If that’s the case, then Apple, Google, Microsoft, Samsung, and other technology leaders are doing well. Making money is only one part of a company’s strategy. Publicly traded companies are expected to grow, and growing requires new products, new markets, new revenue streams. That means new targets.
On Hits And Misses
My graphic above displays a target which has been aimed at by the shooter, but, assuming the target and the center of the target is the object, missed repeatedly.
How does Apple fare when setting and hitting sales revenue and profit targets? The record is clear. Year after year revenue and profits grow. What about new products lines? In the 21st century Apple’s record is stellar. Mac, iPod, iTunes, iPhone, App Stores, Apple Stores, iPad. You name it. Apple makes money from it.
How does that record compare to Apple’s many competitors?
Google first. Despite spending tens of billions to diversify the product line, 90-percent of Google’s revenue and profits come from advertising. There’s diversity of research and development at Google, but that has yet to translate into viable product lines with growing revenue and profits.
Microsoft next. Despite spending tens of billions to diversify the product line, most of Microsoft’s revenue and profits come from Windows and Office. Efforts to diversify into hardware have largely failed, so the company is moving rapidly to an online software subscription model. Think of it as software rental.
Now Samsung. This company alone could count for all the missed arrows on the graphic above. Samsung makes all kinds of products, so it is highly diversified from a revenue and profit perspective. But something is wrong. Samsung’s revenue and profits are taking a beating. Why? Samsung tried to compete with Apple at the premium range of the smartphone and tablet industry and got battered.
Why? Samsung, like PC manufacturers did with Windows, hitched itself to Google’s Android, which, like Windows, is associated with cheap products with little differentiation, therefore, customers recognized they could buy the same thing for less. How is Samsung responding to the problem?
Executives are doubling down on cheap and premium. More cheap products to compete with low-end Chinese makers like Xiaomi, and higher quality components to set its smartphones and tablets apart from everyone else. That’s much like the strategy that has not worked in the past couple of years.
Unlike Google, Microsoft, Samsung and lesser brands like Amazon, HTC, Lenovo, Motorola, et al, Apple’s targets and product lines are clearly defined. They’re all premium brands. And that makes it horribly difficult for the aforementioned companies to compete for the profits needed to sustain and grow businesses.
Apple diversifies well. Competitors do not.