Microsoft is now the world’s most valuable company

Microsoft’s current market cap has overtaken Apple’s, after living for nearly a decade in the shadow of the Cupertino company.

At the time of writing Microsoft’s intra-day Market Cap is now 751.88B, higher than competing company Apple Inc. which is now 749.75B, by more than 2 billion dollars.

Amazon (currently 741.90B) and Apple were dubbed the world’s most valuable tech companies by Market Cap earlier this year as they crossed the $1 trillion mark. With Microsoft now overshadowing all three, including Alphabet Inc, the firm now looks to be the most valuable tech company…

Investors are concerned about slowing revenue growth at the so-called FANG companies (Facebook, Apple, Netflix and Google), a club of high flyers Microsoft has traditionally been excluded from.

Now they are betting company spending on cloud services and software will remain strong as companies strive to increase efficiency and productivity, while Facebook and Google are increasingly coming under scrutiny for their consumer data practices.

Microsoft’s cloud segment, in particular, is expected to do well, with Office 365 the lead programs in the market for cloud-based productivity tools, while Azure services for storing data and running apps in the cloud is in a solid second position to Amazon’s AWS. Microsoft is also increasingly relying on a steady subscription business which is less subject to volatility.

Here is the full story.

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FAAMG always made more sense then FAANG - Netflix is a much smaller company than the others, and it's place in the market is completely different.

Netflix does not belong from a general, industrial perspective, but it sure does if you are looking at it as software developer destinations. Netflix is the rare smaller company that compares the big guys as far as compensation, and therefore the talent they hire.

If a Wall St bank or quant hedge fund hires a bunch of software developers, does that make it a tech company?

Or ads publisher? Yes, sure.

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I always wonder about this too. Apple, Amazon, Google, Microsoft, Facebook all produce tech. They produce software and hardware for users' use, not just for internal company use. Netflix sells movies and television content. Were Blockbuster or HBO ever classified as tech? Does Netflix have any ambitions to produce/sell cloud services, phones and other devices, social network, etc.?

I think it's fair to call Netflix tech, they are about updating distribution and creation of content in a technological advance. They are changing how people consume TV/movie entertainment.

Apple and Microsoft produce technology. Its central to what they do / are.

Netflix could completely outsource their IT function if they could find the right vendor relationship. Their customers would not know or care. Now finding that vendor ...

On the contrary. Distributing video globally, while making sure that you can switch in the middle of a video from your smartphone to your TV, with the perfect adaptation of the video quality, whatever the soundtrack language of the video, is quite a unique capacity. Youtube does not do it at the same level. Netflix distributes a network of cache relay all around the world internet providers. The result is quite impressive. It will be really interesting to compare Netflix with the future Disney platform

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Netflix does outsource it's IT function …. to Amazon. Their entire infrastructure runs on AWS.

What they excel at is software engineering. You can't outsource their algorithms.

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Apple is a luxury goods company that sells through electronics.
Google is an advertising company that uses electronics to acquire raw materials and to distribute its product (advertising).
Microsoft is a technology and services company.

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It is definitely a tech company. A story.

Microsoft developed a technology called observables. It is a software pattern to handle asynchronous events. I think it originated in C#. It was ported to almost all languages, including JavaScript.

One of the programming leads at Netflix looking for an elegant solution for their instrumentation software used observables, worked on it to improve the JavaScript implementation, became maintainer for the project. Google used the pattern in angular, their JavaScript library for web development, one of the core dependencies of the library. Ben Lesh, the guy who worked for Netflix now works for Google.

The line is fuzzy, for example is fedex a tech company? They have very sophisticated information technology.

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Yeah, I'm not sure why they put Netflix in this club.

But instead of FAAMG, MAGAF would seem to be easier to remember: "Make America Great Again, Fill-in-the-blank".

The only reason to include Netflix is to keep the acronym from being FAAG.

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My 1% wealthy family (min. net worth $10M) has several million dollars in the stock market despite hating stocks (they like cash, real estate), and they won't let me advise them (despite my personal stock portfolio matching or exceeding the S&P500 with about the same Sharpe risk ratio), and on top of that they are extremely concentrated in a handful of media stocks (Viacom?! though this year they had a string of hit movies), but one thing I did manage them to do was buy MSFT when it was one-third the price it is now. I figured the authentication of Windows by matching it with the motherboard serial number would increase the sale of Windows, and I was right. However their gains in MSFT were offset by their losses in GE (which I tried to get them out of, taking a page out of TC's "Great Stagnation" book, I figured nothing GE did these days was all that proprietary, i.e., they have a narrow moat). Still, I'm glad to have gotten them into MSFT.

Bonus trivia: MSFT says John Dvorak, who writes well, will come out with a wearable 'smart phone and smart watch" that's about as thin as cardboard, uses AI and changes color and is like a Dick Tracy watch. They filed for a patent recently. It's 10 years down the road and they need to come out with more powerful hardware but it's doable.

MSFT: The Heartbleed bug and other bugs and Linux annoyances have and will demonstrate that paid-for software has an enduring place in the market. Is VMWare the next WordPerfect or Lotus123?

GOOGL: Why isn't there a popular paid-for alternative to Gmail that also comes with a registry telling all the big websites that you intend to stop checking Gmail on a certain date?

AMZN: I agree WMT could be the better risk/reward. Why it is taking so long for WMT or HD or others to improve their e-commerce is a mystery but it doesn't mean any laggard with nationwide warehousing cannot catch up.

AAPL: There might be an online services moat but it's hard to see why I would pay a price multiple for a phone. Isn't this like wanting to own a Mont Blanc, or Moncler, or Rolex and is it not just a matter of time before people see it that way?

NFLX: There's no lock-in; no moat.

FB: Just delete it.

Chromebooks are eating the world, but slowly and quietly. If you don't want annoyances, that's the way to go.

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MSFT: What they've identified is that the money isn't in software now, it's in services. If you're building software and want a database engine, there's a whole load of free ones out there now. There's still some companies that want the reassurance of SQL Server and will pay thousands for a license, but a lot won't. They'll get MySQL or Postgres or something else, and they're good. But who wants the pain of buying a server, looking after a room, calculating capacities, running updates and physical upgrades? Microsoft take care of all that for you, handle scaling for you and all of that. They're even providing MySql and Postgres on there, if that's what you want. They're making money offering Linux as a service.

Windows now ships with the bash shell, which is truly remarkable. Os 10 the apple operating system is based on his and macbooks also ship with a shell. This is the unix command line. That made Apple laptops the premier developer hardware, probably contributing to the success of that product line. It isn't uncommon for developer libraries for JavaScript to be released for apple and Linux, and only later Windows. That is changing as Microsoft is fully supporting and contributing to that environment.

They also developed typescript which is a way of typing and imposing some rationality upon javascript, making it a much better development target for larger apps. Google is fully supporting typescript with their javascript libraries.

The change at microsoft is truly remarkable. They were losing ground as developers are able to move away from their platform as the browser as an application environment matured. And not their browser, in fact purposely avoiding their awful pre Edge browsers. They have smart people, and they are hungry.

Has someone old enough to remember Microsoft backing the SCO lawsuit, I agree, this is an amazing transformation.

(now all we need is real AI on speech to text)

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If the rumours about sales of iPhones is true, Apple are in a lot of trouble. If iPhone users aren't upgrading to the latest version, a lot of those users won't be buying on features when their phone dies, they'll be buying on price. Either they'll replace their current iPhone 6 with an iPhone 6 or 7, or maybe even take a look at what a sub-£150 Android phone does.

Services ( App Store, Apple Care, Apple Pay, iTunes, cloud services and more) are the fastest growing segment for Apple. Services revenue was $9.2B last quarter vs $38B for the iPhone. This is a steady and growing revenue stream that compensates for consumers choosing lower price iPhones as they utilize these services anyway.
Smart watches seems to be a segment too where Apple is a clear leader.

thanks, that's interesting.

Although I think smart watches are one of those inventions where people built them because they could.

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While I am (stubbornly) on a Pixel 2, the family is on iPhones. They are still upgrading 6s and 7s to bigger screens. I would expect the real slow down to happen when everybody has those, or found their optimum size.

I mentioned Chromebook above, but I suppose Android deserves a mention, being the most common operating system in use in the world.

Buying an unlocked Moto G, no insurance, another one when it breaks, is not a bad way to go

I find the migration to phones with bigger screens weird.

I am on a 5 year old iPhone 4s, in part because they don't currently offer a phone with a reasonably small sized screen that will actually fit in a pocket.

I realize that many people use their phone as a computer. My first Mac (an Se/30) had a 9" screen. Having moved on to displays that don't fit in your pocket, I have absolutely no desire to go back to seeing the world through a keyhole. If its too big to fit in a pocket, and you are going to carry it anyway, then why not move up to something actually usable?

I expect we will eventually have HD heads up display in glasses, which will solve the problem, and allow the "phone" to be matchbox size.

Once I got to 5" phones I was happy, but yeah, big phones in pockets don't make sense to me. I'd rather have a tablet as a second home device (WiFi is sufficient for that).

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And yet, the value of free software exceeds Apple (dependent on the BSD license) and Microsoft (having lost out in the smartphone market to Linux/Android).

Well, if it wasn't for the fact that neither the BSD nor GPL license framework allows for pure rentier profits, unlike Microsoft's licensing.

And honestly, what organization concerned about long term costs regarding text documents is not using ODF as a format?

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Is always good to contrast this FAA[M|N]G stuff with what is happening on the other side of the world.

"So dystopian and authoritarian as to defy belief: China will judge each of its 1.3 billion people based on their social behavior & adopt a lifelong points program that assigns personalized ratings by 2021."

https://twitter.com/NAChristakis/status/1066023438563844096?s=19

We will have our choice, what if we do some supposedly market-based FAA[M|N]G analog, or whether we as a society choose privacy.

Facebook is cancelling people’s airline tickets?

Or are you talking out of your depth again. News from twitter.

Jfc.

I link a tweet that correctly summarizes a Bloomberg article and you talk about something completely different.

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I guess it would be comical if ideology destroyed privacy in "opposite" societies. The communists say "government supersedes the individual" and implement their all-seeing point system. The free marketers say "we can't interfere with companies" as they implement their all-seeing point system.

Yep, it's analogous to the environment. Unregulated firms will over-produce pollution and other negative externalities. Totalitarian governments typically will too. Neither system is good for protecting the environment -- nor privacy.

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This is incorrect, Apple's market cap was actually always above 800B

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Microsoft's cloud is now second to Amazon's, and together they dominate. Nobody else is close. Microsoft's is also better priced than Amazon's, and their developer relations game remains strong. Visual Studio Code is beautiful and has captured a great deal of mindshare over the last few years. Typescript (a Microsoft programming language) is taking enterprise web development by storm.

Plus Microsoft isn't saddled by its other business. Amazon's other main business is, what, physical goods fulfillment? (The store is part of that, but the store is not the whole business). Microsoft's is a tax on all developed world desktop and laptop computers: once when the computer is sold (Windows license) and once again every month (Office subscriptions).

Apple is a jewelry company. I think people will eventually realize that what they hate about Facebook is also what they hate about their smartphones and they will learn to restrict their use and so to love them less. [This is a gut feeling I have, weakly held, convince me otherwise]. Already it is not entirely clear why people should get the newest iPhone from what they have, compared to the upgrade cycle from like 1->2, 2->3, 3-4, 5->6, what have you. So the market is bifurcating between people who must have the newest, sparkliest thing (thus, jewelry company) and people who upgrade their phone when it is ready to go kaput. [This echoes Stratechery, whatever Ben said was clearer and better thought through.]

Facebook, probably look past the current scandal. Whatever the weaknesses in dealing with the election scandal, there is a core of engineering talent that can build anything into global web scale there. Though, maybe not. Mark Zuckerberg apparently tried to order his executives to ditch iPhones after Tim Cook threw shade at them, and then they didn't do it. Of course they didn't do it, but why was he making such ridiculous orders?

Azure isn’t ‘better priced’ than AWS, on list prices AWS generally gives greater value. Azure is will to substantial credits to companies to sweeten deals, as well as deeper discounts. I don’t know if this is what you are referring to.

Note that Azure has gotten much better in the last couple of years, they used to have technology issues which heavily weighted them down, but they are catching up.

Amazon doesn’t weigh down AWS at all. Amazon is one of the top brands in the world for a reason.

That being said Microsoft has held the line on windows and office revenue better than most expected. Will this continue?

APPL is an amazing technology company. Their purchase of PA semi has yielded technology on the order of 1-2 years ahead of the competition, which is astonishing. Not to mention their rock solid engineering in terms of power management (related to PA semi) and quality control.

Anyway, I’d rate the 4 components of MAGA, in order : Amazon, Apple, Microsoft, Google. However it is very close and with a couple of innovations the ranking could change substantively (eg: somehow Google’s Gsuite gains serious traction. Microsoft somehow overtakes AWS).

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Only Microsoft products I use or have used in the past year:

Outlook / Office365
Excel
Xbox

...and I no longer use the top two.

Microsoft is much more about serving corporate customers than individuals like yourself now. They were more consumer focused before.

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GE attempted to remake itself as a tech/industrial firm, a firm that produced something tangible using the technology created by so-called tech. https://www.nytimes.com/2016/08/28/technology/ge-the-124-year-old-software-start-up.html That was only two years ago. The experiment failed miserably. Why? Did it prove America can no longer excel in something besides social media and personal assistant apps? Or did it prove that so-called tech is mostly nonsense? Google attempted to build a reliable (self-driving) car, but abandoned the effort; building a reliable car is hard. When was the last time Cowen posted something positive about an American company that actually produces something tangible as opposed to the nebulous "artificial intelligence"? The challenge of our time is climate change. Will a personal assistant app solve that problem? What tech has needed is incentive, incentive to produce something besides nonsense. Well, the boy billionaires have incentive now that their houses are burning up.

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Yet MSFT can't seem to get its act together in getting Win 10 1809 updates to happen.

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These are the causes behind HP printer in error state issue. There can be many other reasons as well due to which this printer is in an error state problem happens. Look for the solutions only after you have identified the actual reason for this error to occur in your system.

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