Apples to Apples to Ice Cream Trucks: The Current Numeric Verdict is In

Tuesday, August 21, 2012 at 10am
By John Friedman

Much has been made this week of Apple becoming the most valuable company in history (as long as you ignore inflation).

One comparo really caught me eye, though, which is this pull-quote, which had lain entombed within a New Yorker-length article in Vanity Fair until Forbes was kind enough to pull out this pull-quote and publish it in a way that got noticed in our twitchy Twittery world (of which I am now part):

One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. . . . In the quarter ended March 31, 2012, iPhone had sales of $22.7 billion; Microsoft Corporation, $17.4 billion.

That is a remarkable thing. If there’s one thing that Microsoft has always been it’s a revenue pump. Why, they even used to get paid for *not* selling stuff! That’s right: MSFT was so dominant in the 80s and up until Netscape came onto the scene in the mid-90s that computer vendors used to have to pay it a per-computer-out-the-door fee regardless of whether a given computer going out the door had any MSFT software on it (there’s lots of text at the end of that link: search for the word “regardless” to see the relevant portion).

Now that’s a great business model. The Mafia looks on with admiration.

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So when I saw the headline for Timothy Worstall’s Forbes article, trumpeting that Apple’s iPhone Is Now Worth More than All of Microsoft, I wondered, “And what do you mean by worth, Tim,” which, fortunately for all involved, is exactly the topic Tim addresses in the article.

I won’t got into that here. Suffice to say that there are many different ways to determine worth, many of which involve judgment calls and market opinions, but one of which is about as close to objective as it can be, and that is revenues — plain ol’, pure and simple Money-In-the-Door. Anyone who has ever run a business has a deep, visceral feel for what Money-In-the-Door is all about, and how it differs, starkly and brutally, from No-Money-In-the-Door.

So revs, as we wonkies like to call them, are a great way to compare — at least as a starting point — two businesses.

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As highlighted in that Vanity Fair article mentioned above, the bottom line on revs, viewed through the lens of an easy-to-glom-onto, downright Reagan-esque sort of imagery, is this: the iPhone Alone woops all of Microsoft The Whole Dern Thing. Here’s the complete pull-quote:

Today the iPhone brings in more revenue than the entirety of Microsoft.

No, really.

One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. More than Windows, Office, Xbox, Bing, Windows Phone, and every other product that Microsoft has created since 1975. In the quarter ended March 31, 2012, iPhone had sales of $22.7 billion; Microsoft Corporation, $17.4 billion.

 

Nicely said Kurt Eichenwald; nicely imaged.

Now please do note well that we’re talking quarters, here. So annual sales of iPhones are in the $90 billion range. Note also that we’re not talking anything like a close call here; annual MSFT sales are in the $70 billion range (for ease of calculation and reference, I’m simply annualizing the quarterly numbs).

I’ve said it before and I’ll no doubt say it again: given that the iPhone, alone, has bigger revs than all of Mr. Softee, one really has to marvel at what Steve Jobs hath wrought.

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If you’re interested in these things, please do read Kurt Eichenwald’s article; you can also see a good interview on Charlie Rose.

Warning: this interview and the Vanity Fair article are not appropriate fair for those who have a soft spot in their hearts for Mr. Softee.

 

625 Words

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