Wall Street wiped $32 billion off the value of Microsoft yesterday as its share price dropped 11 per cent. This was because the company revealed a dramatic shift in its strategy to spend bucketloads of money trying to compete in emerging online markets. Here’s what the Financial Times‘s Lex column had to say:

While Microsoft’s shares dropped like a stone after it revealed plans to pour cash into online and other new markets, Google’s stock barely budged. A warning, perhaps, of the ineffectiveness of Microsoft’s billions in the battle ahead?

The investment binge that will hammer Microsoft’s profits next year echoes other past spending sprees, such as the initial Xbox foray. The company spent years trying to convince Wall Street that it was swearing off such extravagances, so it is hardly surprising that the news was poorly received. In fact Microsoft has little choice. The coming Windows Vista product cycle could well mark the last hurrah of a truly wondrous business model. As more software moves to the web and mobile phones, Microsoft’s foothold on the PC will become progressively weaker as a place from which to shape the future of its industry. Putting Windows on servers was a nice stopgap, but further gains will become harder as Linux spreads…

I love that phrase — “the last hurrah of a truly wondrous business model”. Must remember it for future use.

Oh — and while we’re on the subject, Netcraft has revealed that Apache has overtaken Microsoft as the leading developer of secure web servers. Apache now runs on 44.0% of secure web sites, compared to 43.8% for Microsoft.