THE COMPUTING GIANT IBM has become the second largest information technology company by market capitalisation, surpassing Microsoft.

Big Blue, which ditched its PC business back in 2005, now focuses on bigger hardware, software, services and consultancy. The company has been seeing its share price slowly rise while Microsoft has had a horrible year. Now IBM’s market value – its share price multiplied by the number of shares outstanding – is at $214bn while Microsoft’s market value is $213.2bn.

Microsoft overtook IBM back in 1996 and until now has never finished a day ranked below Big Blue on the stock exchanges. Microsoft’s peak market capitalisation came in the heady days of 2000 when it was valued at $430bn. Ever since then it’s been on a slide down to its current position.

Last year Apple surpassed Microsoft to become the most valuable information technology company on the market, though unlike Apple, both IBM and Microsoft are generally seen as blue-chip investments, meaning they are expected to offer steady, if unspectacular returns for investors.

IBM’s decision to dump its legendary PC business was a shock back in 2005, similar to HP’s recent announcement that it too will look to spin-off its PC business. However given the financial success IBM has had since then, seeing its profits and share price increase, this might give the new HP CEO, Meg Whitman, a reason to follow through with Leo Apotheker’s decision.

IBM still has a long way to go if it is to overtake Apple, which has a market capitalisation of $362.1bn. However IBM aims to double its operating earnings to $20 per share by 2015, meaning that Apple will have to flog ever more shiny toys to stay ahead of IBM.