Microsoft CEO Steve Ballmer suggested during a trip to New Delhi that despite Apple surpassing Microsoft in terms of market capitalization, his company remains the most profitable in the world. In addition to insisting on Microsoft's competitive value, Ballmer also reportedly said that Windows Phone 7, the company's upcoming smartphone operating system, will indeed be released by the end of 2010. News of Apple's higher market capitalization came after Microsoft announced a major shakeup of its Entertainment and Devices Division, which creates consumer products such as smartphone operating systems and the Xbox game console franchise.
Microsoft CEO Steve Ballmer suggested
during a trip to New Delhi that the
surpassing of Microsoft's market capitalization by Apple, while trumpeted as a
major shake-up by the media, was not a cause for concern at Redmond.
On May 26, Apple's market capitalization reached $227.1 billion, based on
its stock price, eclipsing Microsoft's $226.3 billion. That was enough to make
Apple the most valuable U.S.
technology company, and place it second on the list of highest-valued American
companies behind Exxon Mobile at its $282 billion market capitalization.
"It is a long game. We have good competitors but we, too, are very good
competitors," Ballmer told the audience, as
reported by AFP
and other media outlets. "I will make more profit, and
certainly there is no technology company on the planet that is as profitable as
Ballmer also suggested that Windows Phone 7, Microsoft's upcoming smartphone
operating system, will indeed be released by the end of 2010, according
to The Wall Street Journal
Overall, Ballmer reportedly said, "We are executing very well."
Ballmer's comments come days after Microsoft underwent a shake-up of its
Entertainment and Devices Division, which creates the consumer products meant
to compete against offerings from Apple and other companies. Although Microsoft
cast the departures of two of the division's top executives as being motivated
by personal reasons, speculation reigned that the sudden resignations were
driven by a combination of underperforming products and killed projects.
Those two resigning executives included division President Robbie Bach, who
will retire, and J Allard, the senior vice president of Design and Development
credited with shepherding the Xbox into production. Allard will apparently
serve in a consultant capacity to Ballmer, starting with as-yet-unannounced
projects this fall. Before Microsoft's official announcement, rumors suggested
that Allard would leave because one of his pet initiatives, the Courier tablet
PC, had been shut down before it could leave the development labs.
Microsoft's upcoming smartphone operating system, Windows Phone 7, is
intended to represent a fresh start in a market segment where the company has
fallen behind competitors such as the Apple iPhone and Google Android. While
early previews of Windows Phone 7 suggested an innovative user interface and
consumer appeal, the lack of an upgrade path for smartphones currently running
Windows Mobile-along with strong rivals in the form of Android 2.3 and iPhone
OS 4-could potentially slow its adoption.
During the first quarter of 2010, the Entertainment and Devices Division
contributed about 11 percent of Microsoft's $14.5 billion bottom line. Of its
products, some have proven more successful than others: The Zune HD portable
media player was praised for its design but suffered poor sales and Windows
Mobile smartphones have been bleeding market share; the Xbox game console
franchise has only begun to see profits after years of running in negative
"Certainly, the trend has been away from Windows Mobile overall, and Zune
hasn't done well," Roger Kay, an analyst with Endpoint Technologies Associates,
. "And even Xbox 360's best days may be behind it. That doesn't leave
much on E&D's plate."
However, Microsoft has also experienced larger successes in the past year,
including sales of more than 90 million Windows 7 licenses. The company likely
hopes that its upcoming release of Office 2010 to consumers will also help
consolidate its dominant market position in desktop-based operating systems and