It’s worth imagining for a moment what would have happened if Microsoft had never gotten distracted by Google’s search business (or AOL or Yahoo’s ISP and ad businesses) and, instead, focused all that money and effort on developing the new markets that Apple now owns – personal connected devices (iPods), smartphones (iPhones), and tablets (iPads.)
How much would that have been worth to Microsoft shareholders to own these markets, even with the same lack of success on the Internet front?
We’re just playing a 20-20 hindsight parlor game, of course, so you can make your own estimates. But to produce a quick one, it seems reasonable to just add Microsoft and Apple’s stock-market values together.
If you do that, you conclude that Microsoft’s stock price need not have fallen by more than half over the past decade, from ~$60 to $24.
You conclude instead that, if Microsoft had gone after and won these huge new markets that are much closer to its core business than Google’s, it would now be by far the most valuable company in the US, with a market value of about $500 billion. And its stock, meanwhile, would be trading near an all-time high, around $70 per share.
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