Microsoft poised to overtake Apple as most valuable company
As Microsoft stock rises and Apple's falls over analysts expectation of slowing iPhone demand, the two firms are once more within $100 billion of each other -- the smallest gap in over two years.
Credit: Microsoft
Apple and Microsoft have a long history of competing for the title of the world's most valuable company, although originally that was specifically in the technology category. In 2010, Apple dethroned Microsoft when it hit a market capitalization of $222 billion, and then in 2018 Microsoft briefly regained that top position.
Now those sums seem quaintly low, and the two companies have instead been vying for the title of most valuable company globally, in any category. In August 2020, Apple became the first publicly-traded US company to reach a $2 trillion market cap, and Microsoft became the second one in June 2021.
Later in October 2021, Microsoft took over the top spot, and for a time was move valuable than Apple by $100 billion.
While the values of the two firms have continually changed, Microsoft is now worth just $100 billion less than Apple, according to MarketWatch. Microsoft is valued at $2.73 trillion, while Apple -- fallen from its recent $3 trillion high -- is currently at $2.83 trillion.
How Microsoft may be beating Apple
MarketWatch notes that Microsoft's stock rose 57% in 2023, compared to Apple's which rose 48%. Microsoft shares have also reportedly seen what are described as slimmer losses at the start of 2024.
Apple, on the other hand, has seen its shares take a considerable drop in recent days. The first hit was taken following a claim by Barclays that iPhone demand is weakening and that the iPhone 16 range will not offer any compelling new features to tempt upgraders.
The analyst view that Apple is dependent on iPhone sales is part of why Microsoft is doing better. Analysts see Microsoft has being less attached to any hardware, and more attached to subscription software such as Office 365, and so therefore less attached to any falling demand for phones or computers.
And, Microsoft has launched an AI tool in Copilot, while Apple has not unveiled any similar ChatGPT-style app or service. Analysts appear to be ignoring that Apple has been using AI for many years, under the name Machine Learning, though, and also that it is never first to a market, even ones that it later comes to dominate.
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Interesting that the article said that Apple is never first in the market, but they don't mention that Apple was ahead of the competition when they acquire Siri. Thirteen years later we have a stagnant Siri and Apple behind the competition. At the same time, OpenAI and Microsoft have a strong AI presence with services, datacenters and apps with AI integration. At the moment I haven't seen the "indispensable integration of technology" you mention Apple would bring. I would wait and see what Apple brings in WWDC and compare it to what MS announce in their Build event.
Zoom is still a favorite for many over Teams.
Azure hasn't killed AWS.
Surface hasn't really put a dent in the iPad
Generative AI has so much issues that have already been mentioned in this thread (copyright)
the only reason why the Tech Press maintains the prattle is because they don't understand the
Tech industry beyond surface level stuff.
I find the Vision Pro launch to be significantly more important to computing than Generative AI. And if
Apple is effectively able to put LLM right in silicon without heavy reliance on external servers for most
of the daily AI tasks that will leapfrog much of today's "Hey we have AI in our app but please don't use it
too much because it's expensive" approach to extant AI use cases.
They don't have the aspirational appeal of Apple nor the software chops of Google. In fact, their UI is often very cluttered and overly complex.
However, in recent years they have become the safest tech company to bet on. People who are familiar with Microsoft's antitrust cases from way back will find it funny that the companies that were against Microsoft such as Apple and Google, are now being charged for the same things that they accused Microsoft for.
Microsoft's office suite still remains the default, their cloud services has a lot of potential even more than AWS(the current leader), Windows is the only PC choice for the majority of people (no programmer is going to buy a Chromebook and not everyone can afford a Mac), the recent game studio acquisitions has been slowly dethroning Sony and making Windows the only real PC gaming environment. Google started the cloud gaming market yet dropped out( they do this a lot...) and now Microsoft is carrying that with Xbox pass.
They don't have the same revenue dependency on ads and therefore don't have much to fear over new privacy regulations, they also don't have 50% of their revenue dependent on one product, such as iPhones for Apple.
They are also currently the leaders at AI along with Google, so I think they are future proofed too.
The only place they are lagging at is on the mobile market and I don't think they are going to succeed there as Apple and Google have grown too big in that space, but only time will tell, you never know with a company as big as them. Ever since Satya Nadella became CEO, Microsoft has been a different beast, making one right decision after another and he is arguably the best thing that happened to Microsoft.
Maybe I'm old school, but I've always looked for genuine solutions to problems, not approximations with a lot of hand waving. Which is where I feel AI is currently. But obviously that doesn't stop investors looking to ride the wave of interest.
Of course, there would be some individuals who still use Zoom, however, that number is decreasing every year.
hmurchison said: Despite being a market leader, the iPad itself only accounts for a little over 7% of Apple's revenue.
Maybe in the third or fourth generation. This tech has existed in one form or another for the past many years, what Apple has done is crank up the specifications to 100. It is currently being marketed as a productivity tool but only the market will decide it's future. The first generation Apple watch was marketed as a premium watch but failed and only when Apple utilised its capabilities as a health tracker did it gain market share.
The problem with that is, Android OEMs have already started doing that. Of course Apple's implementation will gain more mindshare (it is Apple duh...), however, it will not be something unique to Apple only, and that's not even considering the capability of the LLM model which Apple will use and whether it will be better than the competition.
The point if the OP and many analysts is that none of what 'might' happen has shipped, while competitors are delivering.
The quality of what is shipping is neither here or there. Generative AI, for all its ethical problems, has hit the ground running.
Yes, you will see absurd cases and weirdness getting spewed out but you will also get a lot of time saving results that are spot on. And it will get better.
That’s on the generative front. On the LLM front for specific industries and scenarios, 'clean' data is used and the potential rewards are mind boggling.
Results are already proving this to be the case.
Claiming that Apple already uses AI but calls it machine learning doesn't tackle the point. That is irrelevant in this context.
Everybody uses ML.
That was the point of the OP.
Not being first is also irrelevant. We're dealing with the 'now' and lots of manufacturers have 'indispensable' implementations of technology. Often superior to Apple even when Apple isn't first.
I've been talking cars a lot recently because they are all over the news with computing technology advances.
So we are seeing all the classic use cases for AI.
Sensing.
Image recognition.
Voice recognition.
Audio processing.
...
Think about it. You get into your car and the driver is authenticated using image and or voice recognition. The settings of the car (including seat position etc) change to reflect that user's preferences. All other occupants can be identified and treated individually by the voice AI assistant. Calls can be isolated if necessary to not distract the driver or for privacy. Or the other way around. The audio is processed by AI to enhance the speech quality, eliminate background noise and reduce leakage. Users can seamlessly connect their phones and tablets, authenticate to different degrees and interact with the car by voice or touch.
Even the headlights are taking on new tasks by moving from 'illumination' to 'projection'. Tie that into an AR-HUD (also powered by AI) and you can see massive progress.
Basically, that is here now. It's shipping now. And getting better with each update.
But Apple is nowhere to be seen and, unlike the Vision Pro, nothing has been said.
So. What's left. CarPlay?
That's only cars. The scope for use cases is very broad yet Apple has only presented some machine learning initiatives. Very welcome, don't get me wrong, but everything I've seen (starting with a lack of any competing solutions to generative AI) and on through to recent investments, points to a company wrong-footed and scrambling to react. Scrambling to get a 5G modem finished.
Analysts may be getting it all wrong (or right - it's all guesswork) but when they reason their claims, there is always a possibility that it might actually make sense.
That could be the case here independently of how financial results (and resulting stock movements) play out.
Before iTunes and the iPod, The digital music category had been cracked wide open by the mp3 format and companies like Napster that enabled and promoted the unrestrained theft of copyrighted music. Everybody was talking about it, but the format was crap, mp3 players were mostly crap, and the entire music industry was in a tailspin as theft of vast catalogs of copyrighted music was being normalized. Then Apple entered the market, making legal acquisition and playback of music reliable and easy. The simple convenience of 'doing it right' quickly diminished the consumer practice of stealing all your music, and ultimately created the bridge from the physical media sales model to the streaming subscription model spearheaded by Spotify. Now Apple Music is doing that better than Spotify, building an audience of paying subscribers. More recently, they've introduced lossless and spatial audio formats at no additional cost, instantly creating demand for content in those formats so that creating high-quality content is no longer about chasing the diminishing returns of niche audiophile markets.
We all know the pre-iPhone mess of PDAs, cell phones, GPS devices, and Blackberrys that were dependent on an unsustainable back-end workaround for transmission of data. Then we got iPhones, the rapid build-out of wireless broadband networks and everybody trying to be like iPhones. I won't re-hash that story. The list goes on.
So sure, you can point at Microsoft and other companies pushing out their generative AI stuff, but we're essentially rhyming with the breakout of Napster and mp3s, and pretending that the "new normal" is wholesale electronic plagiarism. I don't know if it'll be at WWDC this year, but at some point, Apple is likely to actually enter that arena, but it won't be with a breathless us-too copy of what everyone else has scrambled to get out first. It will be something better thought out that doesn't rely on stealing copyrighted IP or on selling out user privacy. It'll be something that's actually useful, works seamlessly and that pays its own way. Also, it will build on and reinforce the market for Apple hardware, because that's how they make their money.
AI is just tech Bitcoin right now, a vertical computer company featuring OS software/hardware design engineering like Apple brings physically and substance to the fight.
Because generative AI isn't almost human, it is not capable of being creative or original. As a result, the current batch of programs that are "trained" on other people's copyrighted work are incapable of doing anything more than regurgitating that work wholesale or in piecework mash-ups. Using the same legal definitions for humans who do that, it's plagiarism. Cutting and pasting other people's work into something and calling it your own is plagiarism. Doing so for money is called theft. Convincing investors and customers that this stolen product is gold really is selling garbage, and the pending lawsuits over that theft will soon enough eliminate the claimed value of the stuff.
My guess is that Apple's "late" entry here will be one that gives attribution and pays for source content, while delivering it to users in intuitive and conversational formats that are actually useful. Coming up with that takes more thought and more time to develop, but will ultimately result in the model that everyone else will try to copy, while still claiming they were "first."
Exactly this. We're simply watching the knowledge and art we've generated being reflected back at us, often in ways which lose the original meaning or human expression. Which, in turn, is having the effect where I feel like we're actually losing the capability to discern fact from fiction and the ability to comprehend genuine human emotion. But money doesn't care about that, as long as there's growth.
Microsoft has market inertia on their side, Apple currently has a M1, M2, M3 laptops that are fast powerful last virtually all day on charge with full performance perfect for job sites, and other power challenged scenarios yet good luck getting Autodesk, and most of the other software companies in the cad/construction market taking advantage of them (nothing in the Windows comes close). Maybe the Justice Dept. can help.
It was only December 18th that the following story hit, claiming Apple is doing well in China and on its way to becoming a $4 trillion company.
https://appleinsider.com/articles/23/12/18/wedbush-still-very-happy-with-resilient-apple-in-china
Second, I mentioned Siri because it's the closest thing Apple have similar to a generative AI chatbot. And they had the chance to improve it to be better than what we have today with OpenAI / Copilot and Bard, but it didn't happen. Apple didn't have the vision to improve Siri to be more than just an assistant.
The examples about digital music and smartphones were about how Apple turn around those markets, right? If that's the case, the same can be said about MS and enterprise / business software and ecosystem and Google with search and consumer cloud services. Also, you have to consider that Apple is competing with MS and Google, both massive companies and with more resources and infrastructure than what Napster or Blackberry had in the past.
I would wait WWDC or the final product from Apple before saying they will be better than MS or Google. But if they repeat the mistakes they made with Siri, they will be behind MS and Google for a long time.