Apple is bigger than Microsoft

Every once in awhile it's good to stick your head up above the stratosphere, and take a look at the industry from a 50,000 foot perspective. It sort of clears the air, and gives you a different perspective. To do this I decided to take a look at the most talked about technology companies by way of their FY2010 fiscal reports.

The list may surprise you, first who's the biggest in terms of Total Revenue.

Biggest IT Companies by Total Revenue
Rank Company Total Revenue in Billions
1 HP 126.033
2 Verizon 107.808
3 IBM 99.870
4 Apple 65.225
5 Microsoft 62.484
6 Dell 52.902
7 Cisco 40.040
8 Google 29.321
9 Oracle 26.820
10 Adobe 03.396

Next let's take a look at profits, the money left over after the companies pay their employees and all their expenses. A slightly different order emerges and something we can talk a little more about.

Most Profitable Companies by Gross Profit
Rank Company Gross Profit in Billions Profits as a % of Revenue
1 Verizon 63.509 59%
2 IBM 46.014 46%
3 HP 29.944 24%
4 Cisco 25.643 64%
5 Oracle 21.056 79%
6 Google 18.904 64%
7 Microsoft 18.760 30%
8 Apple 14.010 21%
9 Dell 09.261 18%

In talking about the Gross Profits,Verizon and IBM now are almost entirely service oriented businesses, so they should be more profitable then businesses that also sell hardware. Verizon spent a lot of money putting in their FIOS optical network together. Now that its built, they can sit back and take in the money with very little expenses.

The percent of profits compared to total revenue is a more interesting number. You could say that companies with a high profit margin are either mostly service oriented, as opossed to hardware companies, or there just gouging their customers. Which are the best businesses for profit margin?

Oracle is unbelievable. Oracle has always been service oriented supporting their database products. They have basically the same software database product since the late 1970's. Their pricing model is one of leasing their software at high rates, and charging high for services. They have very little overhead, but a 79% profit is really gouging in my mind.

Google gets its revenue from advertising. Google should have high margins, their revenue comes from ads, and there is very little overhead. Yes, they had to build their distributed search network, to support their search engine, but that's pretty much built now and everything else is profit.

Cisco, the folks that make the hardware that powers the Internet, are more and more service oriented as folks need technical support to make sure their servers are configured properly and secured. Cisco provides services, but they also provide hardware, which should make for lower profit margins. Their profit margin is high, because they charge high prices, and they can, because they almost have a monopoly in their industry.

Microsoft sells more software than hardware thus their profit percent is higher than Apples which gets a lot of their revenues from hardware.

HP has been known to charge more than their competitors for their hardware products and their profits show it.

Poor Dell, just builds computers, so their profit margins are slim.

Who's growing the fastest? This table shows the percent increase or decrease in total revenue from the previous FY2009 year.

The Fastest Growing Companies
Company Percent
Apple +52%
Google +24%
Oracle +15%
Cisco +11%
Verizon +11%
HP +10%
Microsoft +07%
IBM +04%
Dell -13%

Which brings me to the title of this article. Has Apple passed Microsoft? This would have been thought impossible a couple of years ago.

Let's make a comparison table, and I'm going to include Google, who may be the next 700lb gorilla to step forward, you be the judge.

Apple versus Microsoft and Google
Category Apple Microsoft Google
Total Revenue 65.225B 62.484B 29.321B
Revenue Growth 52% 7% 24%
Profits 14.01B 18.76B 18.904B
Assets 75.18B 86.113B 57.871B
Total Equity 47.79B 46.175B 46.241B
Employees 49,400 93,000 24,400

It looks to me, in terms of Total Revenue, that Apple is now bigger than Microsoft, and growing much faster, with less mouths to feed. By the way, Apple just announced the new IPad2, which is better technology at the same price. Microsoft announced a new embedded CE software release, you get the idea. Microsoft is a old gorilla gradually getting white hair and dying under its own weight. Google has a "truck" to catch both Apple, and Microsoft, but they are sapping Microsoft's Internet revenues, and that certainly also is in Apple's favor.

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