Microsoft falls behind Apple for first time in 20 years

Microsoft's quarterly profits and revenues were eclipsed for the first time in 20 years by Apple as a slowdown in the PC business and continuing huge losses in its search division held it back.

Though the company reported net income up 30% to $5.2bn (£3.1bn) from $4bn, and revenues up 13% to $16.4bn from $14.5bn, both were smaller than figures released by Apple last week showing $6bn profits on revenues of $24.7bn.



The overshadowing of Microsoft's financial might by Apple will be seen by some as marking a key moment in the industry, as Apple's iPad tablet computer and iPhone smartphone have both become important sources of revenue even while its desktop and laptop computers – the areas where Microsoft dominates – have become less important. Microsoft overtook Apple in profits in 1991, and revenues in 1995. But since the launch of the iPhone in 2007 and then the iPad in 2010, Apple has grown rapidly, and its market capitalisation overtook Microsoft's in May 2010.



Microsoft's dependence on the PC industry, which recorded a surprise year-on-year fall in sales during the first quarter, means that its profits from Windows licences, which generate roughly half its profits, are vulnerable to any slowdown.

Analysts believe that the iPad and other tablets using Google's Android software are eating into Microsoft's PC business, and have not seen any convincing response from the Redmond-based giant. Sales of its Windows Phone have been unimpressive so far, and are not mentioned in the formal earnings announcement.[...] guardian.co.uk