iPhone antenna controversy won’t stop Apple from topping Microsoft’s revenue

Apple's revenue figures could top Microsoft's as early as this week

It was less than two months ago when Apple hit a major milestone by topping Microsoft as the world's most valuable technology firm, at least when measured by market capitalization.

Now Apple is on the verge of a second coup - beating Microsoft's quarterly revenue figures, "for the first time in its history," according to a new report by Fortune.

How Apple topped Microsoft

The numbers are impressive. Microsoft is expected to report $15.26 billion in quarterly revenue this week, and analysts believe Apple could top that figure. The iPhone antenna controversy may have given Apple a black eye, but sales for all its major products are still strong.

"Even if Apple doesn't beat Microsoft in sales this quarter, it will almost certainly do so next quarter and by quite a large margin," Fortune's Andy Zaky reports. "For the September quarter, analysts expect Apple to generate approximately $16.81 billion in revenue compared to a projected $15.16 billion in revenue for Microsoft. So even conservative estimates, which have yet to be adjusted to account for iPad sales, already put Apple ahead of Microsoft by nearly $1.2 billion next quarter."

Microsoft is still king of the hill when it comes to net income because of its wide operating margins. Microsoft is expected to report $4.1 billion in net income for the most recent quarter, a billion or so better than Apple, according to Fortune.

Building hardware is typically more capital-intensive than developing software, one reason why it shouldn't be surprising that Microsoft still posts better profit numbers. But the trend in this rivalry is clearly going in the wrong direction for Microsoft.

Microsoft has acquired nearly 10 times as many companies as Apple in the past decade, and spent nearly nine times as many dollars on research and development, according to Dow Jones research I mentioned in a recent article.

Specifically, Microsoft made 104 acquisitions compared with Apple's 11 in the past decade, while spending $71 billion on research and development, compared with Apple's $8 billion. 

But Apple has been on the winning side when it comes to luring new customers, unveiling innovative new products like the iPod, iPhone and iPad. Apple's success is due to an obsessive focus on user-friendliness, says Dow Jones investment banker Sameer Bhatia.

"If a company focuses on the user needs and user interaction, that's more important than having loads of cash and capital, and doing mergers and acquisitions," Bhatia said.

Even Microsoft admitted that it admires how Apple's products "just work," a phrase Microsoft used in confidential documents about the upcoming Windows 8 operating system.

Windows 7 is already being called a success by many, but part of its popularity - at least with developers - is due to features popularized by Apple, like touch and multi-touch interfaces.

Apple will report its quarterly earnings Tuesday and Microsoft will do so Thursday. Even if this isn't the quarter when Apple finally beats Microsoft in revenue, it seems likely that a year from now the roles will have been reversed and we'll be speculating about whether Microsoft has any chance of topping Apple. 

Follow Jon Brodkin on Twitter. 

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