The Score Today: Apple 280, Microsoft 38

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 Some people like to think Bill Gates will be thesuccessor to Warren Buffett as CEO of Berkshire Hathaway, if and when Warren Buffettever leaves that post.  [Buffett will never “leave” in theconventional sense of retiring; he’ll work until his mind, or his body, orboth, give out and no sooner—ed.] We take the other side of that trade in“Warren Buffett’s Successor: Who It Is and Why It Matters,” just released viaKindle.  [It’s a short book: you can read it during the half-hour’s worth ofcommercial breaks that occur in the last 3 minutes of the average NBA game—ed.]  The reasons Gates will not succeed Buffett,despite being one of Buffett’s best friends as well as a longtime Berkshireboard member, are numerous and compelling, and we won’t repeat them here.  [Thank goodness—ed.] But there’s a very good reason Bill Gates isnot going to succeed Warren Buffett at Berkshire Hathaway that is not in thebook, and it has to do with the increasingly visible disintegration of theso-called “Wintel” duopoly that spelled mega profits for many years at Gates’baby. That disintegration is occurring—slowly butsurely—even as you read this virtual column, and it is visible in stores acrossAmerica. Just today we visited a prosperous mall in aprosperous city in America—a mall filled with post-Christmas holiday shopperstaking advantage of the post-Christmas sales that make this one of the busiestshopping days of the year. And at a little after noon, wecounted a grand total of 38 shoppers at the Microsoft store…and280 customers at the Apple store. Both retail spaces have about the same footprint, andboth occupy good, highly visible, high-traffic locations.  Also, we used the same method at each, counting everyone not wearing acorporate t-shirt as a customer—men, women, toddlers and even babies in strollers. Granted, it was a bit harder to count at theApple store than the Microsoft store, because there were shoppers coming and going atthe Apple store...while at the Microsoft store there weren’t many people coming or going, and there was only one personactually buying something at the counter.  But the ratio wouldn’t change much if wemissed a couple or double-counted a couple here and there: Apple had roughly 7-timesthe customer appeal of Microsoft on one of the busiest shopping days of the year.  It was almost painful to walk out of the Microsoft store without buying something, because the employees were doing their best to be friendly and engaging. [He is not being ironic here—ed] “So what?” Microsoftians will say [grumpily—ed].  “Microsoft is a business softwarecompany.  They make way more money onserver software and office software than on Windows for consumers.” And that’s all quite true.  More than half Microsoft’s revenues arebusiness/server/tools sales, and whatever Apple is doing to Microsoft’sconsumer franchise won’t show up in those businesses for years, maybe decadesto come. But it’s still worth pointing out, as we’vebeen doing over the years [here, here and here—ed.], that whatever Steve Ballmer has been doing at Microsoftsince he took over the day-to-day business from Bill Gates in 2000—includingiPhone “funeral processions” and other silly marketing tricks—it has notstopped Apple from winning a very competitive game in the free market. Indeed, by our count, Apple was winning that consumer game byabout 280 to 38 over Microsoft today. And what with Google going after the business apps market, Amazon WebServices becoming the go-to cloud for today’s startups, and the iPad making itsway into every “C-Suite” in the corporate world, we’ll bet the scoring onlygets tougher for Microsoft from here. Which is one more reason Bill Gates isn’tgoing to run Berkshire Hathaway any time soon: he has 441 million shares ofMicrosoft at risk, and some time in the not-to-distant future we bet he’ll be CEOof Microsoft for the second time before he’s CEO of Berkshire Hathaway for thefirst.
Jeff MatthewsAuthor “Warren Buffett’s Successor: Who It Is And Why It Matters”(eBooks on Investing, 2013)    $2.99Kindle Version at Amazon.com
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