Skeptics have asked, fairly, why Apple Inc. (NASDAQ: AAPL) should have a larger market capitalization than Hewlett-Packard (NYSE: HPQ), Microsoft (NASDAQ: MSFT), and IBM (NYSE: IBM). The answer is that Apple’s growth is much faster and Jobs and his firm are about to reach a point at which the firm will be the No.1 technology company in the world in revenue. And Apple sells almost no products that cost over $4,000.

Apple posted revenue for the last quarter of $20.3 billion. That figure was up 67% from the same period last year. Apple’s profit for the period was $4.3 billion, a 71% increase.

IBM reported earnings at the same time. Its revenue rose 3% to $24.3 billion. IBM’s profits rose from $3.2 billion in the same quarter last year to $3.6 billion in the most recent period.

Hewlett-Packard, which describes itself as the largest tech company in the world by sales, had revenue of $30.7 billion in its quarter that ended on July 31, up 11.4%. Net income was only $1.8 billion.

Microsoft is still, by most measures, the most profitable of the large tech companies. It had net income of $4.5 billion in its quarter that ended June 30. That was on revenue of $16 billion.

Apple said it expects its revenue for the current quarter to be over $23 billion. Apple is known for issuing guidance which tends to be well below future results. But, based on the firm’s own forecast, its annual revenue-run-rate as of the end of the current period will be $95 billion. Its net income annual run rate will be $17.5 billion.

Some of the core businesses of HP, IBM, and Microsoft grow quickly from time-to-time. Microsoft recently got a growth spurt from the introduction of Windows 7. HP has benefited recently from a rebound in PC and printer sales.

Apple’s growth rate over time cannot be equaled by any of the other companies in the tech category, or perhaps any large public company at all. Apple’s revenue in its 2007 fiscal year was $24 billion. It announced its 2010 fiscal sales of $65 billion today.

Why has Apple done so well? Perhaps because it is not in the highly competitive enterprise market in which tech companies have to compete for huge contracts with large corporations. Perhaps because each of its major product launches in the last decade has been a hit, or that the management has an unprecedented ability to offer the market products which are better designed, better branded, and better featured than those from any competitor.

Apple will be the largest tech company in the world by both revenue and net income soon. All that is left to guess is the quarter in which it will happen.

Douglas A. McIntyre

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