Have you ever wondered why Microsoft stuck it’s nose into so many businesses where it obviously did not belong? Do you wonder why Google didn’t stick with what it does best? Search engine advertising. Why does Amazon sell tablets?
Leaders of modern technology companies know that resting on laurels is the sure path to obsolescence, obscurity, death, and a fate as a historical footnote. So, tech companies branch out and attempt to diversify their products and services to prolong their existence. How is that working out for Apple’s many and varied competitors?
Back in the good old days Apple was the Mac. It was the Mac against the Windows PC hegemony, when Microsoft was a filthy rich illegal monopolist.
Today, barely a generation later, Apple’s Mac is the PC industry’s only remaining darling, owner of half the industry’s profits on barely 10-percent of PC marketshare.
Along the way, Apple diversified beyond the Mac by acknowledging that Microsoft won the desktop wars, the next great thing still needed to be invented, and set about doing so.
Did Microsoft invent the next great thing? PC tablets and Windows smartphones never took off, so I’ll take that as a no.
Instead, Apple launched one industry disruption after another. Apple Stores, iPod, iTunes, iTunes Store, Macs on Intel, iPhone, App Stores, iPad, Apple TV and streaming media. All highly profitable, and each a Fortune 500 company in their own right.
What about Google, Microsoft, Amazon, and others? How have their attempts to diversify worked out?
To be fair about history, let’s give Microsoft credit for having two successful businesses; Windows and Office; both highly profitable. What else? Xbox? Don’t make me laugh. Microsoft sells plenty but will never make enough profit to get a return on the investment.
Even today, after Microsoft jumped into hardware to mimic Apple yet again (What does a Microsoft Store in the mall remind you of?), Windows phones and Surface tablets have less than anemic sales.
Microsoft has riches aplenty, but a diversified business it is not. The future isn’t looking too good.
Moving on to Google, what do we find? Google made fortune upon fortune by collecting user information and selling advertisements alongside search engine results. Since then, Google has spent billions of dollars to diversify but has failed at every turn. Android is a loss leader, as are Google’s attempts to break into the hardware game with smartphones, tablets, and Chromebooks (the new netbook).
Google talks a good game what with self-driving cars, and cameras embedded into eye glasses, but those are more publicity stunts than products that bring in sales and profits; Android being the biggest and most expensive failure of all.
Google has riches aplenty, but a diversified business it is not. The future isn’t looking too good.
The Rest Of The Also Rans
Moving on to Amazon, what do we find? Amazon is the world’s largest online retailer. Apple is a distance second. Yet, the segments where Apple’s businesses compete with Amazon are very profitable, while Amazon is not.
Amazon CEO Jeff Bezos seems to have snookered Wall Street’s herd mentality into believing that losses are good, that down is up, that red is black. That means profits are skimpy to elusive, and the company is forced to sell tablets at near the cost of manufacturing just to keep up a public profile; all while Apple’s iTunes still sells more music, TV shows, and movies worldwide.
What Amazon is good at is dominating the publishing industry to the point of a nearly illegal monopoly; thanks to the Obama administration’s inability to understand multiple syllable words (mo·nop·o·ly) while fixating on price fixing at the expense of lower prices for the consumers they are trying to protect.
Amazon has riches aplenty, but a diversified business it is not.
So, where does Apple go where Microsoft, Google, and Amazon cannot. On the road to profitable and diversified product lines; with a little chuckling all the way to the bank.