For the first time in a decades-long fight that has defined personal computing, the one-time underdog Apple Inc. overtook Microsoft Corp. on Wednesday to become the world's biggest technology company by stock market value.
Apple reached the milestone by riding a string of consumer electronics hits starting with its iPod music player in 2001 and continuing with its recent introduction of the iPad computer tablet.
But it has also benefited from stumbles by its rival, which has had little success moving beyond its ubiquitous but familiar Windows operating system and its Office software.
"Microsoft has been the workhorse of the PC revolution," said Yair Reiner, an analyst at Oppenheimer & Co. "But it seems that horse is running out of new tricks."
Microsoft's market value slipped to $219.4 billion after its shares continued to fall Wednesday, while Apple closed the day valued at $222.6 billion.
That made Apple the second-largest U.S. company by stock value, trailing only Exxon Mobil's $278.6-billion market capitalization.
Just little more than a decade ago Apple was on life support. Apple had begun to stall without its co-founder and visionary chief executive, Steve Jobs, who had been pushed out of the company in 1985.
But Jobs returned in 1997, and beginning with Apple's debut of the hit iPod the company has released a parade of blockbuster consumer electronics products, selling tens of millions of iPods, iPhones and laptops and forcing competitors to play a constant game of technological catch-up.
In recent years, Apple has also broken into a variety of software and entertainment markets, selling music, movies and small software "apps" through its popular iTunes platform.
Meanwhile, Microsoft has had trouble achieving a foothold in some of technology's hottest sectors. Its Windows Mobile phones never found significant traction with consumers, and its attempts to develop a tablet-style computer have fallen by the wayside.
In the last decade, Microsoft's stock price has stayed more or less stagnant, hovering around $25 a share.
At the same time, Apple's stock has soared more than tenfold. An investor who bought 100 Apple shares for about $2,300 in 2000 could cash out today for more than $24,000.
"It's more than just Mac versus PC," Reiner, the Oppenheimer analyst, said. "The market sees Apple as an engine of innovation and growth, but with Microsoft, the vast majority of its profits come from products that have been in the market for a long time."
Apple stock, which has repeatedly reached record highs in recent months, has risen nearly 16% since the beginning of the year to $243.11 on Wednesday, while Microsoft's has dropped almost 18%.
With vast cash reserves and profits still rolling in, Microsoft is far from ailing. The company, which made $58.4 billion last year, still dominates desktop computing, with its software running on hundreds of millions of business and personal computers around the world.
But with a series of marginal product releases — including its much-maligned Windows Vista operating system and its ill-fated Zune music player — the company has struggled to keep pace with its closest rivals, Apple and Google Inc.
Indeed, Microsoft has fought a two-front war against its Silicon Valley competitors and has often been criticized for being staid and slow to adapt to the rapidly changing technology landscape.
Cesar Portillo, 46, a vice president at a children's health clinic in Los Angeles, said he switched to an Apple Macintosh computer in 2005 after using PCs since college — and has never gone back.
He said Microsoft products had an "old fogey" sensibility that had hurt its reputation.
"Microsoft isn't the evil empire — they're the inept empire," he said. "Their old model of copying their competitors and putting out mediocre products has caught up with them."
Apple has sold 50 million iPhones since the device's release in 2007, and recently trumpeted the sale of its millionth iPad tablet computer since the product's release in early April.
Apple is gearing up for another launch that could endear it further to its loyal investors. On June 5, Jobs is widely expected to announce the fourth-generation iPhone. It has created the kind of buzz rarely achieved these days by Microsoft.
Times staff writer Tiffany Hsu contributed to this report.