You know what they say about business, right? “The rich get richer.” We see it going on all around us, despite the so-called economic recovery of recent years. Sure, things are looking up, but as we look up we see the rich much richer than before the recovery started.
Have you ever wondered why large and somewhat disparate companies merge? Part of it is because the rich want to get richer, and those leading the charge for AT&T to buy media giant Time Warner will end up very, very rich. But why does AT&T need to be anything but AT&T? And what does a giant acquisition like that have to do with Apple? And what about Samsung?
Grow. Or, Die
Like it or not, what seems to matter to investors and shareholders is this. Growth drives a stock. Profit keeps a company in business. But to a shareholder, profit is a secondary consideration because shareholder value– the stock price– is the nectar of the gods.
AT&T was once just the phone company, divvied up by the government to a number of regions throughout the U.S. The various phone companies had something of a monopoly and when those shackles were thrown off AT&T gobbled up everything that was left. But it was still a phone company. Then it was a wireless company. Then it was a satellite company. And with the Time Warner acquisition it becomes a media company. Is it any wonder that competitor Verizon wants to be a media company, too.
Growth matters and in a saturated market with limited competition the only way to grow is by acquisition.
Samsung is a conglomerate, too, a company made up of many different technologies under a single brand. Computers, smartphones, tablets, chips, screens, washers and dryers, copiers, printers, and probably a noodle factory somewhere in Asia. Samsung’s own battery factory was blamed for the recent rash of Galaxy Note 7 exploding batteries; a cause still unknown.
Apple Is Apple
To be fair, Apple also acquires other companies; for example, it bought a chip design company back in the early days of the iPhone and now Apple’s A-Series CPUs are the darling of the industry. Apple bought Beats headphones which are an industry sales leader, but Beats’ streaming music service came along, and now Apple threatens Spotify’s hold on that growing industry.
But Apple is not AT&T. Or is it?
Apple’s acquisitions and new products are part of a vast and growing ecosystem of products and services which work well together, while AT&T is doing everything it can to avoid becoming a purveyor of dumb pipes to business and households, but the purveyor to the content going to those locations.
Wait. Doesn’t Apple also sell content for Macs, iPhones, iPads, iPods, and Apple TV? Yes. And no. So far, it’s not Apple’s own content. So far, Apple has avoided– by choice or circumstance, and I’m inclined to think it’s a bit of both– becoming what AT&T has become. Both the distributor and the maker of media content. Instead, Apple has chosen a path where its products receive and display content, even some the company distributes itself, but hasn’t gone down the acquisition trail or across the content bridge to create the content for its own devices.
To be sure, Apple has the money, and it’s likely there are executives in the company planning such acquisitions or initiatives even now, but my fear is that an Apple created media company is when we’ll know for sure that Apple has jumped the shark and attempting to grow because it must rather than because it should.
“Jumping the shark” is an expression that means something may have peaked in value. Historically, it was a pejorative idiom used to describe a moment of television in which there is a gimmick or unlikely occurrence that is seen as a desperate attempt to keep viewers’ interest. Therefore, moments labeled as “jumping the shark” are often considered indications that the writers have run out of ideas; that the show has strayed irretrievably from an older and better formula; and/or even that the series as a whole is declining in quality… the phrase is based on a scene from a fifth-season episode of the sitcom Happy Days in which the character Fonzie jumps over a shark while on water-skis. This was deemed a ratings ploy, for it was outside of the original thrust of the sitcom. The usage of “jump the shark” has subsequently broadened beyond television, indicating the moment when a brand, design, franchise, or creative effort’s evolution declines, or when it changes notably in style into something unwelcome.