Microsoft has, for the first time, been beaten in market cap by Apple. At the close of the market today, Apple sat at $222.12 billion, a gain of 1.8%, while Microsoft went down 1% to $219.18 billion. That makes Apple, according to market cap, the most valuable tech company in the world. Yet compared to Microsoft, Apple has both less cash on hand ($23 billion vs. $35.7 billion) and less revenue ($42.9 billion vs. $58.4 billion). So the fact that the market has valued Apple higher is big news indeed.
That Apple has, improbably and at long last, passed Microsoft in market value has everyone looking more closely at the two companies. In the early years of personal computing (like, 20 years ago. Ancient history, right?), the rivalry between the two formed the basis of the industry's narrative. But now, the industry's changed in more ways than can be neatly summed up in a wistful paragraph, and it's not even a given that Apple and Microsoft are competitors. Rather than trying to examine the ever-changing facets of each business as a whole, let's look at something more concrete — their products — as a measure of where the two tech giants stand right now.
Microsoft is massive, and like some kind of funhouse mirror gets more massive the closer you look. But it is still essentially a software company. The two biggest product lines at Microsoft are Windows, the world's most popular computer operating system (found on nine out of 10 computers), and Office, a suite of productivity tools including Word, Excel, and PowerPoint. One of them is probably running in the background right now on your machine, PC or Mac.
Windows is the keystone of the Platform Products and Services Division, which also includes Windows Live, a service made up of mostly web apps like Hotmail, Messenger, and SkyDrive; Bing, a search engine, and the accompanying Bing Maps; the cable news channel MSNBC; the online magazine Slate; Microsoft Visual Studio, a suite of programming tools; Amalga, a healthcare information system for hospitals; and the assorted software under the Windows Server System umbrella, among many, many others. Microsoft currently supports a litany of OSes, including Windows 7, Windows Mobile 6.5, Kin, Windows CE, and Zune, with Windows Phone 7 to come shortly, not to mention that Microsoft has to support older versions of Windows like Vista and XP that can still be found on netbook or budget computers.
In the entertainment section, they've got DirectX; Windows Media Center; Silverlight, which is used for streaming video, including the most recent Olympics; and the accompanying software for their comparatively meager line of hardware. There's Zune, with its Zune Marketplace (a subscription-based digital music store), its line of portable media players, and, soon, integration with Windows Phone 7. There's Xbox, with its Xbox Live online gaming community, huge library of games, media abilities, and Xbox 360 hardware. There's Surface, a groundbreaking touch interface that's been allowed to lay fallow, living its life as little more than a perennial tech demo. Microsoft also has a well-regarded line of accessories like keyboards and mice.
Frankly, that list is barely the tip of the iceberg—Microsoft also has a serious influence in alternative energies, education, and enterprise software. The latter especially is a huge department with all kinds of analytical tools and systems. But it gives you an idea of just how all-encompassing Microsoft really is. In different departments, they're competing with entirely different companies in all corners of the tech industry.
Microsoft products are serviced in several different ways: software is serviced through Microsoft by phone or email, but hardware is often the purview of the specific hardware manufacturer, especially in the case of PCs.
Apple, by contrast, has three laptops in varying sizes, one all-in-one desktop, one mini desktop, and one tower desktop. All six run the same OS, also made by Apple, and include Apple's iLife software suite. Then there's the three mobile devices that run Apple's second OS, iPhone OS: the iPhone, iPod Touch, and iPad. Finally, there's the media hardware: the three "legacy" iPods (Classic, Nano, and Shuffle) and the mostly ignored Apple TV. Apple also sells accessories for these devices, including a wireless router, monitor, and keyboard and mouse. In terms of software, Apple has the two OSes, plus iTunes and its media store, and the App Store for its iPhone OS devices. They sell and service all of that stuff in Apple Stores. Really, that's about it. Update: I forgot one important product—Apple's line of creative software, including Final Cut Pro and Logic Pro, which are incredibly successful and can be considered the standard in that industry. Thanks to the commenters and readers for pointing that out.
Apple is startlingly narrow in their scope, at least in comparison. More focused on both hardware and the consumer (rather than enterprise) side of tech than Microsoft, Apple's product lines are thus much easier to understand. You can take a glance at the homepages of the two companies to see the difference; Microsoft's list of products runs to the dozens and includes several I've never heard of, while Apple has seven buttons corresponding to their products, all of which (MacBook, iPod, iMac, etc) are instantly distinctive and familiar. Despite a couple duds (I'm looking at you, Apple TV and Mac Mini), Apple's philosophy is both simple and focused on simplicity: "Get rid of the crappy stuff."
I barely scratched the surface in five paragraphs about Microsoft, while in a single paragraph about Apple, I feel like I've pretty much covered everything.
The New York Times calls the market cap valuation a "changing of the guard." It is—in about twelve different ways. The companies are so different these days that it's hard to know what's most momentous; this isn't Pepsi overcoming Coke. Is it simple scope defeating broad? Consumer over enterprise? A triumph of superior marketing? The power of a cult of personality? The answer is yes. Since the introduction of the iPod, Apple has captured mindshare in ways Microsoft only dreams of. Microsoft is an amorphous blob of a corporation, with a capital C—they make essential products, certainly, but without brand loyalty or public goodwill. Apple, through unbelievably astute marketing and the power of one Steve Jobs, has won all of those fights.
Apple isn't as big as Microsoft, and probably never will be. They don't make or have as much money. But that the market has valued Apple higher is an affirmation that at the moment, Apple is leading the tech world.