A house of cards refers to a structure created by stacking playing cards one on top of another.
It’s no mean feat to create a complicated structure– a house– from a deck of playing cards, but each structure has one thing in common. That’s why a house of cards often refers to something built on a shaky foundation that will ultimately collapse. You know, like Apple.
All Came Tumbling Down
In the past week alone two of my co-workers and a friend asked me about Apple’s waning fortunes; as if the company was borrowing money to stay alive. Wait. Bad example.
One was concerned about Apple being able to compete against Google, while another voice concern over Apple’s fortunes in the face of a rejuvenated Microsoft.
And a close friend was certain that Samsung was the new Apple of the 21st century, but didn’t know exactly why that was the case.
In other words, there’s a growing public perception that Apple’s business is merely a house of cards which could come tumbling down at any moment.
Au contraire, mon amour!
Allow me a moment to compare Apple’s so-called house of cards with just a few competitors starting with Microsoft, Google, Samsung, and Amazon. Only the first three of which are like Apple– profitable
First up, Microsoft. Where does the profit come from? Windows and Office. No, not services, not Xbox, not search, not anything else. Windows and Office. Microsoft has spent tens of billions trying to build profit elsewhere, but to no avail.
Second on the list is Google. Where does the profit come from? Advertising. Not hardware, not Android or the Android ecosystem. Well over 90-percent of Googles profits come from… drum roll, please… advertising. And most of the mobile device advertising comes from… take a guess… Apple’s iOS system.
Third on the list is the true conglomerate of the bunch, Samsung. The company is more diversified than either Microsoft or Google, but profits come from chips and mobile products and not much else. No, Samsung’s smart TVs are not so smart when it comes to making money.
Finally, there’s Amazon. Based on Amazon’s stock price and those Amazon Kindle HDX tablet ads which seek to vilify Apple’s hot selling iPad, you’d think the company was a robust giant. It’s not even profitable, hasn’t been for years, but CEO and co-founder Jeff Bezos has hoodwinked the stock market to think Amazon is the next greatest thing since sliced bread and the iPhone. It’s not.
Apple’s Card Stock
What about Apple? If ever there was a profit making machine, it’s Apple, and it’s not a one-trick pony operation like Google. Everything at Apple makes a boatload of money. The Mac takes up half the PC industry’s profits on barely 10-percent of the unit volume.
The iPhone owns more than half the smartphone industry’s profits, and the iPad owns more of the tablet industry. Horace Dediu says Apple’s iTunes Mall of Products would be #130 on the Fortune 500 list of biggest businesses all by its lonesome. Put another way, iTunes generates five times the profit of Amazon on about one-third the revenue.
What about the iPod? Isn’t that a business that is caving in? Only as a standalone device. Remember, Apple purposefully killed the iPod. After all, there’s an iPod in every iPhone and iPad.
The notion that Apple is a house of cards waiting to collapse is ridiculous. Few companies are as diverse and healthy as Apple– and everything is growing, including revenue and profits.
There are probably few CEOs in the world that would not want to trade places with Apple’s financials.