A landmark of sorts was reached this month when Apple overtook Microsoft in terms of revenue and profits in the respective companies' most recent quarterly financial results. The difference in the figures from a revenue perspective are quite spectacular. Apple reported sales of $24.67bn compared to Microsoft's figure of just under $16.43bn. On a profit basis, Apple achieved $5.99bn compared to Microsoft's $5.23bn.
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On one level, this isn't bad news for Microsoft in that profit as a percentage of revenue is 31.8%, higher than Apple's figure of just under 24.3%. As a hardware and software vendor, however, it's no surprise Apple's margin is lower but what is interesting is that its revenues grew a whopping 82.7% on the corresponding quarter in 2010 and profits rose even more, by 95%. Against those types of numbers, Microsoft's fairly healthy 13% revenue increase and 31 per cent profit rise appear pretty puny.
No prizes for guessing the areas where Apple is outgunning Microsoft: smartphones with the iPhone and, latterly, tablets with the iPad. In a market where traditional PC sales are slowing (Windows revenue was down slightly on last year), Apple's results merely serve to emphasise the point that Microsoft needs to get into the smartphone and tablet games and do so in a convincing manner.