Microsoft and Apple

New York — Talk about asymmetric innovation, today the big story was Microsoft hiring comedian Jerry Seinfeld for $10 million to help rebuild its stodgy image in what the Wall Street Journal called its “Battle to Beat Apple.” While the blogosphere chattered away about how Seinfeld used Macs on his show and once appeared in an Apple ad, the real story is in this chart.

Microsoft’s growth rate is decelerating, from 12.5% CAGR over the last five years to 4.3% during the last four quarters. Apple’s rate is decelerating too, from 33.1% to 8.4%. Still, all Microsoft sees is that Apple is growing twice as fast.

Apple’s cash velocity fundamentals are better too and getting better all the time. Microsoft’s are deteriorating rapidly. MSFT’s overheated capital velocity and poor cash velocity makes it what Michael Dell calls, “a pool of cash” waiting to be siphoned off by faster innovators.

Microsoft’s biggest mistake, as I said in my August 2003 North River Advisor, MICROSOFT 2003 was entering the browser wars in the mid 1990s. Once MSFT went after Netscape, it lost its market focus completely and never recovered.

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