Microsoft has overtaken Apple as the world’s most valuable company in terms of market capitalization. The last time Microsoft beat Apple was about eight years ago. Microsoft’s market capitalization reached $ 812.93 billion, while Apple’s market capitalization was $ 812.60 billion. In August, this year, the price of Apple’s shares soared extraordinarily and the company exceeded a valuation of $ 1 trillion. But Apple’s share price has fallen due to investor concerns over most of the company’s revenue from the iPhone and the escalating trade war with China.
At the time when Satya Nadella was named CEO of Microsoft, the company’s stock values ranged from 37 to 38 dollars. And the stock price of the company reached a whopping $ 106.47 recently. This is largely due to Microsoft’s focus and gradual migration towards cloud technology. Microsoft’s revenue streams are vastly diversified compared to most other technology giants.
Microsoft’s chances seemed bleak when it was dethroned from the top spot 16 years ago
Many will agree that the chances of Microsoft making a comeback after it was nudged from the top spot over 16 years ago, seemed incredibly slim. History shows that the company placed at the top of the market capitalization charts only evolves over time and that former incumbents are unlikely to return to fame. Normally as time goes by and the technology changes, companies that get lost do not get a second chance. This hasn’t been always the case though. It’s a tight deal, with an estimated value of $ 851 billion for Microsoft against $ 847 billion for Apple. If Microsoft finishes the year as the most valuable company in the world, it will be its first year since 2002.
New leadership has made the difference
The appointment of Satya Nadella as General Manager of Microsoft four and a half years ago surprised many observers. However, initiatives to abandon former CEO Steve Ballmer’s mobile strategy and bring Microsoft back to its corporate-to-business roots with strategic acquisitions like LinkedIn and GitHub have paid off. Microsoft’s stocks have tripled and increased by 7% in November alone. However, Microsoft also owes its rise to the most valuable company position in the world, to the unforeseen decline of its two major rivals.
Apple plummeted its $ 1 trillion stock market cap that it had briefly reached in August, as its shares fell by 16% in November, as a result of disappointing results, from the decision to stop disclosing the quarterly sales of the iPhone, iPad, and Mac as well as it’s fear that it will fall behind in terms of innovation. But Amazon, which recently crossed the mark of trillions of dollars during an intraday session five weeks later, but never closed above the benchmark, has since retreated to close with a market capitalization of $ 826 billion, which is still good growth for the year.
What made the difference?
In the longer term, the game change for Microsoft was the decision of Nadella, who decided that Microsoft needs to fully focus its products on the cloud infrastructure market, beginning to bridge the gap behind Amazon Web Services, which controls one-third of the market. Nadella’s impressive leadership is particularly evident when you look at how he abandoned the old paradigm of controlling the operating system (OS) market and moved to the control of the cloud platform. It meant acceptance of the fact that Windows as a server-side operating system would no longer govern the world. Many have called the move a stroke of genius.
If it continues, this achievement will also be a rare example of a very large company freed from what has become known as the “dilemma of the innovator”. According to this theory, innovation is not the only way for a powerful and successful company to stay on top but adaptation to current technological requirements.