Apple's global bite now bigger than old foe Microsoft's

Published on Thursday 27 May 2010 21:26

FOR decades it has been the underdog in the world of computing, winning a loyal fanbase for its beautifully designed products but lagging behind its arch-rival in terms of cold, hard cash.

But Apple's share price has shot up thanks to the global success of the iPod, allowing it to pip Microsoft for the coveted status of the world's largest technology company.

On the eve of the British launch of its eagerly anticipated iPad device, the California firm has been valued at $222 billion (154bn), eclipsing the market capitalisation of Microsoft at $219bn (151bn).

Having almost gone out of business in the 1990s, the verdict from the trading floors represents a remarkable turnaround for the company headed by Steve Jobs, which has enjoyed continued growth in recent years thanks to the likes of the iPod and iPhone.

Technology experts said the announcement marked a "milestone" in Apple's history. The valuation means it is behind only energy giant ExxonMobil – worth $282bn (195bn) – in the list of the world's biggest companies.

Only ten years ago, Apple was worth 11bn, compared to Microsoft's valuation of 382bn. Yet in the past five years, the former's stock has risen by 550 per cent, whereas the latter has seen an increase of just four.

Having struggled to compete with Microsoft in the home computer market, Apple has come into its own over the past decade. From the launch of the first iPod in 2001, it has concentrated on stylish, easy-to-use products that appeal to wide demographics.

Highlighting the difference between the perception of the two companies, Simon Myers, managing director of brand consultancy Figtree, said: "Apple are more closely associated with pleasure, play, leisure and creativity – all the things that we like doing. Unfortunately for Microsoft, they are associated with office cubicles and work."

However, Dylan Tweney, a technology expert with Wired.co.uk, warned that the market capitalisation – calculated by multiplying the number of shares in a company by the current share price – is in part due to expectations for Apple's performance, rather than its existing revenue stream, which remains less than that of Microsoft.

Nonetheless, he said yesterday's announcement marked a "significant milestone" for Apple, a firm that "looked like a has-been just a decade ago".

He said: "Apple made serious missteps in the 1990s that relegated it to a tiny niche of the overall computer market. What the commentators didn't count on was the string of hits Apple would deliver over the next ten years."

Asked yesterday whether he was concerned by Apple usurping his company in terms of value, Steve Ballmer, Microsoft's chief executive, said the firm would continue to follow a long-term strategy: "It's a long game, we have good competitors… we too are a very good competitor."