Look around. Successful technology companies all have one thing in common. They want to expand their successes. Apple does that by introducing new products. Mac, iPod and iTunes, iPhone and iPad, Watch and Apple TV.
Because Apple’s success comes from a diversified hardware line, the company can add specific services for customers; a Services group that is so successful it’s Apple’s fastest growing revenue and profit streams. Why do other companies want to be like Apple?
Diversify Or Die
The keys to financial success are many and varied. Shareholder value is not to be trifled with; witness Apple spending tens of billions of profits on share buybacks and shareholder dividends. Other technology companies– Google, Facebook, Microsoft, Amazon, et al– have yet to fare as well as Apple.
Let me use Google as the example comparison. After making tens of billions of dollars in profits as an advertising company posing as a technology company, Google remains what it was in the beginning. And ad company. Sure, Google has notebooks and phones and other gadgets that compete– at least in name– with Apple’s products, but nearly 90-percent of Google’s revenue comes the old fashioned way. Advertising. Just like forever.
For the most part, diversification at Google has been a failure not seen since the likes of Microsoft, a company that has spend many tens of billions of dollars to grow or buy additional product lines and profitable revenue streams– but most of what Microsoft makes comes from Windows and Office. Software. Just like forever.
Why Google wants to be like Apple is why every technology company wants to be like Apple. Apple’s stock price is the highest in the land. Apple sits on more cash than most of its competitors combined. Apple’s products are beloved by a vast customer base with incredible loyalty.
It’s easy to say that such technology companies copy from one another ad nauseam. Every Windows notebook of worth looks like a Mac. Android smartphones look like iPhones. Microsoft’s retail stores look like an Apple Store. What competitors have not copies is Apple’s ability to integrate products and services within the ecosystem in a way that truly differentiates competing products. In other words, they don’t copy Apple’s business model very well.
Google just closed on the purchase of Taiwanese electronics maker HTC. Why? To build better hardware. But remember, Google also bought Motorola and that deal turned out poorly for all involved. That kind of dealmaking contrasts with Apple where purchases tend to be small and become integrated components of future Apple products.
- Emagic – $30-million became Logic Pro and Garageband
- P.A. Semi – $278-million became Apple-designed CPUs
- Authentec – $356-million became Touch ID
- PrimeSense – $345-million became Face ID
- C3 Technologies – $267-million became Maps
- Beats – $3-billion became a leading headphone vendor
- Turi – $200-million brought smarts to Siri
- Shazam – $400-million brought recognition technology
Those are but a few of the investments Apple has made since co-founder Steve Jobs’ return in 1997, thanks to a $404-million acquisition of Jobs’ NeXT company.
All these technology companies want to be more like Apple but they’re doing it wrong.