First, start with a large fortune. Second, spend money like the drunken sailors in charge of running Amazon, Google, and Microsoft. Voila! You’ve now built a small fortune in the technology industry. The real question here is ‘How much longer can competitors lose money chasing Apple?”
Down The Drain
Here’s a quick look at some of Apple’s main competitors in the company’s major product lines. These include the Mac, the iPhone, the iPad, with a subset of Apple Stores and App Stores.
First on the list is Amazon, because unlike Google and Microsoft, the online retail giant has yet to create a return on the investment, and continues to lose money under the guise of building a barrier to entry against competitors.
Here’s the problem. There is no barrier to entry. Amazon has a gazillion competing online retail stores, competitive in price and service, and many of them profit far more.
Other than mom and pop stores, who has Amazon put out of business? Disintermediation is a buzzword, not a business model.
Unlike Apple, Amazon can’t chew gum and walk at the same time. Say what? Yes, Apple grows business, infrastructure, sales and profits. All at the same time. Amazon cannot.
Second on my list is Google, the company that wants to take your personal information and sell it to the highest bidder, in exchange for giving you free applications to use; Google apps, and Android OS.
The problem with that strategy so far is simple– it’s not working very well. Over 90-percent of Google’s revenue and profits come the old fashioned way. Search engine advertising. Mobile ads are growing, but will take decades to provide a return on investment; the tens of billions spent on failed projects to diversify the company away from the desktop.
Third on my list is Microsoft, the company that deemed Windows Everywhere as a solution to everyone’s computing needs. How has that worked out? Not so well. Like Google, Microsoft has spent tens of billions of dollars on failed acquisitions and projects to diversify the company way from the Windows and Office cash cow.
Up and down the line Microsoft has wasted billions trying to get off the desktop and into mobile, into search, into services, into anything that’s not Windows and Office. So far, failure.
Unfortunately for Apple, the competitors have deep pockets, but cracks are beginning to show. Amazon’s losses have increased, surprising Wall Street. Microsoft’s new CEO wants to focus the company– IBM style– away from devices, and more into software and services. Even traditional PC makers don’t want to make hybrid tablet notebooks, and most barely survive on minimal profit margins.
Regarding Apple’s competitors, without a change in strategy, tactics, or execution, one day the money will run out. Profits are important in growing and building a diversified business, and in traditional PCs and mobile devices, it’s neither a battle of Windows vs. Mac, nor a battle of Android vs. iPhone and iPad. It’s a battle between Samsung and Apple. Apple is winning.