MSFT or AAPL: Who Will Win in the Battle of Apple vs Microsoft

Apple vs microsoft stockMicrosoft Stock vs. Apple Stock 

One of the greatest tech rivalries of all time is heating up. The Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) saga is long and storied, and has been one of the main driving forces in the computer sector for decades.

While the two companies long ago parted ways in terms of the types of products they produce (that explains why you haven’t seen those Mac vs. PC commercials in a long time), the technologies that are currently in development by both companies may bring them back into a heated head-to-head conflict.

And that brings us to Microsoft stock vs. Apple stock.

The two companies currently have stakes in very different markets. Apple has the “iPhone,” the “Mac,” and the “iPad,” and the company has generally established its empire on the backs of consumer tech gadgets. Microsoft, by contrast, has focused more on the software side of things, with the “Windows” operating system, “Microsoft Suite,” cloud offerings, and “Office 365” being some of the company’s main sources of revenue and growth.

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But that calculation is changing.

Microsoft Surface Studio vs. Apple Mac 

One of the biggest new additions to the Microsoft vs. Apple tale is the first-ever desktop computer made by Microsoft: “Microsoft Surface Studio.” Being billed as a direct competitor to Macs, the new Microsoft product seems to be taking what the Mac does best and is outperforming the long-held standard in desktops for creatives.

Microsoft Surface Studio is a 28″ super-high-resolution desktop computer complete with touchscreen functionality, sixth-generation Intel Corporation (NASDAQ:INTC) processor options, and a dedicated graphics card. It’s being billed as the must-own tool for creative types, which is bad news for Apple Mac.

Apple has long held that Macs are preferable to PCs when it comes to creative ventures, including picture and video editing, sound design, art projects, etc.

Apple has long since owned that portion of the market, while Microsoft has been seen as the more business-friendly alternative to Apple’s cool factor. But the new Microsoft Surface Studio could shake things up. And computer sales are definitely in need of a revitalization.

Computers sales have suffered in recent years. Among the top five computer vendors, Dell Technologies Inc (NYSE:DVMT) is the only one to see growth in 2016, with a 2.6% boost over the previous year. The industry more broadly saw a sales decline of 6.2% from 2015.

But AAPL stock is currently on a tear, regardless of its flagging computer revenue. The company shipped 8.7% fewer Mac units in 2016 than it did in 2015. (Source: “Gartner Says 2016 Marked Fifth Consecutive Year of Worldwide PC Shipment Decline,” Gartner Inc, January 11, 2017.)

“The broad PC market has been static as technology improvements have not been sufficient to drive real market growth,” said Mikako Kitagawa, principal analyst at Gartner.

Kitagawa continued, “There have been innovative form factors like 2-in-1s and thin and light notebooks, as well as technology improvements, such as longer battery life. This end of the market has grown fast, led by engaged PC users who put high priority on PCs. However, the market driven by PC enthusiasts is not big enough to drive overall market growth.” (Source: Ibid.)

Microsoft has long been looking to get into the hardware market, with its “Surface” line of products, but Microsoft Surface Studio is the company’s boldest move yet. MSFT stock might become the beneficiary of the Microsoft finally striking gold with must-have consumer hardware.

Apple v Microsoft Stock chart

Chart courtesy of StockCharts.com 

Artificial Intelligence Tech in 2017

One of the most exciting developments in the tech sector is the focus on artificial intelligence (AI) technology.

The AI sector is likely to be one of the most transformative innovations we’ll see in the next few years. As such, whichever company can assert itself as the leader in the AI sector will likely see huge stock gains.

Which brings us to another new front in the Apple vs. Microsoft battle.

Both Microsoft and Apple ventured into the realm of responsive machines with voice-activated AI helpers. But, while Apple is focusing more on augmented reality (AR) these days, Microsoft seems to be pushing forward with AI in 2017.

“Siri” made headlines years ago when Apple first introduced it, but Microsoft followed its success with a version of its own in “Cortana.” Named after a heroine in its Halo video game franchise (who is, of course, also an AI, though a much more sophisticated and sentient one), the company is seeking to push itself into the AI market.

The latest news surrounding the MSFT stock price is the partnership between Adobe Systems Incorporated (NASDAQ:ADBE) and Microsoft, in which the two behemoths will seek out ways to enhance their products via AI tech. (Source: “Adobe, Microsoft working together on artificial intelligence,” The Economic Times, March 23, 2017.)

While Apple hasn’t made any significant consumer-facing play in terms of AI since the introduction of Siri, the company is looking toward other forms of machine learning and smart devices in order to take advantage of this burgeoning sector.

“Apple Car,” for instance, was once rumored to be the company’s version of an autonomous vehicle, though the latest information now points to Apple moving toward programming for autonomous cars rather than producing its own vehicles.

And that makes a lot of sense. Why get involved in the hardware side of things in an area in which your company has little expertise, when you can direct your hugely powerful and resource-rich programming departments to tackle another fast developing tech sector?

Apple Investments May Push AAPL Stock Over MSFT Stock 

One big advantage that Apple has over Microsoft is a war chest that is fit to burst. Apple has a lot of money that it can play around with and, as such, the company has many targeted investment options that could dramatically alter the path of the AAPL stock price.

Perhaps the biggest rumor surrounding Apple is whether it will acquire the massive media mogul Walt Disney Co (NYSE:DIS). This would be a huge coup for Apple, were the acquisition to take place.

Why? Well, for one thing, Apple is a very diverse and well-situated company with a lot of different plays on the go, but one area where it is lacking is the media division.

Apple has yet to produce much of its own original media content. The company has always valued its brand image, with some of the most memorable commercials of all time coming from the Apple marketing department, but it has yet to step into the content arena.

And we all know how much Apple loves to exert total control when it comes to its products, often avoiding outside influence whenever possible. Bringing Disney into the fold would essentially buy Apple a ready-made media empire that it can shape in its own image.

If Apple wants to continue its expansion and dominance into new commercial ventures, eventually the creation and sale of original content will become a likely avenue to pursue in order to open up new revenue streams, Disney being one of the most desirable media acquisitions.

Walt Disney Co has rights to the entire box-office-smashing “Marvel Cinematic Universe,” as well as children’s favorites, two foundational genres that often draw in hordes of viewers. Not to mention it also owns the rights to the Star Wars franchise, which is hardly a bit player in movie theaters.

Consider the Beauty and the Beast live-action remake that recently hit theaters. With a gross of over $700.0 million since its release in early March, the movie is killing it at the box office. And last year’s highest-grossing film? Rogue One: A Star Wars Story, another Disney production. (Source: “Box Office: ‘Beauty And The Beast’ Waltzes Past $700M Worldwide,” Forbes, March 28, 2017.)

Not only would Apple acquire the largest movie franchises in the world, it would also gain the ability to have its own original content produced by the best in the industry.

Disney stock is up over eight percent since the beginning of 2017, and up 14% over the past 12 months.

The rumors that Disney will be spinning off “ESPN,” which has been seen as a detriment to DIS stock, could also help create an atmosphere for an Apple acquisition. With strong revenue growth year-over-year in 2016, Disney would make a great fit as an Apple investment. (Source: “Global revenue of the Walt Disney Company in the fiscal years 2006 to 2016 (in billion U.S. dollars),” Statista, last accessed April 17, 2017.)

MSFT Stock vs. AAPL Stock 

With all that information out of the way, where does that leave us with MSFT stock and Apple stock?

The fact is that both companies have the ability to be profitable but, as they continue to step into each other’s industries, there will undoubtedly be more friction and, therefore, some strong dips and rises.

At this point, Apple looks to be in the better position than Microsoft from a share price perspective, but that can be misleading. While Apple stock has enjoyed strong gains in recent months, the company has acquired a lot of debt and faces declining sales in iPhones, as first adopters who can afford the expensive smartphone are shrinking.

And that’s the state of the Microsoft vs. Apple rivalry. After a years-long detente between the two companies, they are once again entering into each other’s markets. While AAPL stock has the upper hand at the moment, threats to its stock in the long run make Microsoft stock a safer pick, albeit with less opportunity for huge growth.