Apple unseats Microsoft as world's biggest tech company

   The impossible has finally happened. Apple has passed Microsoft in market capitalization to become the world's biggest tech company.

   It happened Wednesday just after 2:30 p.m. EDT, when Apple stock jumped and the company's market cap hit $227.1 billion. Meanwhile, Microsoft stock fell and its market cap declined to $226.3 billion.

   By the time the markets closed at 4 p.m. EDT, Apple shares had slipped $1.11 to $244.11, putting its market cap at $222.1 billion. Microsoft stock slipped more, however, dropping $1.06 4.1 percent to close at $25.01. Microsoft's market cap closed at $219.2 billion.

   That put Apple's value in second place overall, behind Exxon Mobil's leading market cap of $278.6 billion.

   "There's no question that Apple is going to be viewed for years as one of the biggest turnaround stories of the industry," said Steve Kleynhans, a research vice president at Gartner. "Apple was pretty much dead 10 years ago."

   Courtesy of Silicon Alley Insider

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   Indeed, 10 years ago Apple was worth next to nothing; its market cap was $17 billion in May 2000 and bottomed out at $4.7 billion that December. Meanwhile, Microsoft's value was hovering around $350 billion in May 2000, spiking into the $400 billions at times.

   And that was about three years after Microsoft invested $150 million in its Cupertino, Calif., rival. My, how the tides have turned.

    What happened? Apple reinstalled Steve Jobs as its CEO in 1997, and he found a sweet spot in the market. The company introduced the world to the i: the iMac, the iPod, iTunes, the iPhone and now the iPad.

   "They focused very squarely on what people wanted," Kleynhans said, "and developed products that are targeted at the non-technical user."

   Meanwhile, Microsoft struggled to keep up. CEO Steve Ballmer took over for Bill Gates in January 2000. The Redmond superpower continued to bring in tons of revenue from its Windows and Office products, but started to pigeonhole itself as an enterprise company instead of a consumer company.

   Apple did the opposite. And, Kleynhans said, the consumer market is where all the new customers are.

"I think these companies, both Apple and Microsoft, want to serve the consumer segment, to be a big player. This (trend) is driven by consumer devices," said Michael Cherry, an analyst with Kirkland-based Directions on Microsoft. "The only small area where their markets overlap is in PCs, music players and phones."

   Microsoft CEO Steve Ballmer has watched Apple's market cap steadily increase save for economic downturns while his own company's value warbled.

   With Windows, Microsoft has Apple handily beat in the PC operating system market, though Macs have been gaining in popularity. The success of Windows 7, especially after the Windows Vista debacle, shows people still will choose Microsoft. But Microsoft's Zune, though a decent device, hasn't been able to successfully compete with the iPod. And Windows Mobile has all but died while the iPhone has prospered.

   And perhaps that's where the passing of the market-cap torch loses its significance. These days, Apple is all about the consumer, Microsoft is more about the enterprise, and each company is successful. Sure, they're both "technology companies," but how comparable are they?

   Though it may hurt Ballmer's ego and get Jobs to pound his chest, Wednesday's switch is an arbitrary landmark that exists only on Wall Street. And for all we know, Microsoft's market cap could pass Apple's tomorrow.

   "No pun intended: We're comparing apples and oranges," Cherry said. "The reason you would invest in them would be different."

    He added: "Market cap is just another one of those rulers. I don't think you can extrapolate from that that one company is better than another. What market cap tells you is, more investors want to put their money in that company."