Every hipster knows that Apple Inc. is the nimble little perfectionist, while Microsoft Corp. is the evil empire and IBM Corp. is the lumbering dinosaur. That’s the way things have always been. Well, until recently.
Bespoke Investment Group points out that Apple’s market cap was only about a tenth of the size of Microsoft’s or IBM’s back in 2000. Since then, though, Apple’s share price has bulged to elephantine proportions. Apple’s market cap is now about 71% as large as Microsoft’s and US$17 billion bigger than IBM’s. (Maybe we should start calling IBM “Little Blue”.)
Apple’s increasing size raises questions about how long it can continue to grow its revenue and profit at the rapid clip it’s enjoyed over the past few years. One big danger is that it will start thinking more like a big company and become obsessed by its internal needs rather than by consumer desires.
Holman Jenkins Jr. of the Wall Street Journal argues that Apple is showing every sign of becoming more and more like Microsoft.
One piece of evidence is the iPad, a disappointing device that seems designed mostly to boost sales at Apple’s iTunes store. Another piece of evidence is Apple’s decision to exclude Flash, a piece of software that would allow iPhone and iPad users to consume video without going through iTunes.
Jenkins warns that Apple may soon become a company “that rolls out increasingly junky devices merely to lock more and more customers into the iTunes-App Store mall.” His warning sounds a mite premature, but it would be reassuring to see Apple respond to the criticism with stronger new products—especially ones that don’t involve peddling iTunes merchandise.
Freelance business journalist Ian McGugan blogs for the Financial Post.