Yes, Microsoft is still incredibly profitable, but these profits come mostly from the Windows and Office product offerings. Microsoft hasn't successfully entered a new market in a long time now, and so despite the good profits, Wall Street hasn't rewarded Microsoft for them.
"Professional investors don't believe Ballmer, and they don't see bigger profits in Microsoft's future," Gassée explains, "Conversely, they bid up Apple's shares precisely because they think the company will keep growing revenue and profits. Apple has managed to enter new, growing markets, a feat Ballmer has repeatedly failed to accomplish."
As a result, Microsoft's stock value has halved over the past ten years, while Apple's soared from USD 25 to USD 256. Apple is now the world's largest technology company by market capitalisation, and while that doesn't mean everything, it does hold some significance as it confirms the trend: Microsoft isn't innovating. Apple is. Wall Street sees a bright future for Apple. They do not see a bright future for Microsoft.
Steve Ballmer, Microsoft's CEO, has missed a lot of boats this past decade. Social networking? Search? Smartphones? Portable MP3 players? On top of that, a numer of products failed to deliver: Vista was a disaster, and the Xbox 360 suffered from major reliability issues.
To bring the ship around, Steve Ballmer reorganised the company's Entertainment & Devices division, kicking out the responsible executives. According to Gassée, one of the reasons for booting Robbie Bach is that he lost the HP account when it comes to the cancelled HP Slate which was supposed to run Windows 7. Actually, Gassée is quite clear in that it wasn't Bach who lost HP - it was Ballmer, and this "is yet one more reason why Microsoft shareholders are troubled".
He further believes that Ballmer is suffering from a reality distortion field - a field which prevents Ballmer from seeing the mistakes he and his company have made. It doesn't help that Microsoft's board of directors consists of people close to Ballmer; people who have no background in technology.
"So, there we are," Gassée concludes, "An immensely successful company, still making large amounts of money but unable to go beyond its original Windows + Office + Exchange franchise, left behind by a combination of newcomers such as Google and Facebook with the old frenemy, Apple."
Gassée's article is definitely worth a read.