News

Microsoft Trails Apple, Google for Most Valuable Tech Company

• By Kurt Mackie
• October 02, 2012

Apple and Google are now ranked No. 1 and No. 2, respectively, among technology companies in terms of market capitalization, according to financial assessments on Monday.

The New York Times noted that Google essentially leapfrogged Microsoft, which is now the third most valuable tech company. According to Yahoo Finance measurements, which were taken near the close of the trading day, Microsoft has a market capitalization of $247 billion. The company trails Google, which has a market capitalization of $249 billion, and Apple, with its No. 1 market capitalization of $618 billion.

Microsoft once was the top technology company for a while, but it got knocked off that pedestal by Apple in May 2010. At that time, Apple's market cap stood at $222 billion with Microsoft at $219 billion. Now, according to financial market assessments, Apple's narrow consumer market hold is worth almost three times more than Microsoft with its diversified consumer and enterprise product lines and services.

Despite Apple's superior valuation, Microsoft still dominates in the desktop operating system world, with about 92 percent share versus Mac OS at about 7 percent, according to Net Applications' desktop data. However, that picture gets wholly turned over when comparing mobile/tablet OS stats, where Apple iOS use dominates at about 63 percent versus Android at 22 percent. Microsoft's mobile OS, Windows Phone, isn't even listed in Net Applications mobile/tablet OS data.

Microsoft is attempting to address future OS demand and market growth with Windows 8, which will have a tile-based touch user interface for tablets and PCs that looks like the one used in Windows Phone. Projections from analyst firms such IDC have shown a general flattening of the PC market in the near future, even while growth takes off in the smartphone and tablet markets (see chart).

Microsoft's slip in valuation compared with Google represents even more of an uphill battle. Microsoft essentially competes with Google in one area, search advertising, in which Google has long retained the No. 1 position. Even after Microsoft established a deal with Yahoo in 2009, in which Microsoft inserted its search technology onto Yahoo's sites, it still hasn't been able to catch up with Google. According to an August 2012 comScore report, Google hold 66 percent of total U.S. core search activity, with Microsoft trailing at about 16 percent and Yahoo at 13 percent.

Microsoft may be feeling other pressures with its search-advertising business, which has typically been a loss leader on the company's financial sheets as it pursued Google's lead. Microsoft's recent write-down of its aQuantive acquisition, as well as the recent loss of executive talent, has an Adweek article speculating that Microsoft is not long for remaining in the search-advertising business. Microsoft execs, though, are denying that speculation, according to the article.