Jeff Matthews
Dec 26, 20123 min
Some people like to think Bill Gates will be the
successor to Warren Buffett as CEO of Berkshire Hathaway, if and when Warren Buffett
ever leaves that post. [Buffett will never “leave” in the
conventional sense of retiring; he’ll work until his mind, or his body, or
both, 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 via
Kindle. [It’s a short book: you can read it during the half-hour’s worth of
commercial 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 Berkshire
board member, are numerous and compelling, and we won’t repeat them here. [Thank goodness—ed.]
But there’s a very good reason Bill Gates is
not going to succeed Warren Buffett at Berkshire Hathaway that is not in the
book, and it has to do with the increasingly visible disintegration of the
so-called “Wintel” duopoly that spelled mega profits for many years at Gates’
baby.
That disintegration is occurring—slowly but
surely—even as you read this virtual column, and it is visible in stores across
America.
Just today we visited a prosperous mall in a
prosperous city in America—a mall filled with post-Christmas holiday shoppers
taking advantage of the post-Christmas sales that make this one of the busiest
shopping days of the year.
And at a little after noon, we
counted a grand total of 38 shoppers at the Microsoft store…and
280 customers at the Apple store.
Both retail spaces have about the same footprint, and
both occupy good, highly visible, high-traffic locations. Also, we used the same method at each, counting everyone not wearing a
corporate t-shirt as a customer—men, women, toddlers and even babies in strollers.
Granted, it was a bit harder to count at the
Apple store than the Microsoft store, because there were shoppers coming and going at
the Apple store…while at the Microsoft store there weren’t many people coming or going, and there was only one person
actually buying something at the counter.
But the ratio wouldn’t change much if we
missed a couple or double-counted a couple here and there: Apple had roughly 7-times
the 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 software
company. They make way more money on
server software and office software than on Windows for consumers.”
And that’s all quite true. More than half Microsoft’s revenues are
business/server/tools sales, and whatever Apple is doing to Microsoft’s
consumer franchise won’t show up in those businesses for years, maybe decades
to come.
But it’s still worth pointing out, as we’ve
been doing over the years [here, here and here—ed.], that whatever Steve Ballmer has been doing at Microsoft
since he took over the day-to-day business from Bill Gates in 2000—including
iPhone “funeral processions” and other silly marketing tricks—it has not
stopped Apple from winning a very competitive game in the free market.
Indeed, by our count, Apple was winning that consumer game by
about 280 to 38 over Microsoft today.
And what with Google going after the business apps market, Amazon Web
Services becoming the go-to cloud for today’s startups, and the iPad making its
way into every “C-Suite” in the corporate world, we’ll bet the scoring only
gets tougher for Microsoft from here.
Which is one more reason Bill Gates isn’t
going to run Berkshire Hathaway any time soon: he has 441 million shares of
Microsoft at risk, and some time in the not-to-distant future we bet he’ll be CEO
of Microsoft for the second time before he’s CEO of Berkshire Hathaway for the
first.
Jeff Matthews
Author “Warren Buffett’s Successor: Who It Is And Why It Matters”
(eBooks on Investing, 2013) $2.99
Kindle Version at Amazon.com
© 2012
NotMakingThisUp, LLC
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