Are Apple Inc. (AAPL), Google Inc (GOOG), and Microsoft Corporation (MSFT) Switching Hats?

If you spend much time in the financial blogosphere, you come across a common theme when things start to get shaken up: Is company X the new company Y? Right now, with Apple Inc. (NASDAQ:AAPL) languishing just above its 52-week low, Google Inc (NASDAQ:GOOG) sitting at its 52-week high, and Microsoft Corporation (NASDAQ:MSFT) presumably happy to be a part of the conversation again, there is a nice series of these comparisons to be made.

Is Apple the new Microsoft? Is Google the new Apple? And almost by default: Is Microsoft the new Google? As odd and improbable as this may all seem, particularly if we look back at where each of these companies was sitting last fall, these are legitimate questions that should be asked.

Apple Inc. (NASDAQ:AAPL)Is Apple the new Microsoft?
History is littered with tales of great empires falling due to stagnation, complacency, and bad timing. Since the stock’s high above $700 per share last September, Apple Inc. (NASDAQ:AAPL) shares have tumbled 40%. One of the areas in which the company has been criticized is in the lack of new innovation being seen out of Cupertino. The company has drawn attention over its rumored entry into wearable tech with the iWatch, but there is no indication of when this product might be released.

In a recent research note, UBS analyst Steve Milunovich identified the problem, but warns that investors will likely need to be patient. He also commented on the company’s margins:

And a 30 percent operating margin long-term historically has proven very difficult to protect. We are no longer looking for the gross margin to move back over 40 percent this year. So while we don’t see it coming down a lot, I think longer-term it is a risk.

The new Apple Inc. (NASDAQ:AAPL) products slated for July are only incremental improvements over existing models. Each of these were the types of problems that caused Microsoft Corporation (NASDAQ:MSFT) to stagnate for nearly a decade. The company remained profitable, just not the hot name. If Apple Inc. (NASDAQ:AAPL) is to avoid this fate, it needs to up its game soon.

Is Google the new Apple?
As is the nature of empires, when one falls there is always another standing ready to take its place. While I have long maintained that Google was the true king of tech, based largely on its better-diversified business model, the company seems to have embraced this new role. As Apple shares have fallen, Google Inc (NASDAQ:GOOG) is up double-digits this year. The company has been able to successfully grow revenue across market segments, is going to market with Google Glass, and continues to whittle away at Apple Inc. (NASDAQ:AAPL)’s lead in devices.

While it is hard to compare a device company to a search company per se, it is Google’s tenacity in expanding into new markets that’s allowing it to perform as well as it is. The company was able to grow its app revenue by six times for 2012, it controls an estimated 75% of the search market in the U.S., and some analysts believe there is value in YouTube that’s to yet be unlocked. When these factors are added to the increasing strength of Google Docs and new Google Inc (NASDAQ:GOOG) hardware, it quickly becomes apparent why some have set new price targets at $1,000.