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Apple revenues could catch Microsoft by 2010

post #1 of 67
Thread Starter 
Apple Inc. has a decent shot of outgrowing Microsoft Corp. within the next five years if it can keep churning out hit wonders, an extrapolation of revenue data from the two industry heavyweights has revealed.

An analysis at 10Layers points out that while both Microsoft and Apple have seen healthy revenue growth in the last 5 years, Apple is growing at a near exponential rate compared to Microsoft's linear path.

"Microsofts revenues have grown approximately 60 percent from just under $30B in 2002 to over $44B in 2006," the report states. "However, while Microsoft has grown linearly for this period, Apple has accelerated with revenues of just under $6B in 2002 growing to just under $21B in 2006."

For Apple, that represents an impressive 250 percent revenue growth.

In an attempt to predict the future growth rates of both firms, 10Layers compiled an extrapolation of Microsofts linear and Apple's almost exponential revenue growth from the past twelve months.

The pure extrapolation shows that Apple could catch up with Microsoft as early as 2010 or 2011, given the current growth rates.



"Of course, an extrapolation is just an attempt at predicting the future based on the past," the report states. "It is clear however, that it is likely that Apple will give Microsoft a run for their money."
post #2 of 67
Shawn Wu will clear this all up.
post #3 of 67
The last line says it all. This is not some natural phenomenon that can be analyzed like that. Things change and profits vary based on markets and interests, not on repeated behavior. Extrapolating a regression is just stupid.

If you pulled that data back another 10 years, you would have a totally different curve that would make even less sense. What is the variable that represents Steve Jobs?
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post #4 of 67
An excellent indicator is that I don't believe there was a single OS release in the entire swath of their data for MS. Obviously, OS releases are something you'd expect to effect their revenues one way or the other, and make the curve "more interesting." I'm going to go out on a limb here and say these folks are imbeciles that should on no account be allowed to use a ruler or the word exponential again.
post #5 of 67
100% BS. We COULD have flying cars by 2010, but we won't. To talk about the future and say what could happen is poor journalism.
post #6 of 67
Of course its B.S. but the really interesting item in this article to me is the current state of things. With only 2-5% market share in the Computer world (I never know which number to actually use) Apple revenues are already 50% that of Microsoft. To me that shoots down the 'Apple has to increase market share' argument.

(Hold's arms over head to ward off flying rebuttles )
post #7 of 67
Apple's market share is 80% in the iPod world, without which that curve would look dramatically different. Apple needs to maintain a reasonable market share in order to keep top-shelf software titles available on the platform. One could argue based on the software availability that their market share has been just above that line recently, and needs to stay there or grow to keep the platform viable.
post #8 of 67
Quote:
Originally Posted by Booga View Post

Apple's market share is 80% in the iPod world, without which that curve would look dramatically different.

Only in the most recent quarter has the iPod had the single greatest revenue share. Before that, it was always still Mac hardware. The next quarter will probably be stronger for Macs than for iPods again.
post #9 of 67
yes Apple could overtake Microsoft profits if Apple keep on charging for every little things like wifi firmware and bootcamp
post #10 of 67
Utter nonsense. Where's monkey-boy Ballmer....

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post #11 of 67
post #12 of 67
I don't think the prediction is all that far fetched. Granted, things could change easily, but what the article is saying is that if things continue as they are now, it will happen.

With the iphone, Mactel and continued iPod success, Apple could continue it's growth. Microsoft seems to have a hit a wall. How many versions of Office and Windows can consumers and corporations buy?
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post #13 of 67
I don't find any weight in this argument, but just for the sake of fun:

This would coincide quite nicely with the end of the Mayan calendar! 2012 marks the end of the Microsoft regime.
post #14 of 67
Quote:
Originally Posted by Highwayman View Post

This sums it up.

http://www.geekculture.com/joyoftech...hives/915.html

Lepoard - $130, Vista - $100-$680, http://www.geekculture.com/joyoftech...hives/915.html Priceless!!!!
post #15 of 67
Quote:
Originally Posted by physguy View Post

Of course its B.S. but the really interesting item in this article to me is the current state of things. With only 2-5% market share in the Computer world (I never know which number to actually use) Apple revenues are already 50% that of Microsoft. To me that shoots down the 'Apple has to increase market share' argument.

(Hold's arms over head to ward off flying rebuttles )

A couple of problems with your comparison. Apple's big ticket item that has really pushed their revenues in the past 2-3 years is the iPod, not their OS or computers or whatever. Second, Apple is a hardware company, and, as such, make a ton more revenue/money on each sale then Microsoft, who's 95% a software company. Take out the computer revenues, and replace it with an estimate of revenues for the OS itself, and you'd see there really is a discrepency.

Of course, all that really needs to happen is for the masses to realize that the iPod is just an overpriced, out-of-style, piece of bling, and decide to move on to the next big thing (whatever that may be - and, no, its not going to be the iPhone). Then your talking one tanking stock...
post #16 of 67
I'm as big an Apple fan as they come, but that sort of analysis is just patently wrong. An X% growth rate achieved at a base of $5b is simply not transferrable to a base of, say $40b. Sometimes this is referred to as "the law of big numbers" or from the bottom side of the sheet as "the law of diminishing returns". It's why Dell's price has been so stagnant (among other reasons, of course)... they just have to work so very hard to achieve any measurable growth as a percent of their revenue, because their denominator is so considerable. Suffice to say, it will be an immense challenge for Apple to achieve that sort of scale in the time frame they project. But hey... don't get me wrong.... I'd love for Apple to make me eat crow
post #17 of 67
I think this is true. Why? I don't know, I just want to believe.
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post #18 of 67
Yeah, I don't think this was meant a "serious journalism" or some actual prediction on which to place your bets. But, it's an interesting idea and caused me to stop and think. While 2010 may seem too improbable, it showed me that Apple "catching" Microsoft is not TOO unreasonable.

But, yeah, it would be nice to see this idea again after Vista (and Leopard?) gets released. As much as we Mac fans love to jeer at it, the majority of computer owners don't really even care about OS X and will just upgrade what they've got.
post #19 of 67
Quote:
Originally Posted by BlackSummerNight View Post

100% BS. We COULD have flying cars by 2010, but we won't. To talk about the future and say what could happen is poor journalism.

For your information, the first flying car was prototyped around the close of 2009. That's all I can say without messing up your future.
post #20 of 67
As someone else mentioned or several others mentioned this is B.S. first of all they are using 3 years of M$ data versus 4 years of Apple data. I particularly love the reference to how M$ was "just over" 44 billion and Apple was "just under" 21 billion in revenues. Honestly I'd love to have the last laugh in the Apple debate too but at this point this is just wet dreams.
post #21 of 67
Keep smoking that happy weed.....

Why even post junk like this?
post #22 of 67
Quote:
Originally Posted by nmcphers View Post

For your information, the first flying car was prototyped around the close of 2009. That's all I can say without messing up your future.

Wrong. Flying cars... he didn't say hovercraft, or jet-powered cars, or spinnners, mind you... have been around since the 1910s.

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post #23 of 67
I agree it is impossible to say this for sure because so many things can happen.

But what we do know is that PC sales are expected to stagnate into the future. That will effect MS OS and Office revenues. You guys are mostly looking at the past while the future is going in a different direction that will give Apple a new chance.

UMPC and Smartphone are expected to outpace PC sells into the future. Apple is just gearing up for this market. This is the future battleground. MS has been in this market for a number of years, but has had nowhere near the success it had of Windows PC.

The largest OS marketshare in Smartphones in Symbian at 71% while Windows only holds around 5%. Windows is mostly grabbing marketshare from Palm. If the iPhone were to gain 1% of the mobile market that would be 10 million phones and around 15% of the market which in one year would put Apple well ahead of MS on this new platform and new battle ground.

With in that 10 million iPhones sold Apple would earn at least $500 million in new revenue. In this recent quarter MS has lost $289 million in its currently unprofitable consumer electronics division. While Apple gained 4 billion in revenue from iPod and iTunes related products.
post #24 of 67
Quote:
Wrong. Flying cars... he didn't say hovercraft, or jet-powered cars, or spinnners, mind you... have been around since the 1910s.

He said 2009 which hasn't even gotten here yet. Sarcasm......
post #25 of 67
this graphic is not worth being on AppleInsider. Please show also a graphic of the previous 10 years..
post #26 of 67
I think you're taking the analysis too literaly. The author even concedes that it's a purely mathematical exercise. However, it's still valid to look at how much Apple has closed the revenue gap over the last few years. It's also fair to say that Apple's prospects for sustained (not necessarily exponential) growth look bright, with a spread of new products/markets and a widely anticipated OS release in the near future. Certainly, MS is not about to collapse in financial ruin, but they do not have such a wide range of growth opportunites.

Either way, it's interesting to see Apple's recent success in comparison to MS. However, these days, it would possibly be more appropriate to compare them to other lifestyle companies, such as Sony?

J
post #27 of 67
Quote:
Originally Posted by GaussianBlur View Post

I'm as big an Apple fan as they come, but that sort of analysis is just patently wrong. An X% growth rate achieved at a base of $5b is simply not transferrable to a base of, say $40b. Sometimes this is referred to as "the law of big numbers" or from the bottom side of the sheet as "the law of diminishing returns". It's why Dell's price has been so stagnant (among other reasons, of course)... they just have to work so very hard to achieve any measurable growth as a percent of their revenue, because their denominator is so considerable. Suffice to say, it will be an immense challenge for Apple to achieve that sort of scale in the time frame they project. But hey... don't get me wrong.... I'd love for Apple to make me eat crow

So you're basically arguing in favor if it happening, though you don't know it. What you're saying is that it's likely for MS to stagnate due to its size. Apple however has 1/3 to 1/2 the revenue though, so they have room.
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post #28 of 67
Quote:
Originally Posted by SDW2001 View Post

.....

How many versions of Office and Windows can consumers and corporations buy?

Long Answer: A PHUKIN BOAT LOAD!

Short Answer: A LOT.

Just how do you think MS makes a hefty profit while burning money on projects such as XBox and Zune?
post #29 of 67
Steve showed a slide during the keynote that showed unit shipments for various devices in 2006
26M Game Consoles
94M Digital Cameras
135M MP3 Players
209M PCs
957M Mobile Phones

Keep in mind that Apple's revenues are primarily based on 2 things
About 5% of the PC market
About 75% of the MP3 Player market
Each contributes about half of Apple's revenues

Microsoft's revenues are based on a more diversified base
Windows desktop OS 30%
Office 25%
Servers & Tools 25%
Home & Entertainment 10%
MSN 7%
Business Solutions 2%
Windows Mobile 1%

As you can see Microsoft's Windows Mobile strategy hasn't really taken off.
This market is still wide open and looking for the killer solution.
Who is best positioned to deliver?
post #30 of 67
What i've NEVER understood is this. Why do non-stock holders get so excited when their favorite company is making record breaking profits? Doesn't that directly say that these people are charging too much for something?

It just seems that people forget that they are consumers. And as consumers then we should be upset that we're overpaying for products rather than praising a company for their ability to mark up a product and con their loyal followers.
post #31 of 67
WOW... judging from some of the angry responses, a lot of Microsoft fans read AppleInsider.

Don't worry fellas... even if Apple passes Microsoft in overall revenue somewhere down the line, MS will probably still have near-dominant marketshare in PC operating systems. Apple changed the game by going into the consumer electronics market, an area MS is finding difficult to make profits in (don't EVEN bring up Xbox, MS is still trying to pay off the $5 billion or so they lost on their first-gen console).

I don't think the big boys in the Redmond boardrooms will care too much if the day comes when Apple beats them in revenue- its not that important, except symbolically. They are probably much more concerned about maintaining profits and wishing that their stock price could go somewhere else besides sideways. \
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post #32 of 67
Also it is important to keep in mind the difference in revenue and profit.
Not only has Apple been increasing revenue but it has also achieved record profitability.
post #33 of 67
I got an email last week that said Islam is the fastest growing religion in the U.S. and that we will therefore soon have a large enough Muslim population to elect a Muslim president.

Same basic logic.

The likelier scenario for Apple to catch Microsoft in the revenue department is either a continued and accelerating erosion of Windows' share of the OS market or a (Google-style) shift from the OS paradigm to something else along with Apple growing its OS market share and continuing to make good choices in consumer product markets.
post #34 of 67
Quote:
Why do non-stock holders get so excited when their favorite company is making record breaking profits? Doesn't that directly say that these people are charging too much for something?

Much of this new profit is coming from people who are buying their first Mac, not from people buying a new Mac.

Quote:
It just seems that people forget that they are consumers. And as consumers then we should be upset that we're overpaying for products rather than praising a company for their ability to mark up a product and con their loyal followers.

You get what you pay for. Most Mac people have used PC's while most PC people have never used a Mac. So their obviously is some difference that is worth the price.

My friend and I recently convinced her mother to retire her 8 year old blue iMac. It was running fine with Panther 10.3, Office 2004, iLife 05. She did not really want new computer, but honestly that iMac had just gotten too slow. She's used it for so long she didn't understand that it was slow. She bought the 17" iMac. Now she sees how slow that older computer was, but it still worked.

A friend of mine edits on Premiere Pro with a four year old Pentium 4 PC. He told me its takes about 4 hours for his computer build and burn a 2 hour DVD. On my three year old G5 with DVD Studio Pro it take about 20 minutes to build and burn a 2 hour DVD.

I'll pay a little more for that.
post #35 of 67
Quote:
The likelier scenario for Apple to catch Microsoft in the revenue department is either a continued and accelerating erosion of Windows' share of the OS market or a (Google-style) shift from the OS paradigm to something else along with Apple growing its OS market share and continuing to make good choices in consumer product markets.

Its predicted that PC sales will slow and UMPC/Smartphone sales will surge.
post #36 of 67
Quote:
Originally Posted by orge View Post

I think you're taking the analysis too literaly. The author even concedes that it's a purely mathematical exercise. However, it's still valid to look at how much Apple has closed the revenue gap over the last few years. It's also fair to say that Apple's prospects for sustained (not necessarily exponential) growth look bright, with a spread of new products/markets and a widely anticipated OS release in the near future. Certainly, MS is not about to collapse in financial ruin, but they do not have such a wide range of growth opportunites.

Either way, it's interesting to see Apple's recent success in comparison to MS. However, these days, it would possibly be more appropriate to compare them to other lifestyle companies, such as Sony?

J

No, there is nothing valid about this analysis.. it's not even an analysis.. it's guessing or putting non related info together or using only parts of info.. something people like to do with figures. especially online.

Although I'm very happy that Apple is doing well and I also think Apple is going in the right direction (away from the clumsy computer that has to do everything towards small and embedded computer based devices) There is nothing as unpredictable as technology.
post #37 of 67
Quote:
Originally Posted by Booga View Post

Apple's market share is 80% in the iPod world, without which that curve would look dramatically different. Apple needs to maintain a reasonable market share in order to keep top-shelf software titles available on the platform. One could argue based on the software availability that their market share has been just above that line recently, and needs to stay there or grow to keep the platform viable.

I think your numbers are off. My rough guess is that in the iPod world, Apple's market share is about 100%...

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post #38 of 67
Quote:
Originally Posted by extremeskater View Post

However I believe ipods have peaked and can do nothing but drop in sales, the Mac/Intel craze is over any news is no big deal anymore, the iphone will fail badly and so will itv.

I think you're right in the rest of your analysis, but I think that iPods will continue to sell decently, the AppleTV will do OK, and the iPhone will do OK as well. Apple's stellar performance may be an anomaly, but they will still see solid growth for the near future. My feeling is that if Apple fails to do fantastically in either arena, then they will be seen as having failed to do well at all, regardless of the small success. That could be a real PR problem for Apple, since with the G4 cube, it was more the shame at having produced a flagship computer that was problematic and expensive than the actual economic issue with building it.
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post #39 of 67
Quote:
Originally Posted by mini.boss View Post

What i've NEVER understood is this. Why do non-stock holders get so excited when their favorite company is making record breaking profits?

Actually, I own Apple stock. Am very happy about it too, obvously. Cigar?

.
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post #40 of 67
Quote:
Originally Posted by extremeskater View Post

Its not angry responses its just people are actually realistic and the curve on that graph is insane. It would be nice if it was true not because im a MS fan or a Apple fan but compitition breeds innovation and it also breeds pricing that is far more competitive.

However I believe ipods have peaked and can do nothing but drop in sales, the Mac/Intel craze is over any news is no big deal anymore, the iphone will fail badly and so will itv.

2006 is about as good as Apple will ever see. My prediction which isnt worth any more than anyone elses. Three years from now for all we know both could be out of business.

I dunno... people have been saying 'Apple has peaked' for the past several years now, and they've always been wrong.

I don't think iPods have come anywhere near peaking, actually... the vast majority of people, even if we're talking just US/Europe/Asia, still don't have one. And let's not forget about Apple's entry into the billion-unit a year cellphone market. Mac marketshare also could continue to increase, provided Apple gets a bit more aggressive in their pricing.

If I had to lay odds, I'd say its 5 to 2 that '07 is even better than '06, and better than that for '08 being gangbusters (when iPhone hits full stride). But we'll see. 8)
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