Is Apple the New Microsoft?

$138.4 billion. That's what analysts expect Apple to report for its holiday quarter this Thursday. But the real story isn't in the numbers—it's in what those numbers represent. The company that built its empire on making people want the future is increasingly winning by making the present expensive to leave.

Apple has entered its Microsoft era.

Windows in Your Pocket

Apple's modern empire was built on a simple promise: the future would arrive neatly boxed, beautifully staged, and worth the hassle. People updated because they wanted to. People upgraded because they couldn't not. Even minor changes—a slightly different lock screen, a new bedtime reminder—felt like cultural moments.

Now that consumer sprint looks more like a shuffle. Cautious, slightly annoyed, and faintly suspicious that "new" means "more intrusive" rather than "more exciting." Apple's old trick was making the future look fun. Its new trick is making the present feel expensive to leave.

The iPhone has stopped behaving like a consumer product you upgrade for fun and started behaving like an operating system you live on. Identity, payments, messages, photos, work apps, health data—the entire muscle memory of modern life runs through this device. Apple has become a toll collector with great industrial design.

The numbers tell this story. In Greater China, net sales fell 4% to $64.4 billion in fiscal 2025, even with limited-time iPhone discounts. The smartphone market is stagnating, and Apple's growth increasingly comes from "higher net sales of Pro models"—the same premium-mix phenomenon that Microsoft leaned on when Windows was everywhere and the money was in versions and upgrades.

The Office Math

Microsoft's genius was Office: once Windows was the floor, Office became the high-margin annuity riding on top. Apple's version is Services—the sticky, profitable layer that turns the whole empire from a product company into a platform tollbooth.

The transformation is already visible in the margins. Services delivered a 75.4% gross margin in 2025, compared to 36.8% for Products. Services generated $82.3 billion in gross profit against $112.9 billion for Products, meaning the suite is now doing a massive share of the empire's profit work.

That's Office math. The device gets you in the door. The recurring layer keeps charging rent.

Apple's financial center of gravity has shifted from "sell the box" to "monetize the environment." Subscriptions, payments, cloud storage, App Store economics, bundles—all the infrastructure that makes leaving feel expensive. The most consequential Apple products now aren't always the ones you can hold. They're policies, defaults, and distribution deals.

The Next-Engine Question

Every dominant platform eventually faces the same challenge: the world moves, and the platform has to catch up without admitting it's chasing everyone else. Microsoft didn't "die" when Windows stopped feeling like the future. It became legible, steady, and for a long time, a company the market struggled to value as a growth story—even while printing cash and sitting inside basically every office building on Earth.

It took until 2017 for Microsoft's market value to climb back above $500 billion for the first time since 2000. That's a long time to be everywhere and still be treated like yesterday's news. Then cloud computing became the new engine.

Apple's last true platform breakthrough was the Apple Watch—which it originally got wrong and now feels like history. AI is the next interface shift the whole industry is reorganizing around, and Apple's AI story is quiet at best. The company that once mocked Microsoft for being the uncreative incumbent now risks falling into that same trap: massive, everywhere, and slowly losing the ability to convince people it's steering the future.

Wall Street is trying to decide whether the current iPhone cycle proves renewed consumer appetite or represents a late-cycle spike that sets up tougher comparisons ahead. "Great quarter" doesn't mean "great future." The smartphone world might get more expensive right as replacement demand becomes more optional.

The Default Trap

Apple has reached the default stage—the point where success comes from managing a base rather than selling a dream, from keeping the suite indispensable rather than launching spectacles. The question isn't whether Apple can maintain its position; platforms this entrenched don't disappear overnight. The question is whether it can find its next act before "premium" becomes "legacy."

Microsoft proved you can be the default, lose the future, and survive. It also learned that only a new engine brings you back to relevance. Apple's stock has been acting like the market senses this shift—earlier this month, shares were on pace to match their longest losing streak since 1991.