Apple vs. Microsoft Essay

Income Statement
The income statement indicates the profits or losses that the company incurred in relation to its revenue and expenses during a given period. Exhibit X illustrates the net income, revenue, and expenses for Apple and MICROSOFT, during 2008 to 2010.
Revenue
Apple | 2010 | 2009 | 2008 | Revenue (in millions) | 65,225 | 42,905 | 37,491 | Growth Rate | 52.02% | 14.44% | 52.54% |
Apple’s reported figure and growth signifies a positive performance trend for the company, especially when we compare these figures with MICROSOFT. Net sales of iPhone and related products accounted for 39 percent of Apple’s total net sales for 2010 compared to 30 percent in 2009. The firm’s various products and features are a market driver. Microsoft | 2010 | 2009 | 2008 | Revenue (in millions) | 62,484 | 58,437 | 60,420 | Growth Rate | 18.19% | (3.28%) | 6.93% |
As for MICROSOFT, the company experienced a slower growth rate compared to Apple’s. The increase in growth rate in 2010 is mainly due to the strong sales of Windows 7. Both Apple and MICROSOFT suffered a huge decline on revenue in 2009 because of weakness in the global PC market and the unfavorable economic environment.
However comparing the general picture of Apple and Microsoft, we can see Apple actually maintains a excellent growing trend, mainly because Apple’s new product—iPhone and iPad. Meanwhile, Microsoft as a software and service company was less innovative about creating high customer demand products, which have the parallel impact to financial statements. Microsoft’s overall revenue in 2008 to 2010 is considered satisfactorily stable. Consumers hold a stronger belief and anticipation for Apple products in comparison to Microsoft. Thus, allowing us to believe that the revenue will grow at a increasing pace.
Cost of Revenue Apple | 2010 | 2009 | 2008 | Cost of revenue | 62,484 | 58,437 | 60,420 | Growing rate | 53.96% | 5.720% | 47.90% | Percentage of Revenue | 60.6% | 59.9% | 64.8% |

The increase of cost in 2010 is caused by the higher cost structure of new products such as iPad. However, the substantial sales of iPhone, which has a higher gross margin than the company average, partially offset the total cost. Microsoft | 2010 | 2009 | 2008 | Cost of revenue | 12,395 | 12,155 | 11,598 | Growing rate | 1.97% | 4.80% | 8.46% | Percentage of Revenue | 20% | 21% | 19% |

The cost of year 2010 decreased because of the improvement in resource management efforts and the reduction of Xbox 360 consoles costs. The increase of cost in 2009 is primarily attributable to the increased online costs, which are traffic acquisition, data center and equipment, and headcount costs, also partially offset by the decreased cost of Xbox 360 platform.
Although Apple and MICROSOFT have parallel sales amounts, the difference between their costs of revenue is relatively huge. Apple’s cost of sales is almost triple of MICROSOFT’s. The reason for that could be Apple sells more tangible products such as iphone, iPad and Mac while most MICROSOFT products are software and services which usually have higher margin.
Research and development Apple | 2010 | 2009 | 2008 | Research and development | 1,782 | 1,333 | 1,109 | Growing rate | 33.68% | 20.20% | 41.82% | Percentage of Revenue | 2.7% | 3.1% | 3% |
In 2010, the R&D expense increased by 33.68%, it was primarily caused by the increase in headcount and related expense in the current year. The capitalization in 2009 of software development costs of $71 million also contributed to the R&D expense of 2010.
The increase in 2009 was primarily caused by an increase in headcount in 2009 and related expense as well. It was also caused by the increased higher stock-based compensation expenses. MICROSOFT | 2010 | 2009 | 2008 | Research and development | 8,714 | 9,010 | 8,164 | Growing rate | -3.29% | 10.36% | 14.65% | Percentage of Revenue | 14% | 15% | 14% |
R&D expense in 2010

Show More