Microsoft has lost its position as the second largest technology company in the market. Microsoft slipped in the ranks to Apple last year, and yesterday, it sunk to third place with International Business Machines Corp (IBM) surpassed it, reports the Wall Street Journal.
Microsoft's market value peaked in 1999 at around $600 billion and has only trended downward since then. The company has failed to replicate the dominance it holds in PCs in other markets like Internet search and mobile phones.
IBM, which marked its 100th anniversary in June, has completed what analysts are calling a remarkable makeover over the last decade. Microsoft and IBMs shares had opposite trajectories for the last 11 years. IBM's shares have risen 34 percent in the last year, whereas Microsoft has only gained 3.9 percent. It is worth $214 billion, trailing Apple who is worth $362 billion as demand for iPhones, iPads and Macs grows. Microsoft's value is now at $213.2 billion.
As the Wall Street Journal explains:
IBM Chief Executive Samuel J. Palmisano made tough decisions to dump cherished businesses like IBM's PC division and bulk up in technology services, business software and premium hardware—complex lines of business that are hard for competitors to replicate and carry high profit margins. The moves by the IBM lifer who took over from Louis Gerstner in 2002 allowed the company to find new life in the post-PC era.
Business Week reports that Palmisano was quick to move from technology to computing. He began focusing on software and services for corporations and the government.
“Computing is now found in things that no one thinks of as ‘computers’,” said Palmisano at a trade show keynote in February. “Today, there are nearly a billion transistors per human, and each one costs one ten-millionth of a cent. Yes, some of these transistors are going into servers, PCs, smart phones, MP3 players and tablets. But an increasing number of them are going into appliances and automobiles, power grids, roadways, railways and waterways.”
The companies are expected to continue to switch positions, predicts Joel Achramowicz, analyst at Blaylock Robert Van LLC in California, reports Business Week.
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