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IBM Businesses Microsoft The Almighty Buck

IBM Unseats Microsoft As Second Most Valued Tech Company 296

Posted by Unknown Lamer
from the big-blue-gets-even-bigger dept.
First time accepted submitter FlatEric521 writes "The BBC is reporting that for the first time since 1996 IBM's market value has exceeded Microsoft's. The values cap a sustained period in which IBM's share price has moved steadily upward as Microsoft's has generally been in decline. Of course, Apple is still the #1 company by far."
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IBM Unseats Microsoft As Second Most Valued Tech Company

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  • So IBM will be number 1 soon.

    Really though. This isn't news for nerds.

    • by jcr (53032) <jcr@[ ].com ['mac' in gap]> on Saturday October 01, 2011 @12:40AM (#37574836) Journal

      Apple's P/E ratio is only 15. On what exactly do you base this prediction?

      -jcr

      • by Surt (22457)

        Apple sells upscale products at a premium to a market that is being eviscerated by a massive economic downturn. I would expect them to take a serious hit.

        • Recently economic downturn has not translated into a collapse in purchase of premium mobile devices. Nokia used to do fine. The reason seems to be that people who can't afford a new car, for example, get their premium kick by buying a new phone. I'm not saying there won't be an effect on Apple; I'm just saying don't count on it. It's more likely that the downward influence will come from Android.
        • Don't ask my why, but certain people I see have no money yet insist on obtaining the latest iTrinkets no matter what.

          Apple will be fine.

        • Actually, the luxury market is fairly resistant to downturns. Most crises affect mainly the poor, then the middle class. The rich are and will be OK.

          Also, as seen with tablets, Apple has so much scale now that they can even compete on price. They've been very quiet on the desktop front, it wouldn't take much to give a nice fillip to their share there.

        • by Anonymous Coward

          Actually, downturn markets are great for companies like Apple, as their success in the last couple years should demonstrate. You see, in times like this, people cannot afford or feel they cannot afford real luxury items: vacations, expensive cars, bigger houses, pools, early retirement, so on. But people still like to treat themselves to a luxury. Apple is right in the sweetspot for this: pretty much everybody with a job can afford an Apple product or two, and they will sacrifice other things to get one

        • And yet they have had record profits and revenues since 2008 which when the downturn started. When did you predict this hit to occur? When we go into recovery?
      • by TheRaven64 (641858) on Saturday October 01, 2011 @06:13AM (#37575806) Journal

        Apple's strategy for the last decade has been to ride the cusp of the wave of commoditisation. They identify a market that is about to be overrun by commodity products, enter it at the point when they can get commodity prices from their suppliers but still charge premium prices to their customers, and then move on to a new market while keeping a small share at the expensive end of the newly commoditised market. Home computers, laptops, portable media player, smartphones and tablets have all followed this trend. The problem that Apple now has - and the reason that they're resorting to lawsuits to slow down other tablet makers - is that they don't have the next market identified and they don't have a product ready for it.

        This strategy is very profitable, but only as long as they keep moving forward. Apple's market cap is based on the fact that their net income has increased by a huge amount year on year. As soon as it stops increasing, or the rate of increase slows, it will collapse.

        It remains to be seen whether post-Jobs Apple can keep this going. Steve Jobs was always good at identifying this kind of market (look at PDO and WebObjects, for example), but it wasn't until he returned to Apple that he was really good at exploiting them, and I suspect that this was largely due to other people on the management team. I'm not sure that Apple still has the expertise to both identify and exploit a new market.

        • is getting away from pure commodity parts. They've been using some of their enormous pile of cash to fund manufacturing processes they like (unibody aluminum) and to fund fab lines in return for first dibs on their output (flash RAM - Apple has a significant fraction of world capacity contracted).

          Other manufacturers have had trouble competing on price with Apple lately (which is a switch) because Apple has the best price on parts and processes.

          Apple will have its hands full exploiting its current markets f

    • So IBM will be number 1 soon.

      Really though. This isn't news for nerds.

      No, but it is stuff that matters, which I believe is the second half of slashdot's former slogan.

  • Why doesn't anyone else take their laptops and add an aluminum case and 50% markup?
    • by jo_ham (604554)

      Because for some reason everyone else thinks that they way to be successful is to make their laptops as cheap as possible in a race to the bottom. There are some other nice laptops out there, but almost no (none?) other all-metal case laptops - it's seen as too expensive.

      • They're out there. The laptop I'm typing this reply on has a magnesium case, that's both light, and inexpensive. And it's in a laptop that cost me $400 at regular price... you can get inexpensive laptops with metal cases, you just need to know where to get them from.

        Incidentally, an Aluminum case would not be too expensive... with the price of petroleum these days, it's probably cheaper than a plastic case, actually. Al is one of the most abundant minerals found on this planet (behind only Oxygen and Silico

    • Re: (Score:2, Insightful)

      That's a very good question, and it should lead you to consider that maybe "aluminum case and a 50% markup" isn't all there is to Apple's success. But it probably won't.

    • Why doesn't anyone else take their laptops and add an aluminum case and 50% markup?

      Uh, pretty much every single major laptop manufacturer has either announced or already shipped a model that's exactly that in the last few months.

    • by dkf (304284)

      Why doesn't anyone else take their laptops and add an aluminum case and 50% markup?

      Because it's not one thing, it's lots of small things. For me, the big benefits are a full Unix environment, really good suspend support (really important for a notebook) and convenient backup software. Oh, and I haven't broken the case yet, unlike with the PCs I had before of the same age. :-) YMMV.

    • by TheRaven64 (641858) on Saturday October 01, 2011 @06:56AM (#37575886) Journal

      Lots of people add an aluminium case. They just don't add the rest. For example, my last 3 Mac laptops have all had a backlit keyboard - if I use it in low light, I can still see the keys. The last two came with MagSafe power connectors. I managed to kick the power cable on my ThinkPad and drop it from the top of a chest of drawers (to its credit, it survived). I kick the power cable of my MacBook Pro regularly, and it doesn't have a problem. The screen on this machine is the best I've seen on any laptop. It's bright enough to use in direct sunlight and isn't one of the horrible glossy screens that seem so popular elsewhere. FireWire 800 means that I can daisy-chain a couple of external hard drives and still get good performance from them - when I was doing video editing I had one for the source material and one for scratch renders, and even my G4 PowerBook was pretty fast in that configuration. ThunderBolt means that I don't have to worry so much about expandability - I can plug in PCIe devices externally, and I can even drive two external displays if I'm going to be in the same place for a while. The trackpad can simultaneously track 4 fingers, so multitouch gestures work nicely.

      My last MacBook Pro had four years of daily use before being retired to less strenuous uses and I expect the new one to last as long. My ageing PowerBook still works, although it doesn't get much use anymore.

      As to the 50% markup, let's see what a similar spec machine costs from Lenovo. The ThinkPad W520 seems to be about the same spec as the one I bought. I need to bump the CPU up to 2.2GHz from the stock 2GHz to make that the same. The display is only 1600x900, while mine is 1680x1050, but it has an option of 1920x1080 for £144 more. We'll go with the cheaper one since it has an nVidia GPU with 2GB of RAM while the Mac has an ATI GPU with 1GB of RAM. I'll leave it with the stock 4GB of RAM, since I upgraded mine to 8GB with third-party RAM (buying RAM from laptop makers seems expensive from anyone, but Apple is probably the worst in this regard). The ThinkPad doesn't have the option of a 256GB SSD, so I'll go with the 128GB SSD for now. The price is now £100 more than I paid for my MacBook Pro, yet:

      1. Lacks Thunderbolt.
      2. Has no backlit keyboard.
      3. Has no FireWire 800
      4. Has no multitouch trackpad.
      5. 128GB SSD instead of 256GB
      6. Has a lower-res screen
      7. Is 50% thicker and 10% heavier.
      8. Can only drive two external displays if one has a VGA connector (how quaint).
      9. Has a flimsy drive-pops-out optical drive, not a slot-loading drive.
      10. Has a combined headphone / microphone port, while the MBP has a separate analogue/digital line in/out ports.
      11. Doesn't have that aluminium case you thought was so important.

      If Apple is adding a 50% markup, then Lenovo must be adding at least 75%. On the plus side for the ThinkPad, it does have ExpressCard (my last MBP did as well - I never used it) and eSATA (less useful to me than FW800, because I can't daisy chain external disks with it, I can only plug one in at a time). It also has USB3, which may become useful at some point in the future, .

      • The last two came with MagSafe power connectors.

        Which are a female dog and a half to find replacements for should they break, or to find external batteries for. For a very long time, Apple flat-out refused to license its patented MagSafe connector to a maker of external batteries. In fact, one company bought authentic Apple power supplies just for the authentic MagSafe connectors and soldered them onto its external batteries, and Apple still sued [arstechnica.com].

  • by bjourne (1034822) on Friday September 30, 2011 @11:50PM (#37574672) Homepage Journal
    Apple is the largest tech company followed by IBM and Microsoft, if measured by how much the stock market thinks each company is valued at. It is a completely meaningless metric that does not say anything about either company. The stock market is detached from the real world and how well a company's stock is doing is not proportional to how well that company is doing.
    • there are 'people in washington' who might not approve of your 'tone'.

    • by BBCWatcher (900486) on Saturday October 01, 2011 @12:02AM (#37574724)
      If you believe in rational markets -- I do, if the time horizon is long enough -- the market is simply valuing the respective companies according to the net present value of their expected after-tax profit streams. (That's an oversimplification but only slightly.) Looking at profit growth [fool.com], IBM has outpaced Microsoft for several years running now. If the market simply extrapolates that trend forward, at some point IBM's and Microsoft's valuations had to cross.
      • by houghi (78078)

        If the market simply extrapolates that trend forward, ...

        That is one big if. Especially when you talk about long term.

        • Yes, it is one big if, but it's an if for both companies. Nobody has a perfect crystal ball, but it's simply inevitable that valuations flip when one company (IBM) consistently delivers superior profit growth compared to the other (Microsoft). That's particularly true when what forward-looking information we have suggests that Microsoft's twin franchises (Windows and Office), representing the majority of Microsoft's revenues and profits, are continuing to become progressively less relevant as predominantly
      • by rolfwind (528248)

        While I agree with you in general, there are some type of stocks I would never invest in, like, say, airlines. They always seem to be going out of business, and yet the brand lives on and on (most of the time).

    • Apple is the largest tech company followed by IBM and Microsoft, if measured by how much the stock market thinks each company is valued at. It is a completely meaningless metric that does not say anything about either company. The stock market is detached from the real world and how well a company's stock is doing is not proportional to how well that company is doing.

      Stock prices are not meaningless, they are simply misunderstood and misused. They are not a measurement of how a company is currently doing, they are an estimate of how a company will be doing in the future. The current state is just one of several variables that goes into that estimate. Regrettably when an estimate reflects a relatively large change in either direction, good or bad, speculators pile on and inflate or deflate that price. Apple is far more vulnerable to such speculation than IBM. As suggeste

    • by rolfwind (528248)

      Apple is the largest tech company followed by IBM and Microsoft, if measured by how much the stock market thinks each company is valued at. It is a completely meaningless metric that does not say anything about either company. The stock market is detached from the real world and how well a company's stock is doing is not proportional to how well that company is doing.

      Bullshit. Then that would mean Joe Blow could open a company on Monday and have it be worth $300B by Friday's IPO.

      Sorry, things don't work th

    • Calculate the effect of the iPhone 5 being banned from europe vs the next Galaxy phone from Samsung. This battle is raging right now. For Apple, this is a major part of their business, it brings in a lion share of their profit.

      For Samsung? They got plenty of other ventures, a block will hurt their bottom line but not in any significant way. Samsung is larger then Apple in many ways BUT not that much larger, it is just far more diversified.

      It isn't fair to say Apple if a bubble stock because Apple isn't to b

  • by md65536 (670240) on Friday September 30, 2011 @11:50PM (#37574674)
  • by BBCWatcher (900486) on Friday September 30, 2011 @11:52PM (#37574682)
    It's extremely difficult for a major company to sustain its business leadership after its founder leaves. IBM was fortunate they had a son at the helm who was every bit as smart as his father. After the son the company lost its way but then found a new, better path after huge, painful adjustments. That's the exception, though. Apple had a near-death experience losing Steve Jobs, but the founder returned and put Apple back on track. It'll be interesting to see what happens now that Tim Cook is in charge, but we won't know the impact for several years. Likewise, Microsoft has yet to prove it can prosper in its post-founder era, and that experiment has been running a lot longer now. True, Ballmer has been with Microsoft a long time, but he's no Bill Gates, Thomas Watson (Jr. or Sr.), Steve Jobs, or even Lou Gerstner/Sam Palmisano.
    • In my opinion it's actually the opposite problem at Microsoft. Judging by the way the company acts I wouldn't be surprised to see that the desk calendar on the top execs desk is still the one from 1997. Microsoft has yet to seem to come to the realization that it's biggest competition no longer comes from within the company but from outside. The past decade at Microsoft has pretty much been the top execs trying to empire build within the company and completely ignoring outside threats. As such Windows

      • No, a consistent user interface is not going to be enough. WebOS has a consistent user interface. Microsoft has a business model problem, and that's tough to fix. Application services are becoming more Web-based (cloud-based if you prefer), and Microsoft's Internet Explorer is no longer particularly popular. It's no problem running Safari, Chrome, or Firefox, mobile or tablet, to access the Web. (In many respects it's a better experience than IE on Windows.) Microsoft doesn't control much content distributi
    • by houghi (78078)

      What about all the other big companies that have no founding father at the helm? That would mean a lot more companies like chemical companies, energy, banks, ...

      I would say it is harder for a small company to do so, yet there are many that do: http://en.wikipedia.org/wiki/List_of_oldest_companies [wikipedia.org]

  • In the form of "Microsoft either needs to move everything else to India, or O/S, Office, and development tools should be split apart and individually sold off to enhance shareholder value. We can call what is left DEC."
  • Monied might be more appropriate. I doubt that either MicroSoft or IBM are "valued" by anybody. They are simply players.

    • This is market cap based. 'Value' is the closest word for that. It doesn't directly indicate cash on hand or how much debt they hold. It doesn't indicate directly how highly viewed among potential clients they are. It indicates the perceived value of IBM by stock market participants. This translates well to their ability to borrow and *usually* indicates a healthy company with positive cash flow/good standing with their customers.

      While IBM is doing well enough at creating and selling goods and services

  • Apple is a media company, first and foremost.
    Microsoft is a software company, first and foremost.
    IBM is a services company, first and foremost.

    • A lot of people get that wrong about IBM. For example, IBM's software business generates more profit than its services business. IBM is simply the most successful technology solutions company for business (and government) with the most extensive vertical integration of hardware, software, and services. If you think of IBM as primarily one of those businesses, you're entirely missing their business model. Their business model is not altogether unlike Apple's -- IBM and Apple have very similar philosophies in

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