

Microsoft's quarterly profit drops below Apple's for the first time in 20 years - mapk
http://mashable.com/2011/04/29/microsoft-quarterly-profit-apple/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Mashable+%28Mashable%29

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orijing
Misleading. Microsoft's quarterly profit grew pretty quickly (above 30%). It's
just that Apple's profit grew faster, causing it to take the lead in the race.

~~~
orijing
Guys, I didn't mean to start such a discussion over the wording. I said it was
misleading, not "cannot be interpreted correctly."

In particular, by saying that X's profit dropped below Y's for the first time
(without context of X and Y) suggests _TO ME_ that X's profit dropped when
that was not the case.

By "misleading," I meant that had I not known profit figures already, I would
have assumed the title meant that Microsoft's profit had fallen. It means that
the understanding it leads you to believe initially is incorrect, hence
misleading.

~~~
glhaynes
I downvoted your original post because I read "misleading" as implying that it
was intentionally, wilfully misleading - i.e. lying. But you're correct: the
wording _misled_ you (and understandably so) to an incorrect conclusion.
Apologies.

~~~
orijing
No worries. Perhaps my use of "misleading" was itself misleading!

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runjake
For me, it's more interesting that Apple did this without a lot of the shady
business & licensing practices that Microsoft engages in.

Edit: Before downvoting me, take a look at my comment history. I'm not your
typical Apple fan/Microsoft basher.

~~~
orijing
Do you think Apple's walled approach to iOS apps and content on iOS platforms
is more honorable than Microsoft's open development initiative? (i.e. letting
anyone write Windows applications).

To me, their decision to prevent iOS apps from getting content outside of its
walled garden (and bypass the 30% fee) is much more anti-competitive than
whatever Microsoft did.

I don't know if anyone downvoted you (I didn't). I just wanted to hear your
opinion. I'd like to hear what you mean by 'shady', and what in particular
about Microsoft makes it shadier.

~~~
alanh
Please stop trolling. Microsoft did a ton of shady things. For instance:
Colluding with SCO to spread Linux IP FUD [1]; suing Lindows around the world,
even“ex parte,” and getting a ruling from some a Dutch judge that _every day_
someone could download Lindows from the Netherlands, Lindows owed MSFT an
additional 100,000€ for trademark violation [2]; the whole Java Embrace,
Extend, Extinguish thing; forcing OEMs to not ship PCs with Linux installed if
they wanted standard OEM discounts on Windows; the whole federally-convicted-
of-antitrust bit; etc.

And I for one LOVE the walled garden as it provides me with demonstrably
higher-quality, malware-free apps that don’t just rip off someone else’s
IP/icon haphazardly the way most Android apps seem to do. The walled garden
does NOT prevent end users from installing web apps to the home screen, sans
Apple approval. It is also NOT anticompetitive, unless you know something no
one else does.

[1]: <http://news.cnet.com/2100-7344_3-5172426.html?tag=nefd_lede>

[2]: [http://www.eweek.com/c/a/Linux-and-Open-Source/Microsoft-
Kee...](http://www.eweek.com/c/a/Linux-and-Open-Source/Microsoft-Keeps-Heat-
on-Lindows-with-New-Suit/) and
<http://www.wired.com/techbiz/media/news/2004/03/62644> and more generically
<http://en.wikipedia.org/wiki/index.html?curid=465335>

~~~
orijing
I was not trolling. I had a fundamental disagreement and wanted to understand
where he was coming from.

Additionally, whether some anti-competitive action benefits you in the short
term is irrelevant because it often does. (For example, Microsoft "Bundling"
IE led you to have free browsers) They are anti-competitive because companies
are sacrificing short term potential to wall off their competitors, hence
"walled garden."

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bstar
I guess I was most amazed that in 1991 Apple's profits were greater than
Microsoft's. I was playing Ultima 6 and King's Quest V back then... I didn't
know anything existed but the IBM PC.

~~~
protomyth
Office came out in 1990 and took a while to take over. MS-DOS wasn't as
profitable as Windows would be.

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romey
What I think is most interesting about this is that 1\. People continue to
compare Microsoft and Apple as if they were directly competing, in spite of
the fact the Apple is [primarily] a hardware company and MS is [primarily a
software co. and 2\. In spite of being primarily a hardware company, Apple is
still able to be more profitable than Microsoft. They truly do release their
hardware as if it were software, iterating and releasing a new version nearly
every year. Even more surprising is that people actually buy this new hardware
annually, as if it were a software upgrade

~~~
raganwald
Hardware is not software, but it's trending in that direction. The price of
the raw components keeps falling, we are headed towards a future where a
tablet is really a hardware dongle for an operating system or an advertising
platform.

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pessimist
Two things - Windows license down 4% year-over-year(!) while macs rose 28%,
and $728 million loss this quarter alone competing with Google. Thats a run-
rate of $3b loss just to compete with Google - at some point one has to think
this assault - plus competition from Apple and facebook - will finally start
hurting Google a lot.

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hvass
Can someone please explain why Apple spends relatively so much less than
Microsoft on R&D? I would've thought it's the opposite.

~~~
brg
I would look at it from the perspective of Microsoft spending so much more
than everyone else.

Research encompasses a lot of things at MS, from pure research labs in
Redmond, Boston, Cambridge to online services and live labs. Microsoft runs
perhaps the largest CS research organization in existence, when basic research
is considered alongside product research such as Bing and Photosynth.

MSR grew to be so by the promotion of Nathan Myhrvold, and the buy-in he was
able to get from Gates and Ballmer. It maintains itself by being able to
collect a lot of talent, and keeping them interested. But like Lucent, it
probably only survives as long as the company is growing.

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bkhl
What we need to focus here is this...despite the decrease in PC sales,
Microsoft managed to grow. They did not just grow a little, but they grew
tremendously. 30%? that's a huge number for a company like Microsoft.
Nonetheless, Apple has reached another huge milestone in their history.

~~~
kevin_morrill
Right, I think the point is this says more good things about Apple and doesn't
really say that MS faces impending doom. Both companies are quite impressive,
just more so for Apple. To grow a megacap company in double digits is quite a
feat.

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eddieplan9
MSFT is down 4.4% now: [http://www.marketwatch.com/story/microsoft-offers-
more-muted...](http://www.marketwatch.com/story/microsoft-offers-more-muted-
view-of-pcs-2011-04-29?link=MW_latest_news)

~~~
r00fus
Probably has to do with concurrent reasons _why_ Apple is overtaking them in
profitability, notably, the iPad is absorbing the netbook market (MS reported
netbook sales down 40%).

------
orijing
While it is significant that Microsoft's falling behind Apple, I'm not
particularly surprised that OS sales are slightly lower than it was last year
at Microsoft. Last year was the start of the launch of Windows 7.

------
cocojumbo123
herp-derp. Title should had rather been: Apple's profit is higher than
Microsoft's for the first time in 20 years.

------
cooldeal
Microsoft spends a significant amount on basic research, like Bell labs used
to and Microsoft research publishes a lot of publications. 15% of the research
budget goes to universities for research, that could keep the profits lower
than Apple.

~~~
orijing
In fact, Microsoft spends around $2-2.5b on R&D per quarter [1] while Apple
spends $500-600m [2]. That certainly more than makes up for the difference.

[1] <http://finance.yahoo.com/q/is?s=MSFT>

[2]
[http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii](http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii)

~~~
wooster
I was on a team once at Apple with ~15 people on it. At one point, we found
out the equivalent group at Microsoft had ~500 people.

Most people I've talked to who worked elsewhere are shocked at how small the
teams at Apple are.

~~~
kenjackson
What group is that? From what I hear most groups at MS aren't huge either --
unless you aggregate them (for example Visual Studio, counting all of the
languages, shells, debuggers, etc...).

Unless you're going to say there are only 15 people on iOS. In which case I
will be seriously impressed!

~~~
jballanc
When I was at Apple, I was on a team of 6 within the server group. When I told
a friend in CoreOS that we had 6 people, he wanted to know what justified our
team being so large!

Oh, and if you want an Apples to Apples comparison...I was there when the
Server group merged with the Dev Tools group...and the merged group is maybe
300 engineers total (all of server was about 70 engineers...all told OS X and
iOS combined only comes to something like 3000 engineers).

A fun little link:
[http://www.wolframalpha.com/input/?i=revenue+per+employee+at...](http://www.wolframalpha.com/input/?i=revenue+per+employee+at+apple%2C+google%2C+and+microsoft)

~~~
kenjackson
_all told OS X and iOS combined only comes to something like 3000 engineers_

That sounds about right. For Win7 about 2500 engineers (1000 devs, 1000
testers, 500 PMs). I suspect WP7 is probably 500 engineers. So Windows + WP7
is probably right around the same number.

Interesting to think that in terms of products where Apple and MS compete
directly, they probably have very similar headcounts. There's a mythology that
MS is this huge beast that will crush you (at least in the past). But in
reality MS ships 100+ different products. The company is spread a lot thinner
than lay people might imagine.

[http://www.pc-wholesale.com/networking-news-a-small-army-
of-...](http://www.pc-wholesale.com/networking-news-a-small-army-of-engineers-
slated-to-work-on-windows-7.html)

