Why Apple lag behind Microsoft as the most valuable company

Microsoft (MSFT.O) stock market value outspaced Apple Inc. for the first time since 2021 on Friday. This session made Microsoft most valuable company in the world and problems are growing even faster for the demand hit smartphone giant Apple. On Friday, Apple crept up 0.2% whereas Microsoft jumped 1%. According to LSEG, Microsoft’s market capitalization totaled at $2.887 trillion while Apple’s market capitalization was $2.875 trillion.

What made Microsoft climb over apple? maybe its investments into ChatGPT make OpenAI. Microsoft’s shares surged a 57% high in 2023. However, Smartphone giant’s shares are down by 3% so far after growing 48% a year earlier. Let’s dive into the reasons for this event. No doubt! slowing demand is one of the reasons but there are many more.

Apple Inc. smartphone revolution

Apple computer Inc. was founded by Steve Jobs and Steve Wozniak in 1976. At that time, it has only one product named Apple I, a single board based personal computer. But with the coming of Apple II, a pre assembled personal computer, hit market with commercial success. In 2007, Apple in a historic event launched iphone which revolutionized the whole smartphone market. This phased out popular brands like Blackberry and made iphone trendsetter in the smartphone market.

In 2023, As per quarterly report Apple sold iphones of about $200,583 million in the year 2023. Quite a huge sales number right? but here’s a catch iphone sales of 2023 is $4,906 million down as compared to sales of 2022 when Apple sold $205,489 million worth of iphones. Clearly it is a negative growth in the most popular device of the company. Now just take a second and understand in a more clear and comprehensive manner.

Demand Riddle

The Firm is experiencing tepid demand for most of its products including iphone. Below table clearly tells us about the trends and where are they going. As we study more about it, we find rise of Huawei like brands in the large market of China is one of the prime reason for people ditching their iphones and accepting home made Huawei smartphones. Consider phones like Huawei Mate 60 Pro with cutting edge technology is silently eating up market share of Apple in the Chinese market. Though out of context but interestingly The Intel Core i5-14490F “Black Edition” Raptor Lake Refresh CPU has recently been leaked in China.

Some of it also point towards slow recovery of China after deadly COVID-19 surge in the country resulting in slow or even bad economic growth. Apart from this, whole world is in recession mood laying off large number of employees and creating problems for tech product giants in the market. If you notice for a bit, all the products experienced a decline in sells but at the same time services sales steeped to $85,200 making it second prime source of revenue after the cash cow that is iphone.

Net Sales by Category	2023	2022
iphone	$200,583	$205,489
Mac	$29,357	$40,177
ipad	$28,300	$29,292
Wearables, Home and Accessories	$39,845	$41,241
Services	$85,200	$78,129
Total net sales	$383,285	$394,328

Supply Chain Disruption

World economy is dwindling each day with new issues and refreshed goals since 2020. First COVID-19 pandemic gave a jolt to the growth of number of large companies. However, COVID-19 pandemic was spreading like anything in the whole world that Russia attacked Ukraine for security reasons. This war in the north then gravely impacted supply chains in the world.

This adversely impacted many players including iphone maker. As the tech giant not getting hold of spare parts of the product resulting in the delayed supply of Mac, iphone and ipads. For instance, 14-inch and 16-inch Macbook Pro got delayed almost 6 months for its final launch.

China’s ban on iphone use

China is the largest market for any aspiring company but it is hard to conquer. Chinese have their own internet browser, social media, many phones etc. However with restrictions that is other case. iphone is widely used in China as well but the recent ban on the use of iphones in the country pose severe threat to sales of the product. China bans use of iphone by Government officials.

Bloomberg reported that large number of Government agencies and state owned businesses restricting employees from using iphones or any other foreign gadget. This trend has coincided with the boom in the popularity of Chinese smartphone brand Huawei. Though this ban is general and not specifically on iphone restriction but it will severely impact already slowing iphone demands and cost crucial revenue loss from one of the largest smartphone markets in the world.

Can Apple replace Microsoft as most valuable company?

There’s no debate iphone maker is smartphone giant dominating whole world with its cutting edge technology, beautifully crafted design and iron stealth security. But many countries, like in India, people consider it overpriced and complex to use for a beginner. However, aspires to own at least one Apple product. Revenue of the company is in shambles as it negatively impacted the growth of the shares and subsequently replacing the firm to the second place.

In 2019, The smartphone giant faced severe jolt to its product market as it sold only 187.2 million units of iphone lowest in past five years but with the introduction of one of the best selling iphones of the brand. iphone 11 lifted the sales upwards raised from dwindling 187.2 million to 196.9 million sales in the subsequent year of 2020. Additionally, With the Tech giant’s Vision Pro VR headset set to open for sales in US from February. There’s quite few chances of iphone maker replacing software giant Microsoft in the race of the most valuable company in the world.

Whatever it do to secure its position in the market is yet to be seen. We will see many many technological innovations and marketing strategies companies will make to ace their ranking and sell their products to a large chunk of people.