Consider Apple vs. Microsoft vs. Google vs. Amazon. All of these technology giants make money differently. Not one of them goes head to head with another yet all compete against each other for mindshare, as well as revenue growth and profits, yet all do what they do entirely different from one another.
What’s interesting about the group is how they’re treated by market analysts, technology writers and critics– one is mistreated and seemingly misunderstood, three are revered as industry movers and shakers, one makes very little profit, and only one of the four bothers to tell investors or watchers how many of their products are sold each year.
Let me start at the bottom of the pack and give you a few obvious disparities you won’t read about too often.
Amazon – Jeff Bezos wants to be Steve Jobs but Amazon only dominates online sales as a collective department store; many, many major companies have successful online businesses which are as profitable or more so. Amazon’s technology infrastructure is touted as the industry’s best, but both Google and Microsoft (and IBM and others) are coming on strong and have figured out the profitability model. Oh, by the way; Amazon never tells how many units of its own branded– designed and manufactured in China– devices it sells, which leaves everyone to their guesses.
Microsoft – There is little question that Steve Ballmer’s successor has managed to turn the misguided ship around and move into the cloud and subscription business while maintaining profitability with Windows and Office. Microsoft software is everywhere these days, but the company’s hardware efforts have hit a snag. Surface device revenue was down in the quarter where it should have been up. As usual, Microsoft investments turn sour. LinkedIn’s revenue was a minor rounding error and it lost $100-million. Cloud services revenue was up and Microsoft touts a big revenue run rate of of $14-billion but actual revenue was about half that. Or, put in perspective, about the same as Apple’s failure, Watch. See the disparity in perspectives?
Google – As with Microsoft and Apple, Google makes money hand over fist but was not able to shut down enough Moonshots in 2016 to make the expected profit numbers. In other words, Google still makes money they way it always has. Advertising. Hardware sales, even with the highly touted Pixel smartphone line, remains a rounding error and hardly provides competition to Apple’s iPhone 7 and 7 Plus. Google has been making a lot of public noise in recent years, but the money– revenue and profit– rolls in from advertising, and not all the other ill-fated technology ventures. Google is becoming more like Microsoft was. Lots of mud on the wall and not much that sticks.
Apple – This is where the comparisons get interesting because Apple competes in hardware sales with Amazon, Microsoft, and Google, but remains the clear and present winner. Apple knows how to make money with hardware sales while the others do not. Wait. Isn’t the Surface PC line a big success at Microsoft? Is it really? Sales are down. Meanwhile, Apple sells 4 to 5-million Macs per quarter with a quarterly revenue estimated at upwards of $6-billion, nearly four times Microsoft’s Surface.
Wait. Isn’t Amazon’s new Echo with Siri bashing Alexa a big hit? That’s what the critics and analysts say, but Amazon won’t say how many Echo units have been sold. Most estimates say Apple’s Watch sells in greater numbers at a much higher average selling price, but Watch is considered a dud while Echo is considered a hit product? Do you see anything wrong with that picture? Math is truth, and Apple’s math is pretty good. In every category where Apple competes– Mac, iPhone, iPad, Watch, Apple TV, services and apps, it’s Apple that brings in the highest revenue and profits. Marketshare is meaningless if profits are zero.
All of these companies know how to make money. Apple knows how to make more and the entire product line is diversified beyond the competition. This is not an arguable point or an alternative fact.