Most of the technology companies that I follow, pay attention to, or buy products from are rich beyond imagination. They all make money in boatloads, spend money in boatloads, and have more cash on hand than most countries, dictatorships or otherwise.
Think of how much money is stored away in bank accounts for Apple, Google, Microsoft, Amazon, Samsung, and other technology giants. If you don’t look closely then you won’t be able to see some of the cracks in their golden walls, or an impending meltdown. But there are signs.
Wherefore Art Thou, Problems?
Not one of those companies on my list is about to go out of business, but all is not rosy at every corner of each company. Let me take the easy examples first.
Apple – no company on planet earth has more cash than Apple. And few have as much debt, either, thanks to archaic U.S. tax laws which prevent repatriation of overseas profits. Oh, and iPhone, Mac, and iPad sales have been going down. Apple is highly profitable, but it’s spending far more under Tim Cook’s reign than it did under Steve Jobs to find the next great thing.
Microsoft – the Windows and Office maker has been asleep for a decade and it took a coup to overthrow the anemic CEO from yesteryear to get Microsoft onto a track for the future. What’s going on? Windows and Office still dominate the market, but that market is shrinking and Microsoft has almost no presence among the mobile product revolution save a few billion a year on patent royalties from Android makers.
Amazon – finally, the world’s largest online retail has begun to show a profit. By not spending so much. Amazon has competitors nipping at its digital heels, and expansion into other countries has not been effective, limiting the company’s growth. The company has a bevy of failed mobile devices and refuses to say how many of any of its own branded electronics it sells each quarter. That’s never a good sign. Wall Street’s support requires less spending, more profits, but, oh, keep up the growth, too. That’s easier said than done.
Google – it’s always better to save the best for last, and why Wall Street analysts castigate Apple for having too much of its business tied up in the iPhone (over 60-percent) but seems to ignore Alphabet’s one-trick pony problem with Google’s advertising revenue– well over 90-percent. That’s right. Nothing else at Alphabet makes any real money other than online advertising.
Wait. Isn’t Google into all kinds of things like Nest home automation, and Google’s self-driving car, and internet fiber installations all over the country? Yeah, uh huh. right. Next has proven to be something of a failure and failed to generate a return on the investment. Self-driving car? It’s more of a self-driving car press release printing machine. Google Fiber? The idea was to roll out high speed internet access to many markets around the country. After years of laying fiber, Google Fiber has barely 200,000 subscribers instead of the 5-million that was planned.
Instead of speeding up the groundbreaking fiber installations to attract more subscribers to the high-speed network, Google is cutting staff in half and scaling back plans. Why? Too much money is going out. Not enough money comes back in.
Therein lies the seeds to a coming technology meltdown. Google is a one-trick pony. Sales for iPhone, iPad, and Mac are going down, not up. Amazon can only make profits by not spending on infrastructure. Microsoft has almost no presence in the smartphone and tablet arena, other than giving software away (maybe they’ll make it up on volume).
None of those tech companies will go out of business soon, but the failure rate is growing.