There have been some interesting trends in the consumer technology companies in the recent years, most popularly between Microsoft and Apple.Although on the surface, it might seem that we are comparing apples to oranges, but the fact is that, Apple has rapidly destroyed Microsoft as a consumer Technology Company. Recently, Microsoft reported a profit of $6.37 billion for the first quarter as against Apple, who made a profit of $13 billion. Five years ago, the scenario was totally different, with Microsoft’s profit being $6.58 billion and Apple’s profit was $1 billion for the same quarter.
Microsoft is slowly becoming an enterprise company. The Windows division, of Microsoft has not been growing as significantly as it should and most of the revenue is driven by the Business and Servers and Tools division of Microsoft, which is the enterprise side of the business.
Windows 8 is going to be launched by the end of 2012, and we might see some jump in the numbers due to that. But as per the industry analyst’s, the jump is likely to be short-lived. Microsoft saw a huge revenue (and profit) spike when Windows 7 was released, then it immediately dropped and plateaued. It was back to the revenue grind and the profit stagnation.Windows 8 could be better for the company, or it could be worse. The world is drastically different than it was even just three years ago. The IPad is taking over the market. While Microsoft is going all-in on their tablet strategy with Windows 8, with no indication if this would work. If it doesn’t, that could significantly hurt Microsoft.
Another key difference over the past five years is, of course, the iPhone. Five years ago, no consumer had one. Microsoft controlled nearly 35 percent of the U.S. smartphone market. It was going to be a huge business for them. Today, that percentage stands at roughly 5. And even with Windows Phone, it’s shrinking.
The world is quickly changing. If you just look at the past five years of what Apple has done versus what Microsoft has done, it’s not hard to imagine Microsoft’s business being completely dominated by the enterprise side of the equation in another five years. That will still make for a great business, but it’s not the Microsoft that many of us have known.