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Microsoft has claimed the title of the most valuable Apple technology company this week – at least briefly – and the change in the ranking says a lot about the direction companies take and their direction.
At present, investors seem to have much more confidence in Satya Nadella than in Tim Cook.
And probably for a good reason. Under Nadella, Microsoft has found his next act. He made a big bold gamble on the cloud, and that pays off.
Meanwhile, at Apple, Cook has left shareholders wondering what kind of act the company has after the iPhone – if any.
Concerns about Apple have been particularly keen since the beginning of this month, when it announced its latest results. Although the company's revenues and profits have outpaced Wall Street's predictions, the number of iPhones sold has been lower than expected and the outlook is rather disappointing for the holiday quarter. Even worse, he announced that he would soon stop reporting the number of iPhones and other devices sold each quarter, leaving a lot of concern that these sales will start to decline sharply. Since then, these fears have become more pronounced.
The potential for a decline in iPhone sales is of great concern to investors because Apple is essentially a telephone company. The iPhone accounts for more than 60% of its sales figure for years. Like the iPhone, Apple is going.
Apple worked well under Cook, but he's not a product guy
Cook may be a bit confused by the seemingly sudden loss of confidence in his leadership. After all, Apple has been extraordinarily successful since it took over from Steve Jobs seven years ago. During this period, Apple's revenues and profits more than doubled. The company gave hundreds of billions of dollars to shareholders in the form of share buybacks and dividends. It has become the most valuable and profitable company in the world and, at its peak, has a market capitalization of over $ 1 trillion.
But in reality, concerns about Cook have been around for a long time. Apple is a product producer, but Cook, as his job says to his biographer shortly before his death, says Jobs to Job, "is not a person product product." He's great at operations He turned out to be a good manager, but he is not a visionary of the product.
It's not that Cook has not tried it. In fact, he has repeatedly tried to expand Apple's business with new products. For years, he pushed the iPads as Apple's next big product line. Apple has launched the Apple Watch on its watch. The company has made significant investments in the areas of automotive, television, augmented reality and streaming media under its management.
But none of this has paid off – or at least nothing has been powerful enough to make Apple significantly less dependent on the iPhone. After a first boom, iPad sales then declined and stagnated. The Apple Watch has been at best a minor success. Apple TV has never been more than a "hobby" self-proclaimed by the company.
And failures and disappointments continue to accumulate. Apple Music is ranked second in the world behind Spotify. The series of streaming videos that the company has published so far has been largely swept away and rumors that Apple would try to remake the world of television have never materialized. And who knows if or when we'll ever see an Apple model car?
Cook says the next act of Apple is in services
Despite all this, Apple stocks have resisted because the iPhone is still a cash machine and the company has found ways to sell fruit juice several times, whether by recruiting new partners operators, Oversize the device or the price But these are commercial and commercial innovations, not products. And now that Apple seems to lack such tricks, Cook's product flaws are back in the spotlight.
The response of the company as a result is that it becomes a society of "services". He is increasingly able to convince customers who own his phones and other products to subscribe to services such as Apple Music, iCloud storage or AppleCare warranty coverage. Next year, many badysts expect that Apple will launch a streaming video service and eventually bundle it with some of its other offers as part of a monthly subscription.
Until now, Apple's success in turning into a service company has been limited. During the past year, approximately 14% of its revenues were generated by services. That was a 13% rise the previous year and 11% in 2016. There is not enough to go on forever, but it's not really a metamorphosis d & # 39; company.
And the company's service efforts could prove difficult if its phone sales began to fall. Fewer device users would likely mean fewer customers for warranties and other services.
Nadella showed that he was a visionary
That Apple is in this position at this moment is somewhat ironic. The last time Microsoft and he had contested the title of the most valuable technology company – in 2010 – was Microsoft, whose future investors were being questioned.
At the time, with Steve Ballmer as CEO, Microsoft was big, blundering and slow. Like Apple and iPhones under Cook, Ballmer's Microsoft dominated one sector – the personal computers sector – but repeatedly failed in the development of new business areas and lacked major trends.
But then came Nadella. In a sense, it was for Microsoft what Jobs was for Apple. He transformed the company and not only gave directions, he gave him a new law.
Nadella, who took over in 2014, focused on the cloud and has worked hard, even ruthlessly, to focus Microsoft's efforts in this area. He upset the management, organization and product lines of the company to redirect Microsoft to this opportunity.
Read it: Microsoft's cloud transformation is expected to be the next one-trillion dollar company
And it paid off – a lot of time. In Microsoft's last fiscal year, 23% of its total revenue came from cloud products and services. It was up 3% four years ago. This is what a fast transformation can look like.
Microsoft's Azure cloud service has proven to be a formidable rival to Amazon Web Services and is growing twice as fast. Meanwhile, he is becoming a leading player on another segment of the cloud market, that of cloud-based application hosting.
Investors are betting that there is more to come. Microsoft now has about the same value – and sometimes even higher – than Apple, while its turnover for its last fiscal year was less than half of that of the iPhone makers and that his profit was less than a third.
This is a good indication of investor confidence in Nadella and their enthusiasm for Microsoft's future. This is also a sure sign that they think that under Cook, the best days of Apple could be behind.
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