Steve Ballmer calls Apple's Mac growth a "rounding error"

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http://www.appleinsider.com/article...calls_apples_mac_growth_a_rounding_error.html

Steve Ballmer calls Apple's Mac growth a "rounding error"
By Neil Hughes
Published: 09:45 AM EST

Speaking to a group of market analysts this week, Microsoft Chief Executive Steve Ballmer repeatedly mentioned Apple, including a suggestion that a growing rate of Mac adoption is statistically insignificant.

"Share versus Apple, you know, we think we may have ticked up a little tick," Ballmer said at the 2009 Financial Analyst Meeting, "but when you get right down to it, it's a rounding error. Apple's share change, plus or minus from ours, they took a little share a couple quarters, we took share back a couple quarters."

The Microsoft executive said he expects Windows to continue to trade market share with Mac OS X back and forth, though he added he feels taking customers from Apple is a limited resource.

"Apple's share globally cost us nothing," he said. "Now, hopefully, we will take share back from Apple, but you know, Apple still only sells about 10 million PCs, so it is a limited opportunity."

The 40-minute speech covered a variety of Apple-related topics, including product pricing, advertising, and the number of Macs in the audience. Ballmer noted the large number of Apple machines in the crowd as he spoke, saying the Windows maker has a "low share" in the investor audience.

"I can see the Apple logos versus the PC logos," Ballmer told the crowd. "So we have more work to do, more work to do. Our share is lower in this audience than the average audience. But don't hide it. I've already counted them. I have been doing that since we started talking."

The CEO also, in a roundabout way, acknowledged that Apple is known for making higher-quality hardware than Microsoft's PC partners. But Ballmer said he expects consumers to be surprised at some of the new offerings available this fall alongside the debut of its new operating system, Windows 7.

"At least when Apple attacks us, the primary attack that comes from Apple is, 'Hey, at the end of the day, we have the coolest hardware,'" he said. "When you see the hardware, the PC designs that will come out this Christmas with Windows 7, I think that conventional wisdom can begin to really change. There is some really amazing, amazing work. So it is possible to get great hardware innovation, even when hardware and software comes from separate companies."

Microsoft's top official said Windows falls in between OS X and Linux into the market sweet spot -- not too expensive, not too cheap. Just weeks ago, Ballmer laughed off the threat of Google's open source Chrome OS. This week he said Microsoft's goal is to dominate the market, rather than carve out a niche.

"We do not, say, like Apple, believe in low volume, very high prices, very -- Apple is a great company, does a fine job. But their model says high margin, high quality, high price," he said. "That's kind of how they come to market. We say we want big market share. But with big market share, you take a lower price."

Recently Microsoft changed one of its advertisements attacking the high cost of Apple products after legal threats. The Microsoft executive spoke about those commercials, but did not talk about the recent controversy. Instead, he said the "Laptop Hunters" ads have changed some public perception about the Microsoft brand as it relates to Apple.

"And are the ads working?" he asked rhetorically. "In an independent survey, we asked 18- to 24-year-olds—or they were asked, "Who offers the best value, Apple or Microsoft?" You can kind of see Apple was comfortably ahead despite the fact they — well, despite whatever the facts are. Our ads started in April of '09. You can see kind of what the perception changes have been so far."
Click to expand...

AAPL: 163.39
MSFT: 23.52

Rounding error?
 
1. the stock prices you posted are not indicative of the actual market cap of each company. MS is huge.

2. Ballmer wouldn't be Ballmer if he wasn't dissing Apple. It's what he does and that's cool.

3. They really need to get a decent mobile OS out there if they don't want to be left behind for the next 20 years.
 
Apple is a growth stock, is somewhat dependent on a talented leader rather than long term company strategy, and heavily relies on a narrow range of high margin products that aren't sustainable as competition lowers the feature gap and reduces prices. Apple doesn't pay dividends, and long term I doubt they'll beat the market average without changing their strategy.

Microsoft has dozens of solid products that have strong market shares and will continue to have repeat customers. They maintain profitability regardless of their leader because they have a long term company strategy. They pay dividends, and their P/E ratio is more rational than Apple's.

I'm going to go with Microsoft on this one, but different reasons than what Ballmer said.

Any by the way, stock price is irrelevant on it's own. Microsoft has a larger market cap, even with a much lower P/E ratio. They are bigger.
 
teh_pwn said:
Apple is a growth stock, is somewhat dependent on a talented leader rather than long term company strategy, and heavily relies on a narrow range of high margin products that aren't sustainable as competition lowers the feature gap and reduces prices. Apple doesn't pay dividends, and long term I doubt they'll beat the market average without changing their strategy.

Microsoft has dozens of solid products that have strong market shares and will continue to have repeat customers. They maintain profitability regardless of their leader because they have a long term company strategy. They pay dividends, and their P/E ratio is more rational than Apple's.

I'm going to go with Microsoft on this one, but different reasons than what Ballmer said.

Any by the way, stock price is irrelevant on it's own. Microsoft has a larger market cap, even with a much lower P/E ratio. They are bigger.
Click to expand...

What is this? LOGIC?!?@?!?!

In my GAF?
 
LCfiner said:
3. They really need to get a decent mobile OS out there if they don't want to be left behind for the next 20 years.
Click to expand...
In the mobile market, sure, but why would this affect other aspects of their business? Their Client division is still the biggest and will be unless something like cloud computing takes off.

Also, you always have to take what Ballmer says with a grain of salt. He's fickle, histrionical and about as subtle as a brick to the face.
 
teh_pwn said:
Apple is a growth stock, is somewhat dependent on a talented leader rather than long term company strategy, and heavily relies on a narrow range of high margin products that aren't sustainable as competition lowers the feature gap and reduces prices.

Microsoft has dozens of solid products that have strong market shares and will continue to have repeat customers. They maintain profitability regardless of their leader because they have a long term company strategy. They pay dividends, and their P/E ratio is more rational than Apple's.

I'm going to go with Microsoft on this one, but different reasons than what Ballmer said.

Any by the way, stock price is irrelevant on it's own. Microsoft has a larger market cap, even with a much lower P/E ratio. They are bigger.
Click to expand...


your premise is off. If this were true, no one would buy premium products of any type. clothes, cars, stereos, etc.

Only if Apple does not innovate and improve its products, while keeping prices high, will they fail.

but for the past decade, they've been consistently moving things forward to avoid that situation.

esc said:
In the mobile market, sure, but why would this affect other aspects of their business? Their Client division is still the biggest and will be unless something like cloud computing takes off.
Click to expand...

I'm saying that in 20 years, the mobile computer market will be the dominant market. unless MS is happy to give that away to RIM and Apple (maybe Palm?), they need to kick ass with WM 7 and beyond. they are woefully behind.
 
Holy shit, did someone really directly compare the stock prices in the effort of trying to make a fanboyish point? :lol :lol

That might be the funniest thing I've ever seen on GAF :lol
 
"There's no chance that the iPhone is going to get any significant market share. No chance," said Ballmer. "It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get."
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I miss Bill Gates. That dude talked shit and made sense. Ballmer just sounds like the Iraqi information minister.
 
Liu Kang Baking A Pie said:
I miss Bill Gates. That dude talked shit and made sense. Ballmer just sounds like the Iraqi information minister.
Click to expand...

Really, does anyone even want Windows Mobile on their cell phone? I bet even MS employees would avoid that shit like the plague. Until they complete redo their phone operating system, they are fucked in that space. By the time they get their act together I bet that Android will have already eaten their lunch.

In the PC market they're obviously solid, Win7 should help them a lot if everything goes right. MS makes an average OS for mobile devices sold at rock bottom prices, Apple makes luxury computers with a great OS, fantastic build quality and high profit margins but low marketshare. This isn't going to change in the future and I'm fine with that. As long as Apple keep making kick ass computers and portables, I'll keep buying them. I'm 100% Windows-free and I'm keeping it that way (I was going to say MS-free but I own and love the Xbox 360).
 
LCfiner said:
your premise is off. If this were true, no one would buy premium products of any type. clothes, cars, stereos, etc.

Only if Apple does not innovate and improve its products, while keeping prices high, will they fail.

but for the past decade, they've been consistently moving things forward to avoid that situation.
Click to expand...

I disagree because Apple's stock is bloated on hype. Electronics are one of the fastest things to reduce in price and offer more features. Apple's continued success from an investor's standpoint assumes that Apple can innovate new products with high margins to replace the old.

Microsoft on the other hand has a reliable set of products that are practically guaranteed to have repeat customers without cutting their margins nearly as fast.

This kind trait is common with some of the best performing stocks as investments in history. Pfizer, Johnson & Johnson, Merck, Altria Group, General Electric, Coke, Pepsi, etc. These stocks average 16-20% annualized interest, and what they all have in common is that they always have repeat customers no matter what the economic climate is because their products are timeless.

An mp3 player or cell phone loaded with features are going to be cheap as dirt in 10 years. Microsoft will still be selling Office and Windows and making billions in profit per year from it.
 
MercuryLS said:
In the PC market they're obviously solid, Win7 should help them a lot if everything goes right.
Click to expand...
The thing is, Windows 7 may stop some people from switching, but it's still not fantastic enough to get people to switch back.

Remember Windows 95? That was the shit, and that was the event that caused everyone to use Windows and put us in the "95% of computers are using Windows" scenario we're in now.

I think they really need to just shake up everything again. People use computers differently now. We do almost everything in the browser. Re-do the computer operating system.
 
teh_pwn said:
Apple is a growth stock, is somewhat dependent on a talented leader rather than long term company strategy, and heavily relies on a narrow range of high margin products that aren't sustainable as competition lowers the feature gap and reduces prices. Apple doesn't pay dividends, and long term I doubt they'll beat the market average without changing their strategy.

Microsoft has dozens of solid products that have strong market shares and will continue to have repeat customers. They maintain profitability regardless of their leader because they have a long term company strategy. They pay dividends, and their P/E ratio is more rational than Apple's.

I'm going to go with Microsoft on this one, but different reasons than what Ballmer said.

Any by the way, stock price is irrelevant on it's own. Microsoft has a larger market cap, even with a much lower P/E ratio. They are bigger.
Click to expand...

In other words, the Apple stock price is artificially inflated due to massive short term profits and will start to stabilize, possibly even decline, as sales plateau, which we are starting to see now. Meanwhile, Microsoft maintains control over the larger market share due to their rational view of the business marketplace, an area Apple continues to lag in. Due to this consistent view of the marketplace Microsoft has for them most part had a fairly stable stock price, IIRC it's been in the 20s for a good long time now, hanging around there since it spiked in 98-99.
 
teh_pwn said:
I disagree because Apple's stock is bloated on hype. Electronics are one of the fastest things to reduce in price and offer more features. Apple's continued success from an investor's standpoint assumes that Apple can innovate new products with high margins to replace the old.

Microsoft on the other hand has a reliable set of products that are practically guaranteed to have repeat customers without cutting their margins nearly as fast.

This kind trait is common with some of the best performing stocks as investments in history. Pfizer, Johnson & Johnson, Merck, Altria Group, General Electric, Coke, Pepsi, etc. These stocks average 16-20% annualized interest, and what they all have in common is that they always have repeat customers no matter what the economic climate is because their products are timeless.

An mp3 player or cell phone loaded with features are going to be cheap as dirt in 10 years. Microsoft will still be selling Office and Windows and making billions in profit per year from it.
Click to expand...

no, it's high because the profits are high. no hype, there. stocks might even be higher if apple didn't account for iphone revenue on a deferred basis.

as for cell phones in 10 years, it's not about features. it's about usability and quality. (same can be said for a ton of products, really) there were phones that did more than the iphone before it came out (and cost less) but almost no one bought them because using them was a pain.

Apple is one of a few companies that understands that the experience is more important than the feature list.

And an iphone can be had for 99 bucks now, subsidized. for most anyone looking for a smartphone these days, that price isn't out of this world at all.
 
Peronthious said:
In other words, the Apple stock price is artificially inflated due to massive short term profits and will start to stabilize, possibly even decline, as sales plateau, which we are starting to see now. Meanwhile, Microsoft maintains control over the larger market share due to their rational view of the business marketplace, an area Apple continues to lag in. Due to this consistent view of the marketplace Microsoft has for them most part had a fairly stable stock price, IIRC it's been in the 20s for a good long time now, hanging around there since it spiked in 98-99.
Click to expand...

The stock price isn't what the investor gets. Microsoft pays dividends, and so when you reinvest those dividends, your money grows even though the stock price has leveled off.

According to google finance, the total history return without adjusting for dividends:

MSFT: 23,233%
AAPL: 4,446%

Growth stocks are notorious for building up hype but tend to under perform long term.
 
LCfiner said:
no, it's high because the profits are high. no hype, there. stocks might even be higher if apple didn't account for iphone revenue on a deferred basis.

as for cell phones in 10 years, it's not about features. it's about usability and quality. (same can be said for a ton of products, really) there were phones that did more than the iphone before it came out (and cost less) but almost no one bought them because using them was a pain.

Apple is one of a few companies that understands that the experience is more important than the feature list.

And an iphone can be had for 99 bucks now, subsidized. for most anyone looking for a smartphone these days, that price isn't out of this world at all.
Click to expand...

No he is right.

Hardware suffers from commoditisation. Apple's margins will be eroded sooner or later on the iPod front. In the smartphone market they are no where near iPod status and there are more than a few competitors who hold mindshare.

Microsoft is as close to a pure a monopoly as you can get, by defnition they will not suffer commoditisation. Microsoft's only concern is future growth beyond Windows and Office, hence the dividend.

No stock price is truly reflective of a company's worth. All inflated stocks tend to be overvalued and all deflated stocks undervalued. Secondary market pricing is never perfect.
 
LCfiner said:
no, it's high because the profits are high. no hype, there. stocks might even be higher if apple didn't account for iphone revenue on a deferred basis.

as for cell phones in 10 years, it's not about features. it's about usability and quality. (same can be said for a ton of products, really) there were phones that did more than the iphone before it came out (and cost less) but almost no one bought them because using them was a pain.

Apple is one of a few companies that understands that the experience is more important than the feature list.

And an iphone can be had for 99 bucks now, subsidized. for most anyone looking for a smartphone these days, that price isn't out of this world at all.
Click to expand...

Do you understand what P/E is? It's price per earnings. Meaning that the profits are already factored in. Apple's stock has a P/E of 28.5, Microsoft has an P/E of 14.

Apple stock is bloated. And in order for the stock price to merely not decrease, Apple must keep the profit margins on their products equal.

Music players and phones are going to be like $10 in 10 years without any contracts or monthly payments hiding the real price. Has there ever been an electronics product in history that maintains price and market dominance?
 
teh_pwn said:
Music players and phones are going to be like $10 in 10 years without any contracts or monthly payments hiding the real price. Has there ever been an electronics product in history that maintains price and market dominance?
Click to expand...
I see them still improving at a pace where there is still a market for high-end devices, though. So the iPhones of today will be free, but there would be something new that justified an upfront cost.
 
teh_pwn said:
Music players and phones are going to be like $10 in 10 years without any contracts or monthly payments hiding the real price. Has there ever been an electronics product in history that maintains price and market dominance?
Click to expand...

Err. smartphones will continue to be as expensive as ever, that is the business model.

Music players will encounter diminishing returns sooner or later because once you get into 100GB vs. 200GB for the mainstream you don't have the same situation as 8GB vs. 16GB anymore. This is evidenced by Nano sales dwarfing everything else.
 
I'd be more interested in Ballmer saying something that wasn't stupid for once.

Ballmer being a moron doesn't even get a rise out of me anymore.
 
evil solrac v3.0 said:
wait, can someone dumb down why apple stock costs more than microsoft?
Click to expand...
better company = more valued by investors = more demand = high stock price.

8)
 
evil solrac v3.0 said:
wait, can someone dumb down why apple stock costs more than microsoft?
Click to expand...
Because MS has more outstanding shares. MSFT is selling for $23 but there are 8.91 billion shares. Apple has 900 million shares at a value of $163 each. The market cap (share price times number of shares)--which very roughly represents the net worth of a company--is higher for MS.

Basically, stock prices don't give you much info. Berkshire stock never splits so each share sells for a hundred grand.
 
Liu Kang Baking A Pie said:
The thing is, Windows 7 may stop some people from switching, but it's still not fantastic enough to get people to switch back.

Remember Windows 95? That was the shit, and that was the event that caused everyone to use Windows and put us in the "95% of computers are using Windows" scenario we're in now.

I think they really need to just shake up everything again. People use computers differently now. We do almost everything in the browser. Re-do the computer operating system.
Click to expand...

Well, Win95 was definitely a piece of sh... But I was too young at the time to know whether or not there were even viable competitors at the time. Were there?

Because I do not remember Unix equivalents or Apple having a equally 'inviting' interface at the time. (and if they did, there was no way that I could have known anyway. No internet, see?)
 
5 Year Averages

ROA

MSFT: 17.6% AAPL: 11.7%

ROE

MSFT: 28.1% AAPL: 20.5%

Net Profit Margin

MSFT: 27.9% AAPL: 12.2%


Ballmer's done an okay job.
 
Microsoft's top official said Windows falls in between OS X and Linux into the market sweet spot -- not too expensive, not too cheap. Just weeks ago, Ballmer laughed off the threat of Google's open source Chrome OS. This week he said Microsoft's goal is to dominate the market, rather than carve out a niche.
Click to expand...
Wait... in between OS X and Linux?

So...

OS X = $129 Leopard, $159 Snow Leopard or $29 SL Upgrade

Linux = Free

Windows = $119 Upgrade, $199 Full is "in between"? How is $119 for an upgrade cheaper than $29? How is $199 cheaper than $159 or $129? And that's just for Home.

Where did Ballmer learn math? He'll deny all of Windows' competition can make a dent until the day they make such a huge dent that he has to notice. Denial is an interesting thing. It's one of the stages of grief you know. He does go through Anger a lot too. He should probably see a doctor or a psychiatrist.
 
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