Money Made by Apple Since 1985

http://royal.pingdom.com/2010/04/09/the-money-made-by-microsoft-apple-and-google-1985-until-today/

Okay, there's is Microsoft and Google too, but it's interesting to see that only 17.8% of Apples revenue for 2009 is profit, even with their "over priced" products, while MS is 27.7% and 27.6% for Google. Also, if you look up to 1995 Apple use to lead MS in revenue, Yes Apple was bigger then MS at one point, to bad they had some bad people running Apple, then when Job's came back in 1997 you see revenue and profits start to level out and and rise. It's safe to say, if Jobs was never brought back, Apple wouldn't been around today.

 

Microsoft could be better if they didn't waste money on things they don't need to do. Their operating margins on their core product Windows and Office are unbelievable.

 

The small profit margin is probably why Apple is moving its "hard" products into platforms to sell the more profitable applications, music and software.

 

Software companies always have far higher margins. That's the reason why MSFT never vertically integrated and started selling all their own products except when it made sense.

Revenue isn't a perfect indicator of scale for AAPL in '95 since back then they were losing money while MSFT was getting anti-trust legislation and still making all of its employees multi-millionaires. Technically Dell still has more revenue than Apple which is the nearest pure play computer manufacturer competitor but has low single digit margins. HP's bigger but they have a ton of their revenue coming from services, printers, and consulting.

Before you claim AAPL has superior hardware etc, remember they're all built in the same contract manufacturer factories from commodity components they can all buy in bulk. Sure Apple has some pretty good industrial designers but they're not building anything in house. Macs generally fall in prosumer market segment w/ prices probably nearing the 2k mark which is in Dell Latitude/HP Elitebook/Lenovo Thinkpad pricing. Dell had more models of netbooks available than Apple has laptops models in total and the consumer market is small potatoes for Dell which makes most of its money in the corporate market. Sure Dell consumer products are lacking but people seem to forget they can upgrade every year and still get more price/performance than a 2-3 yr cycle on Macbook and many people do. On the business side, AAPL doesn't have much if any durability advantage and doesn't come close to offering the level of support of Dell/HP where they have people on-site next business day.

Since Google technically doesn't sell box software or do any kind of customer installation, they're really in the services market which can be ridiculously profitable. They're almost in line w/ something like Visa since once you get enough scale to pay for the infrastructure, each additional customer is virtually free.

After all of that...the gist you should be getting is that AAPL has very overpriced hardware b/c as a hardware company they are selling commodity products at a huge profit. As a software company, they are still doing very well b/c they are still shipping boxes of physical product which is very expensive to do. Another thing you should consider is given how AAPL is known as such a master of innovation, they spend almost nothing on R&D at 3% compared to GOOG's 12% and MSFT's 15.4%. Sure Dell spends significantly less but they aren't building their own OS or trying to reinvent the wheel. MSFT spends over 9B/yr on R&D compared to AAPL's 1.3B which is a number bigger than even Intel's 6B. They may need evaluate the effectiveness of this kind of spending but MSFT certainly isn't skimping on the re-investment.

So in summary...buy AAPL stock. Profit and buy an HP Envy w/ their fat margins.