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Apple edges Microsoft on profits for first time in two decades

by Phil Hornshaw

Drops in Microsoft’s (MSFT) profits for the first quarter of 2011 have put the company behind Apple (AAPL) for the first time in 20 years.

According to a story from Bloomberg, Apple posted quarterly profits of $5.99 billion, rising above Microsoft’s $5.2 billion. The reason: iPad’s cutting into the market share normally enjoyed by laptop computers. At least, that’s how analysts see it. Pat Becker Jr., principle of Becker Capital Management, told Bloomberg there is “no doubt” that iPads are taking customers away from more traditional computers.

Microsoft’s Windows division dropped by 4.4 percent in the quarter, pulling in $4.5 billion. Meanwhile, its Entertainment & Devices division saw a massive revenue increase of 60 percent year-over-year thanks to Xbox 360 and the Kinect motion controller.

Over at Apple, it appears early speculation that the Verizon iPhone wasn’t selling so well was way off. According to a story from Pocket Gamer citing figures from analyst firm NPD Group, Apple is now the No. 3 phone seller in the U.S., snagging 14 percent of the total smartphone market.

Samsung (005930.KS) is still the top phone manufacturer in the country, holding down 23 percent of the market, and is followed by LG with 18 percent. NPD cites the launch of the iPhone 4 on Verizon (VZ) as a reason for Apple’s success, despite reports from DigiTimes yesterday that assemblers of the smartphone expected only 5 million orders for the phone for 2011, rather than 10 million.

NPD also says that for the first time in two years, Android has lost ground in the U.S. market. The operating system currently holds 50 percent of the smartphone market, down from 53 percent in the quarter before. Apple’s iOS currently has 28 percent of the market, and BlackBerry by RIM (RIMM) holds the third spot, dropping another 5 percentage points to 14 percent total.

Though accounts have been to the contrary, it appears that Apple is still a force to be reckoned with in the smartphone arena and isn’t powerless against the Android war machine. It goes to show that many analysts’ projections can be disproved by smart moves by Apple, and with the iPhone 5’s release likely pushed back to September, devices like the Verizon iPhone and the white iPhone 4 will continue to have legs this year.