Apple vs. Microsoft: Rival Strategies, Rival Results
It's been a rough year for everyone, even multi-billion-dollar companies that make computers. Well, maybe not so rough for Apple, which seems to be doing okay, based on its latest financial earnings report.
By contrast, Microsoft delivered bad financial news in July. In fact, its poor showing for the third fiscal quarter -- revenue down 6% year-over-year and lower than expectations, earnings per share a jolting 30% off over the same period -- was notable enough that it made the news at the top of the hour on NPR, which isn't usually seen as a capitalist media tool.
Of course, one of the reasons Microsoft cited was, "Well, the economy sucks all over." True enough, and part of the hit the company took was due to lousy sales of new PCs to businesses, which ate away at Microsoft's money stream of OEM Windows license fees. (I could mention the poor reception for Vista, but at this point, that's last year's news.)
There was a slight rise in sales of netbooks, for which Windows licenses cost less -- more on this later. But there were losses generally across the board, from Microsoft's search ("Let's kill Google!") to the division that runs Windows Mobile ("Let's kill Nokia!") and the Xbox ("Let's kill Sony and Nintendo!").
Over the same period, Apple had its best non-holiday quarter ever. The company saw a rise in all stats year over year, from revenue to earnings-per-share to gross margins. Sales of Macs remained steady, inching up 4%. iPod sales dropped a slight 7% (I know the iPhone has replaced my iPod needs). iPhones, well -- up 626%.
That is not a typo. Nor is the number -- cited by research firm NPD -- for Apple's share of the market for PCs costing more than $1,000: 91%. That number should be taken with a number of caveats: NPD could only look at physical stores and not virtual ones such as Dell's; the average selling price for a Windows-based desktop was under $500; Apple's overall PC market share remains less than 10%; Apple simply doesn't make much that sells for under $999, other than the Mac mini. Still, you have to remember that the pro-level computing marketplace is a thriving one with high margins, giving Apple a healthy base for its primary revenue source: hardware.