New Straits Times

MICROSOFT BACK IN THE LEAD

US giant’s market capitalisa­tion was US$851.2b on Friday compared with Apple’s US$847.4b

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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 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, after a brief move ahead of the iPhone maker earlier in the week.

On Friday, Microsoft’s market capitalisa­tion was US$851.2 billion, having tripled in value since Nadella took over in early 2014.

Apple’s valuation stood at US$847.4 billion, having dropped some 20 per cent in the past eight weeks. Not far behind were Amazon (US$826 billion) and Alphabet (US$763 billion).

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 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, 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 known as Azure, and has developed a steadier revenue stream from its Office software suite for both consumers and enterprise­s.

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.

The diversifie­d revenue stream is in contrast with Apple, which still relies on iPhone sales for the majority of revenue and profit.

“Microsoft is pretty well-balanced across a number of different categories,” said Bob O’Donnell of TECHnalysi­s Research.

Microsoft’s emphasis on business services makes the company less visible to consumers, but “it means they are not subject to the whims of tech fashion, and their revenue base is more solid and more stable”, he said.

A big part of Microsoft’s transforma­tion came when it decided to throw in the towel on its Windows mobile phone business after failing to get a foothold in the sector.

“I think Nadella exercised extraordin­arily good judgment,” said Roger Kay, a consultant and analyst at Endpoint Technologi­es Associates.

“He ceded the consumer business to Apple and focused on the corporate sector and the cloud.”

Microsoft’s failures in mobile may have actually helped it by forcing the company to work with rival operating systems, analysts say.

Apple, meanwhile, has largely required its own devices for its services, a strategy which Gold called “troubling”.

“That’s the same path Microsoft went down a decade ago,” he said. “Apple is going to have to change that.”

 ?? BLOOMBERG PIC ?? Microsoft Corp has leveraged its position to bring customers to its Azure cloud computing platform and has developed a steadier revenue stream from its Office software suite.
BLOOMBERG PIC Microsoft Corp has leveraged its position to bring customers to its Azure cloud computing platform and has developed a steadier revenue stream from its Office software suite.

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