Monday, May 2, 2011

David vs. Goliath update

I first posted on this subject in October '08 and then again about two years ago. In my original post I predicted that "we could see Apple surpass Microsoft's market cap within a few years." As it turns out, Apple's market cap eclipsed Microsoft's about one year ago.

Back in late 1999, Microsoft reached a peak capitalization of just under $600 billion, while Apple was worth a mere $17 billion at the time. Since then, AAPL investors have gained about $300 billion, compared to the $375 billion that MSFT investors have lost.

I've been an Apple fanboy ever since purchasing my first Mac in 1987, and I have used both Macs and PCs almost daily ever since, so I'm intimately familiar with both. I've owned AAPL stock for about 10 years now, and I haven't changed my mind: Apple makes better computers and a better OS than Microsoft—better than anyone else, for that matter. Apple also has become the most successful computer technology innovator the world has ever seen.

Apple was the first to commercialize the graphical user interface for personal computers, and it has since set the standard for music players, smartphones, laptops, and tablet computers. Microsoft and other would-be competitors have been reduced to copying and piggybacking on Apple's achievements. Apple leads, and others follow, in a market that now amounts to billions of potential consumers all over the world. This is heady stuff and I doubt the dynamics will change meaningfully in the foreseeable future.

Full disclosure: I am long AAPL at the time of this writing.


Benjamin Cole said...

This has got to be one of the most amazing business and tech stories ever.

If you are bald, you remember when IBM was IBM. Then, one day, it wasn't.

I sense Microsoft is moving off-stage as well. There will be free and terrific software in decades ahead.

Apple? Is Apple bigger than Steve Jobs?

Congrats to Grannis on seeing the Apple story. I always liked their computers, but thought they would get crushed by Microsoft, and I guess they nearly were.

One of the great comeback stories of all time.

Free markets and innovation--can't beat that.

Stone Glasgow said...

I guess it's just about time for the Department of Justice to accuse Apple of "anticompetitive" business practices.

Scott Grannis said...

Stone: you make a good point. Thank goodness for Google's Android OS. If it weren't for that, I would be very concerned about anti-trust threats against Apple.

TradingStrategyLetter - Weekly Summary said...

APPL has alomst $100/sh in cash. The lawyers must be salivating!

CDB said...

I have always admired your plots - very clean and attractive. What software/tools are you using?

Richard Sprague said...

Just a nit: this chart doesn't count dividends. It would be interesting to see which stock left investors, all-up, better off.

Scott Grannis said...

Richard: Excellent point, I did overlook MSFT's dividends. From the end of 1999, the total return to owning MSFT through the end of April 2011 was -44.1%, while the total return to holding AAPL over the same period was 1,262.2%. That would make the net loss to MSFT investors about $265 billion, instead of the $375 billion I mentioned in the post.

Scott Grannis said...

Re my charting software. I use DeltaGraph v. 5.7.5 on a Mac. It is also available for PCs, though years ago it was not too reliable on the PC. There is a newer version out that is supposed to be a lot better on the PC but I have not yet upgraded to it.