Profit or Passion Part 2

I never thought I will write part two so fast but once event has forced me to do so. The event was Apple take over Microsoft was world’s most valuable tech company having market capitalisation of more than USD 222 billion. The reply from Microsoft chief to this news was not different or surprising. He said it is a long game and we are still most profitable company.

The view of Microsoft chief shows how much important is for them to make profit. No matter what happens profit will remain top priority. In today’s dynamic world profit is important but should not be your aim. If you do so you will not be able to make profit after few years.

In the past companies required to be in business for many years to start making profit and it took many years to go bust. But today situation has changed dramatically. Today company is in profit from the first year and companies go bust in few months. So strategy of the company for long term growth is more important than profitability. Share holders have also now learnt that EPS is important but should not be the only factor to gauge company’s value and hence you see Apple shares having higher valuation than Microsoft.

People believe future belongs to Apple. People are optimistic that Apple will change landscape of computing but people do not have anything to see in Microsoft. What people see is Office 2010 which is priced even more, having similar features and more of a revamp rather than new thing.

Microsoft lost its crown of being World’s most valuable tech company, it is not a small crown to lost, it may sound as end of era so Microsoft has to be careful and not to take this as some event, it has to start creating great products, products which people need, products that will affect Masses and not think of affecting bank balance.

 

Signing off

Nikhil Parchure