Apple seems to have taken a few hits in recent months to its carefully crafted public image. Although it’s a silly argument, some tech pundits are worried that Apple is no longer capable of innovating, and that the company’s best days are behind.
Maybe that’s true, and time will tell, but Apple as a for-profit business seems to have a few more legs than Google, or Microsoft, or nearly any other competing business. See if you can count the number of legs, then compare that number with others.
A Few Legs Up On Profits
First, lets look at Google. The search giant has a finger in nearly every pie these days. Not only is there the advertising cash cow, there’s hardware, and services. How’s that working out?
Well over 90-percent of Google’s profits come from the search engine advertising business. Most of the rest of Google’s beta projects remain profitless, including Android.
Smartphones and tablets don’t make any money. The Motorola purchase has been a big disaster. Even most of Google’s mobile advertising revenue comes from Apple’s iOS users.
Google: One leg.
What about Microsoft? Most of the company’s profits come from Windows and Office, and much of the rest of the company loses money hand over fist. Search engine advertising? Loser. Xbox 360? Loser. Tablets and notebooks? Loser. Smartphones? Loser. The company does make some money on hardware accessories, but it’s not enough to cover the losses elsewhere.
Microsoft: Two legs.
What about Apple? This multiple leg analogy should be something stock analysts and technology writers should know, but apparently do not. Let me start with a smaller leg. iPod. As portable media players go, Apple owns about 75-percent of the market, but the iPod is important to Apple and many competitors would love to have the profits from this shrinking business.
Secondly, lets back up to the Mac. Estimates show Apple’s Mac owns the lion’s share of PC maker profits, and tops the next four manufacturers combined. Not bad for the company that lost the OS wars to Microsoft.
Next up is the smartphone industry, and recent estimates show Apple owns about 70-percent of profits, with the majority of the rest going to Samsung. That’s another highly profitable leg for Apple.
We need another chair. Close to the iPhone is the iPad which now accounts for more revenue and profits than the entire Mac line. That’s another leg as the iPad is highly profitable for Apple. On the same chair is the iTunes Music Store. It’s more of a media mall these days, but even mighty Amazon doesn’t sell as many movies, TV shows, or songs as Apple.
Finally, Apple’s App Store revolutionized the smartphone industry, and the company carried that leg of profitability to the Mac. Users can buy from hundreds of thousands of apps at the click or touch of a button. And, they do– more frequently and for more money than all other competitors combined.
Apple: Six legs.
I count six legs to Apple’s profit stools, each one a leader in each product segment. Why isn’t that enough to satisfy the critics? And, how long can Apple’s competitors continue to limp along on one leg?