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As you read this, Microsoft is fighting with Apple for the title of the world's most valuable technology company – something that has not happened since 2010, when the Zune was still a thing. The two are roughly shoulder to shoulder, each worth about $ 850 billion, plus or minus a few billion dollars, and outdoing each other at different times this week.
It's easy to blame this turn of events for a stalled Apple, as the signs of weakening demand for the iPhone continue to accumulate, hurting the company. 39, Tech Titan action. But, even if this reversal of situation can be attributed to the difficulties of Apple, we must not forget that it is also due in large part to the renewed strength of Microsoft.
In short, one begins to get the impression that Microsoft's slow but steady growth in "boring" business software and services seems more appealing to Wall Street than Apple's reliance on the consumer market at once. bady and gigantic.
When Satya Nadella took the reins of the CEO nearly five years ago, he quickly called for: Microsoft would stop spending a lot of money after ending dead ends like Windows on smartphones, and start to focus on fast-growing companies like Microsoft. Azure Cloud and the Office 365 subscription service.
And, frankly, the tracking has been a little boring for anyone who does not get rich because the Microsoft stock continues to reach unprecedented highs. Analysts expect Microsoft to grow strongly in the cloud – and quarter on quarter, Microsoft delivers on its promise. In total, Microsoft achieved a business turnover of $ 114 million for fiscal 2018, up 14% over the previous year, including $ 23 billion from its various business operations. cloud.
This is not as exciting as launching a new iPhone; Customers are not lining up to try new artificial intelligence services for the Microsoft Azure cloud, nor to place pre-orders for its super-secure version of Linux for connected gadgets.
Yet there is a strong demand. Enterprises, large and small, are turning to cloud platforms, such as Azure, to reduce their dependency on their own servers and data centers, which has the dual benefit of reducing costs while enabling them to to modernize. These buyers are deeply pocketed and ready to commit to long-term contracts that keep Microsoft in the dark for the long term.
In addition, this model allows Microsoft to stay away from several trends opposed to Apple. There is no seasonality in the cloud. Multinational companies are not much more likely to buy Office in the holiday quarter than in the summer. In addition, Apple is under threat from the Trump administration to impose a tariff as high as 10% on the iPhone. Microsoft's main products, offered via the Internet, are not subject to the same thing.
Oh, of course, Microsoft still has a strong consumer brand, especially with the Windows operating system, the Xbox video game consoles and its Surface hardware line. Some of these products, especially Surface laptops, go against Apple. The difference, however, is that for Microsoft, these initiatives are often lucrative and strategically important secondary businesses; for Apple, the sale of devices (and services like iCloud and Apple Music goes hand in hand) is the complete game.
In the end, however, Microsoft's continued success under Nadella is a reflection of the motto of the famous Y Combinator startup program: Create what people want. In this case, the people who want it are the big spenders of big companies, not the types of super-fans who buy a new phone on launch day every year. In addition, Microsoft is not subject to the same type of regulatory review as Google or Facebook.
Thus, if it is quite possible that Apple regains its balance, launches a new iPhone to success and become a $ 1 trillion company, do not doubt that Microsoft has made an extraordinary recovery momentum that will most likely continue to grow. One is not necessarily better than the other, but they are very strong and do not exclude at all.
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