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Apple becomes the new high-tech king of Wall Street

Text by Sébastian SEIBT

Latest update : 2010-05-27

For the first time, Apple has surpassed Microsoft to become the highest-valued tech firm on Wall Street, a historic shift that is due partly to the explosion of mobile technologies.

Two decades of tech firm history have come to an end on Wall Street. On the world’s principal exchange, the value of Apple stock exceeded that of Microsoft on Wednesday, estimated at $222.12 billion compared to only $219.18 billion for the deposed king of tech stocks. What is more, the only US firm keeping up with Apple is the Exxon oil giant, estimated to be worth $278.64 billion.

It is a historic turning point for the creator of the Mac, iPod, iPhone and now the iPad, which has been operating in the shadow of the Microsoft giant since the 1980s. “It is the single most important turnaround that I have seen in Silicon Valley,” said Jim Breyer, a venture capitalist specialising in new technologies, in an interview with the New York Times.
 
Twenty years ago, Apple was a minor player. Its computers made up barely 2 percent of the global market share and the tech world suspected that Microsoft would buy out its smaller rival. In 1997, PC Dell founder Michael S. Dell even suggested that Apple should shut down and return any money to shareholders.
 
A gamble on tech's future 
 
Apple owes its rebirth in part to Microsoft, which in 1996 injected the company with $150 million. That same year, Apple's charismatic founder, Steve Jobs, returned to lead the struggling company. It is widely believed now that the return of Jobs, who had left in 1985, helped the company pull ahead.
 
Jobs decided to put all his apples in one basket – that of computers. Apple then invested in dominating the digital music sector with the iPod, launched in 2001. Next came a mission to revolutionise the world of cell phones with the 2007 release of the iPhone. According to the company’s official figures published in April, it has sold 260 million iPods since 2001 and 50 million iPhones in the last three years.
 
Despite all of its successes, Apple’s new dominance on Wall Street does not reflect the financial reality. In terms of turnover as well as profits, Microsoft still outstrips its competitors. The stock exchange figures instead underscore a technological gamble, according to Peter A. Theil, cofounder of online-payment portal PayPal. “Apple is a bet on technology,” he told the Times, and where it is headed in the future.
 
Investors are now putting their money on the idea that mobile technologies, where Apple is pulling ahead, will be more important than the traditional PC sector, where Windows software continues to dominate and remains the primary source of income for Microsoft.
 
This trend toward the mobile is also good news for a third major tech player, Google. The Internet giant has made major investments into the Android operating system for its own cell phone, which outsold the iPhone on a day-to-day basis through the first quarter of this year.
 

Date created : 2010-05-27

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