Microsoft returns to the top of the tech world

WASHINGTON: Microsoft is back at the top of the technology world following an extraordinary comeback to close the gap with Apple, some three years into a transformation of the onetime leader by chief executive Satya Nadella.

Microsoft regained its title as the world’s most valuable company when it closed on Friday at a higher market value than Apple for the first time since 2010, after a brief move ahead of the iPhone maker earlier in the week.

At Friday’s close, Microsoft’s market capitalisation was US$851.2bil (RM3.55 trillion), having tripled in value since Nadella took over in early 2014.

Apple’s valuation stood at US$847.4bil (RM3.54 trillion), having dropped some 20% in the past eight weeks. Not far behind were Amazon at US$826bil (RM3.45 trillion) and Google parent Alphabet at US$763bil (RM3.1 trillion).

In the 1990s, Microsoft held the crown as the top tech firm and most valuable company as it powered the revolution in personal computers with its Windows operating system.

But in recent years, it appeared headed to obscurity after spectacular failures in mobile computing, while Apple, Google and Amazon saw their fortunes rise.

Analysts say patience, diversification and the willingness to jettison failing ventures helped fuel Microsoft’s surge.

“Microsoft is firing on all cylinders right now,” said Jack Gold, a technology analyst with J. Gold Associates.

“Nadella has been doing a fantastic job in leading them away from dead-end areas and being more innovative.”

Microsoft still draws considerable revenue from Windows, the software that powers the vast majority of PCs.

But it has leveraged its position to bring business customers to its cloud computing platform Azure, and has developed a steadier revenue stream from its Office software suite for both consumers and enterprises.

“Azure has been really big for Microsoft,” Gold said.

For companies already using Microsoft systems for PCs and serv- ers, “it’s easy for them to stick with Microsoft, and that’s the advantage for Microsoft”.

Microsoft has become far less dependent on a single product than in the past, with strong growth from its cloud services and revenues from its Xbox gaming business, Bing search, Surface tablets and PCs, as well as the professional social network LinkedIn acquired in 2016.

It won a US$480mil (RM2 trillion) contract with the US Army last month to supply HoloLens devices that will help troops train using augmented and virtual reality.

It is also competing with Amazon and others for a multibillion-dollar contract for Pentagon cloud services.