Did you know that numbers have a fragrance? Put another way, numbers can smell– good and bad. As an example, how do you think Apple’s financials– unit sales, revenue, and profits– smell? Probably good, right?
What about bad smells? Microsoft, Google, and Samsung’s numbers of late smack of late nigh burritos and gastric distress. The numbers, at least when compared with Apple’s financials, plainly smell bad. So, why isn’t that bad smell having an impact on their respective stock prices?
Sniff, Sniff, Bang, Bang
Yesterday Mac360’s Kate MacKenzie blogged about Microsoft’s most recent financial setbacks in ‘Where Math Don’t Lie.’ The problem with math, at least as I see it, extends beyond Microsoft’s troubles.
Google and Samsung have their own problems and the clock is ticking on a turnaround of fortunes. It remains to be seen whether Microsoft plans to exit the Windows Phone business, but it’s certainly cutting its losses. The Nokia purchase has been a financial disaster.
Speaking of disasters, I see two more on the horizon, and as Kate wrote, ‘math don’t lie.’ Samsung just finished up the seventh straight quarter of profit declines which exactly mirror Apple’s record revenue and profits. It’s much easier these days to pick the winner from the losers.
It’s likely that Samsung has known for a few years that battling Apple at the premium end of the smartphone and tablet spectrum needed a shift in tactics. How so? The Galaxy S6 is more like an iPhone than any previous Galaxy model. Samsung is doubling down on its copy cat roots. How’s that working out? Seven straight quarters of lower profits indicates that doubling down isn’t the right tactic.
Another disaster in the making is headquartered in Mountain View, CA, the home of Google, the world’s largest search engine advertising firm. Yes, Google’s free mobile operating system, Android, is housed on about 80-percent of the world’s smartphones and tablets, but how does free translate into revenue and profits?
While Apple does business the old fashioned way– make product, sell product, count profits– Google’s business model is much more indirect. The company gives away applications for free but tracks the user, collects the data, and uses that to sell advertising. How’s that working out? As expected, overall revenue growth as begun to stall, profits are diminishing, but the real numbers, the real math, comes from mobile. The majority of Google’s mobile revenue and the meager profits come from iOS devices. If push comes to shove, Apple could turn off that spigot overnight.
To be fair, Microsoft, Google, and Samsung are not in the same category as BlackBerry, HTC, Nokia, et al. They are highly profitable marketing machines but the former two have had trouble diversifying despite spending tens of billions to prop up their aging business model.
It is not just the math.
All three companies have an inherent inability to amaze and delight, which seems to be included in Apple’s DNA. Who loves Microsoft’s products? Who loves being tracked and hounded online by Google? Who loves to be insulted by Samsung’s desperate television commercials?
Besides diminishing financials and losing to Apple in nearly every important category, all three companies have something in common. It’s not just math. There’s no feel good, warm and fuzzy, or delight with their products. That may be at the heart of Apple’s success; a feeling not easily described by customers but easily sensed when an Apple product is used. It’s good feeling and emotion which begets good math. Mediocre products which fail to excite discriminating buyers ends up in bad math.
