The main things I see lately are: Apple is creating VR headsets and new chip technology, Microsoft is buying up AI companies and injecting ads/spyware into their operating systems. Also Microsoft is getting big into cloud.
Microsoft is one of the most diversified companies in existence. Pretty much every business, every government and most consumers around the world are directly or indirectly paying them money for something, whether software, devices, consulting, cloud, data. On the other hand Apple's success for the last 15 years has relied on a single device. Now that the device is running into some issues (dropping sales in China, general stall in innovation, regulatory hurdles) their stock price is reacting accordingly.
Of course investors aren't rewarding them for an upcoming VR headset which is yet to be proven. Why would they?
But oddly enough one of those countries isn't China. Its weird how Google and Facebook can't do much their while everything from Apple works as well as anywhere else.
Because Apple is willing to play China's game. Google and Facebook's business models (ads) fundamentally don't work with China's government. They sell different products than Apple.
They are forced to by their hardware business model. Almost every entry point to the Apple ecosystem is through hardware and nobody can meet QC and scale of Chinese factories. Too much of a risk to block China and risk supply chain disruptions.
This comment made me feel unnecessarily old. It was only ~15 years ago that we went through all the drama of tech companies deciding whether or not they’d play ball. It’s not that Google can’t, it’s that they decided that the juice isn’t worth the squeeze. Apple decided otherwise. They’re very different companies selling very different things.
I bet it’s not just Xbox, either. Maybe you’re not directly paying them money, but as someone commenting on Hacker News I’d sure bet you’re using at least one of GitHub, VS Code, NPM, or LinkedIn. And I’m sure they’re ultimately benefiting from that use!
I’ve been following Apple for a long time and the stock almost always rises ahead of announcements and falls after. Pretty sure that pattern has existed for ~20 years.
Yep. Yet time after time “stock dropped after announcement” is trotted out as some sort of indicator of consumer sentiment whenever anyone is looking to start a silly flame war, because it’s convenient to temporarily ignore that share prices are already the result of 12-dimensional speed chess.
How much of that other half would still be around if the iPhone was no longer a thing? Apple Care? App store purchases? IAP/microtransactions? Apple Pay? iCloud storage? Chargers? Airpods?
They can structure their financial reports however they like, but it doesn't change the fact that their entire ecosystem is directly or indirectly tied to that one device.
> Fair enough, but Microsoft would be equally dead without Office and Azure revenue.
Office and Azure make up half of their revenue, but their other revenue streams are actually different things, like Windows, gaming, LinkedIn, Bing advertising. It's actual diversification.
People forget that Apple of today probably wouldn't be around if Microsoft hadn't given them $150M to save them from bankruptcy in 1997[1].
With the introduction of IE in 1995 and its deep integration into Win95 and ruthless take-no-prisoners assault on Netscape, Microsoft was probably already aware that they were starting to resemble a monopoly, given Apple's poor sales and market share at the time. My personal take is that MS propped up Apple to help appear to have a competitor ahead of the Antitrust action in 2001[2].
>probably wouldn't be around if Microsoft hadn't given them $150M to save them from bankruptcy in 1997
I'm _pretty_ sure Apple could have gotten the money from elsewhere if they really had to. It's history now, so we'll never know for sure, but I'd bet that they could have found other investors if they really had to. People seem to think it's a black and white scenario - money from MS or death! But I don't think it ever was.
The 70's through 90's were littered with the corpses of computer companies that were outcompeted and never recovered - the IBM PC/DOS/Windows 3.x effectively killed not only the competing CP/M (8080/Z80) market for PC's, but outcompeted the Amiga, Atari ST, and of course the entire 8-bit market was obsoleted by the 16-bit 80[2]86. Apple's struggle to enhance MacOS to keep up (vs Win95/NT juggernaut) at that time are well documented. At least Apple still had some brand recognition, so maybe you are right.
I really don’t think that people “forget” that. You’re effectively saying “if Microsoft continued to be predatory and anticompetitive to the degree they were, there wouldn’t be [other option]”. What’s the point? Seems self-evident.
>Microsoft would be equally dead without Office and Azure revenue.
Would they? Microsoft also own other stuff they monetize like GitHub, Linkedin, X-Box, and a shit tonne of gaming IP inclusing Activision Blizzard, plus other things I'm surely forgetting.
Looks pretty diverse to me comapred to a company who's revenue stream is limited by the ammounts of walled garden phones it can sell and who's grasp over its walled garden can be regualted away by the EU waving their wand the same way they lost the Lightnig cable revenue stream.
Can Apple keep up this momentum in the long run and keep growing by getting people to buy more expensive stuff, or will they slowly loose steam and stagnate?
>Fair enough, but Microsoft would be equally dead without Office and Azure revenue.
They were already on a bit of a shaky nail for a while when they relied only on Office and Windows, but their shift to the cloud (and resultant cuddly Embrace of Linux) has paid off well for them, so overall a smart move on their part.
Microsoft is much more diversified than that. They have entire consulting services and a world class research arm and many other things that Apple has no analog of.
Honest question: does Wall Street care? In my experience, this is the kind of thing that’s (rightly or wrongly) considered a “cost center”, not a “profit center”.
I think you're right, investors don't really value the research arm until something profitable comes out of it and then they only value that thing that came out of it and not research arm itself.
In some sense, that is the right move. For example, Intel was a market leader for decades while their research arm was very stagnant for many years too. Other times, it is short sighted not to price in what might be to come because you miss buying shares on the cheap before a huge technology/product leap.
Some people on wallstreet do. In Mckinsey's book Valuation, they make it pretty clear to the reader that companies who spend a lot on r&d tend to have outsized returns compared to their counterparts, who don't spend that much.
I'd say the whole market gives a premium to companies with R&D spend, that's part of the reason why they have higher valuation metrics (alongside growth, margins and other quant factors). That is, when they are not stupidly burning it or giving it away as stock compensation.
Ignorant question: Does much actually make it out of MS Research? I've seen lots of interesting retrospectives on stuff that either failed or just has never come out of the lab (Singularity/Midori, accessibility demos showing phones reading restaurant menus to the blind, their tablet pre-ipad, etc.) but I don't think I know of anything they made that really grew up off the top of my head.
Back in 2014 for the release of Kinect Sports Rivals, the tech to scan people and extract their body details into the right face shapes to match them with a virtual avatar. That came from MS Research Cambridge as far as I know.
There are several examples. F# came from Microsoft Research and has also fed into C#. Also, Haskell.
Note that it does research and not R&D. You aren't going to get products from research but rather technology advancements that then get incorporated. That happens a lot, and they obviously publish a lot.
Nope. Microsoft Research has some luminaries such as Leslie Lamport, Christopher Bishop, Xuedong Huang and others, but as far as actual research output that has been commercialized, there is not much to show off.
Oh yeah I didn't mean to imply the people there never produce anything that gets widely used in their whole careers, I'm specifically asking if it ever happens while they are at MS Research.
Ok, so one of those technologies potentially saves people time and levels the playing field by enabling the use of computers with less special training to achieve equivalent results.
The other one aims to strap screens to other people's faces to keep them even longer in a perpetually-online computer bubble of their own choosing, because that's been going great for society so far.
> Ok, so one of those technologies potentially saves people time and levels the playing field by enabling the use of computers with less special training to achieve equivalent results.
Did you forget allowing the sum total of human knowledge to be swamped by dogshit, because it allows for the creation of dogshit at scale more cheaply than ever before?
Once content generation has been completely commoditized the platforms relying on user submitted content will collapse under the sheer weight of AI generate trash. Part spam, part DDoS, the bad will drive out the good until we settle at some even lower equilibrium than we are at now. There will be a strong incentive to find solutions with technology and regulation to determine who the actual humans are on the internet.
> Did you forget allowing the sum total of human knowledge to be swamped by dogshit, because it allows for the creation of dogshit at scale more cheaply than ever before?
What does that even mean? When has human knowledge ever gotten "swamped" by the capability of creating newer content?
Those are some upsides of AI, there are also many potential downsides that could be very harmful to society, more so than some AR goggles. Time will tell how it all plays out.
Apple is also invested in AI, they just refuse to use the AI buzzword, and use ML instead, which is probably the more accurate term.
And potentially kills people's jobs, potentially helps spammers and phisher to start larger and better campaigns, potentially increases the amount of fake news, disinformation or just bullshit.
Microsoft has been innovating way more than Apple, which is always going for the low hanging fruit of taking tested and consolidated tech from others and rebranding it as its own.
Investors are throwing money at anyone who can spell “AI”, just like 25 years ago they thrust cash at people who could spell TCP, or who were one.
Love them or hate them, Apple isn’t playing that game (and despite their having hired Giannandrea, who was the reason Google has an AI strategy in the first place).
Apple has their own AI strategy and it includes things like Ferret and scientific papers like running inference on "low-memory" devices. I wouldn't count them out over the long run.
It seems to be rewarding Apple? They also had a similar market cap two years ago. Microsoft has seen growth in revenue and net income, Apple has not. Going back to pre-covid times the picture is similar: better financial results for Microsoft but still head-to-head with Apple in market cap.
> The main things I see lately are...Microsoft is buying up AI companies and injecting ads/spyware into their operating systems. Also Microsoft is getting big into cloud.
Thing the markets would care about, thing you are personally bothered by, thing the markets would care about. Got it.
No, the advertising and telemetry in Windows isn't a reason for the markets to value Microsoft highly.
It is irritating when people who have no idea what they’re talking about make judgmental comments like “interesting what wall st rewards”. This guy has no clue what wall st rewards. He clearly does not understand the current situation. He clearly does not follow it in depth.
If you’re going to excuse this guy making an obnoxious unfounded moral high ground claim, grant me the same courtesy for telling others not to preach about things they don’t know.
If you ever find yourself writing something like “I don’t know much about X.” Then don’t conclude your statement with an assertion about X. Go learn about X or ask questions or shut up. Your opinion contributed negative value when it’s knowingly predicated on incomplete information.
Sure! If you’re going to start with the financial value of any company, begin with their net income, growth trajectory, dividend yield, etc. Observe that none of this includes media headlines.
After that, you can start to try and figure how where most of the money comes from. For Apple this is the iPhone hardware sales and the App Store tax. For Microsoft it’s split roughly evenly across cloud, business processes and PCs. Cloud is the biggest.
These are the basic fundamental facts that begin to describe why Microsoft may or may not be valued. I don’t care or have an opinion on it. But I’m irritated by some guy saying he heard four media headlines ergo shame on wall st. for trading based on those four headlines. Like shut the fuck up man. That’s such a stupid claim. And look how many people have been suckered into responding to this garbage.
I disagree with the original commenter, I think the switch is because of the EUs crackdown on apples monopoly like practices(among other reasons). However your comment in response is not better than his original. Who are you to decide who can hold a moral judgement. You give no better argument to hear out your opinion over the originals.
The problem is not holding a moral judgment. The problem is asserting that wall st behaves according to the four media headlines that he read; and then encouraging people to pass a moral judgment on them on that premise. His premise is stupid and basically acknowledged by the poster as underinformed.
If you think that a company's market capitalization isn't high enough, you can always buy its stock. Conversely, if you think it's too high, you can always short it. Not financial advice.
Microsoft's recent stock gains are obviously due to AI hype and the expected returns from it, but does the company actually have obvious lines of revenue from AI to that degree? Looking at the numbers investors are expecting them to make more from LLMs than they do from products like Windows and Office.
Microsoft’s biggest lines of business support knowledge work (Windows, email, Office, MS365, etc) and AI is looking it will provide a nice productivity bump to knowledge workers.
Even just building AI into existing products could help justify price increases, offset on the customer side by higher productivity.
In plain English: AI means companies will need fewer knowledge workers per unit revenue and MS will have a strong claim on some of those additional profits if they are supplying the AI (even if they are reselling OpenAI).
But that makes it somewhat entertaining :-) Have you ever heard of the German sports club "Bayern Munich" ("FC Bayern")? They've won all national titles since 2013! _That_ is boring.
I'm no investor or financial analyst, but it appears to me that Microsoft have a diverse range of revenue (that don't necessarily depend on each other) with pretty good lock-in with their products (not easy switching away from M365 once you've gone all-in with it). Apple on the other hand still have most of their revenue coming from iPhones with the next biggest coming from services which stems mostly from the iPhone sales. There's some lock-in with the iPhone, especially in the US, but it's pretty easy to switch from iPhone to Android and still have access to the same apps and services (apart from the Apple-specific iMessage/FaceTime). I don't know how much this affects stock prices, but it does seem like if you're investing in Apple, you're investing in the success of the iPhone. Obviously that's been a safe bet over the last 10 years, but nothing lasts forever.
This is probably the bingo statement. Everyone has seen the layoff's recently. Markets are expected to take a turn for the worse. In such a situation, a highly diversified company would be perceived as more valuable than a high-end consumer brand.
Yeah, but that would still have been a poor investment strategy. You have to manage the risk. And you can only do that by looking forward, not backward.
Do you really think that it would be a good fit? Apple is mostly a hardware company, although this hardware obviously needs some software and a part of it runs in the cloud these days. But at least my impression is that they are not really in the B2B market with professional services.
To enter the cloud market they are pretty late to the game ...
Sad. Microsoft, after advancing the state of consumer-oriented computing more than anyone else through the '90s, is now a despicable anti-customer troll.
Nothing epitomizes that more than the reduction of all users to a goddamned "Microsoft account" that nobody wants. You can't use or even install Windows now unless you do so as a "Microsoft account," lest you be hounded day and night to log in, log IN, LOG IN WITH YOUR "MICROSOFT ACCOUNT!!!!"
Office365 is subscription trash with hopelessly inept UI. Windows itself is a depressing shitshow of UI defects and... I was going to say half-baked... but in reality NO ideas.
I was a professional developer on Windows from the days of separate 16- and 32-bit versions of Visual C++, eventually leading what was (according to Microsoft, as far as they knew) the largest Visual C++ project of the early/mid-'90s. You could have called me an evangelist for most of their products. I continued using Visual Studio until the mid-2000s, even while working at Apple.
Today I don't have a single installation of Windows running in my home (which is also my business). I'm a pilot, and I want to use MS Flight Simulator, but not even that is enough to get me to buy an Intel box and tolerate the disgusting abuse that is being a Microsoft Windows user. There's simply no excuse for the execrable state of Windows, Microsoft's other product offerings, and the way they treat users. Fuck Microsoft.
Microsoft was never consumer-oriented, it was always a B2B/Enterprise-catering firm. They only tolerate retail customers because they don't want us getting used to something else.
Apple just needs to do SOMETHING exciting with AI. Vision Pro looks great, but it's only a small piece of a much larger puzzle. I'm not sure if they're just too big to move at the speed they need to move or if it's something more damning about their internal culture but they need to do something in this space faster than I think most people realize.
Apple is rarely first to release new tech. They watch and develop quietly in the lab, then release an implementation that everyone else seems to copy.
So far their approach has been different, but their last keynote mentioned ML countless times. We can only assume they have more in the pipeline, and it will run locally on-device, which seems preferable to all the data collection being done with most companies working on AI.
That's true, and Apple has the capital to do pretty much whatever they want. I just think as we've seen with Google/Gemini it doesn't seem that easy to beat what OpenAI has going even with a lot of money to throw behind it. And I don't think Tim Cook is that much of a visionary but that's just my personal opinion.
I hope Apple does succeed though because I love their hardware and their silicon is great for AI applications.
They don’t need to beat OpenAI if they plan to play a different game.
The biggest question mark, like you mention, is how innovative can Apple be under Tim Cook? Are there systems and people in place to serve as those visionaries when the CEO is an operator at heart? I often wonder how much of what we’ve seen was in the pipeline when Jobs was still around, or is simply taken from what is popular in the moment vs having a vision for the future.
That's sarcasm, right? Surely you're not lauding this asinine peripheral that is supposed to be jammed into a fragile port to recharge while sticking out like a chopstick waiting to be snapped off.
Surely you're not lauding a near-useless gimmick that inexplicably doesn't work on the (defectively) giant trackpads of Apple's own computers... or most of their iPads.
Im referring to the 2nd gen, never really saw the first gen until now but the charging method now is quite nice.
First gen still is no worse than first-gen Magic Mouse, which launched under jobs though. Which is my main point, I don’t think Jobs was solely responsible for apple’s focus on design
> Near-useless gimmick
Man, millions of procreate enthusiasts would beg to disagree
> doesn’t work on the giant trackpads
Does anyone who stops to think about this for more than 2 seconds actually want this? What would you use it for besides digital signatures? Writing-to-text is just barely usable on tablets, I can’t see it being viable when you can’t see what you’re writing.
>First gen still is no worse than first-gen Magic Mouse, which launched under jobs though. Which is my main point, I don’t think Jobs was solely responsible for apple’s focus on design
The first-gen Magic Mouse used AA batteries and did not have the charging issue of the current Magic Mouse. The second-gen Magic Mouse, with an internal battery and the horribly designed charging port, was released in 2015, 4 years after Jobs died.
Jobs was largely responsible for Apple's obsessive focus on design, even if he didn't design everything himself. He positioned Jony Ive to be #2 at the top of the company, no other company (other than maybe a strict design firm) is going to have a design person be 2nd in command after the CEO. He also famously reviewed each thing that was going out the door and it had to meet his standard of design. This goes far back, here is a story from when they were designing the original Macintosh, they handed the design to Jobs, because he kept rejecting all their designs.
Of course there were misses under Jobs well, no one is perfect. The mouse the shipped with the G3 iMac, while it may have looked good in a press photo, was not great to use. That said, I have a hard time believing Jobs would have let the changing of the first Apple Pencil or the second-gen Magic Mouse out the door. They are so awkward. Even the newest pencil, plugging it in with a cord is weird compared the elegance of the second-gen Pencil.
Jony Ive presided over the worst usefulness/usability regressions and design blunders in the history of Apple. That guy is a pompous hack who, in the end, had no ideas for the advancement of products. His only M.O. was to take functionality away, with the excuse of making whatever the product was "thinner."
For sure, the "Magic" mouse is another Apple entry in the Hall of Peripheral Shame.
"Does anyone who stops to think about this for more than 2 seconds actually want this?"
Really? Have you ever heard of Wacom? They built an entire company on people who want this, and it has been in business for decades. And of course you can see what you're writing, right there on the screen! The surface area of current Apple laptop trackpads is 33% larger than that of a Wacom Intuos tablet: https://i.imgur.com/D8pmsTC.jpeg
It has nothing to do with handwriting recognition, either. That's another area where Apple failed spectacularly to make the Pencil useful. All they had to do is add a single-character writing area to the standard keyboard on the iPad, as was nailed in the '90s by Palm. That way, ALL applications would have immediately have gotten handwriting-entry capability. Instead, Apple left it up to every application developer to implement it separately. Baffling.
Wacom is a totally separate device from a laptop, and can be positioned so that you can comfortably write/draw while looking straight on at your screen.
It's woefully impractical for a laptop, specifically because it CAN'T be flexibly positioned where many people would want it. Plus, you'd have to lug an additional and cumbersome device around with you, occupy a USB port with it, and deal with a wire.
All of that makes the trackpad a much better option.
I'm just waiting for Siri to reliably set timers when I'm cooking. Between my watch and my phone, it's a damn nightmare to actually do the most basic thing with what should be a ubiquitous AI platform. They've had ages to make it better and some great minds in their employ, and yet they've really not done much. That said, if and when they do, they have immediate distribution and proof points to sell oodles more of their AI-enabled products and wearables...
Funny you raise that, as this is one of the very few tasks that Siri does do reliably for me :)
(Along with just-about-good-enough speech-to-text, if I speak clearly, and checking on the weather outside.)
--
But yes, totally agree with your underlying point about the huge opportunity that Apple is leaving on the table with their lackluster approach to Siri.
Well, when I’m doing something and I need a timer, especially cooking and my hands are occupied or dirty, rummaging for a timer to manually set makes no sense when I should have a voice assistant on my wrist/in earshot.
They do lots of things with AI, it’s just that most of it is transparent to the user. Voice recognition, OCR, image classification, recommendation algorithms, FaceID etc. It’s all baked into the hardware or some other service.
Apple is also mostly a consumer oriented business. I can’t see them selling AI as a stand alone service.
And that's before AI really took off + their attempts to enter search and ad business + before they have started producing their own ARM chips enmasse.
They put themselves in the best position to capitalize on AI especially in the enterprise but also by integrating Copilot into Windows. With so many companies already trusting their confidential data to MS, it's easy to justifying using their/OpenAI tech through Azure.
CPU architectures are irrelevant to Microsoft at this point.
Microsoft is also starting to develop their own chips and are expanding more into ARM. They can't just "abandon" x86/64 like people think they can, it's not realistic. If they ever do it will be almost 20 years from now unless ARM just gets -that- far ahead that they have no choice.
Relevant for who? Influencers that have to have MacBook because otherwise they cannot show off their “wealth”.
MS was doing relevant stuff for corporations like banks, insurance companies, public services. That is where real money is Apple doesn’t have any of it.
Their revenue sources are more diverse than you think. Products that are either directlyfrom their portfolio, or from a company they have a large stake in
- Windows
- Office 365, which includes Teams, a product that has boomed in usage since 2020
- Xbox + Activision Blizzard
- Azure Cloud, the 2nd largest cloud computing platform
- Github, by far the largest version control platform for developers
- Linkedin, quickly becoming one of the largest platforms for hiring
Microsoft relies on independent hardware vendors selling Windows PCs, so they can't just go and build their own CPU like Apple can. They partnered with Qualcomm, but Qualcomm underdelivered.
Because they picked a CEO with a background in the very products the company is making. Often companies this size pick a professional bean-counter to man the helm, with predictable results
Interesting to see what Wall Street rewards.