Color me somewhat equally balanced between right brain left brain. Whether or not the right side of the brain is creative and the left side is logical, I fall somewhere down the middle and exist in balance of both hemispheres. Or, so I’ve been told.
That means I love the creative works but logic, math, and organization is as much a passion. That led me to view a graph recently published online which compares Apple’s overall numbers with Google (Alphabet), Microsoft, Facebook, and for some reason, Amazon instead of Samsung. Whatever. The point was to show that all these companies are kinda sorta mostly one-trick ponies. That is, they derive most of their revenue and profits from a single source.
The whole article and the numbers turned into colorful graphs is an exercise in left brain right brain because the premise is creative and the numbers are less telling than numbers should be.
For example, all five companies combine for over $500-billion in revenue and $94-billion in profits. You have to dig to see that Apple accounts for about half of both, which means the other four– Alphabet, Microsoft, Amazon, and Facebook– account for the other half.
So, how is that sad, sad, sad?
It’s sad for Apple because the comparisons are not valid in almost any respect other than numbers are involved.
Apple, despite the iPhone accounting for 63-percent of revenue, is a highly diversified company. Every product line makes money, and even lines without hardware products– Services, for example– make money hand over fist. Apple is a numbers making machine.
Alphabet, still known as Google, derives almost 90-percent of revenue from advertising. Apple is a technology company that sells hardware. Alphabet sells advertising and even after many tens of billions into investments and acquisitions to diversify itself, Google is an advertising company.
Microsoft seems to have done a better job with diversification until you look at numbers more closely. Office is nearly 30-percent of revenue. But Windows has dropped to not even 10-percent. What’s with that? Revenue. Not profits. Microsoft’s Bing search engine and advertising brings in 7-percent of revenue and the Surface line of notebook tablet hybrids brings in 5-percent, but neither group makes much profit. Ditto for Xbox which has more than 10-percent of the company’s revenue. Diversified revenue, yes. Diversified profits, not so much.
Amazon is worse. Nearly 75-percent of Amazon’s revenue comes from being the online Walmart and selling goods from other companies. Big whoop, right? But Amazon has a healthy media division that doesn’t make much money. The big money maker is Amazon’s web services. High tech, not storefront, drives Amazon.
Facebook? Well, Facebook is an advertising company much like Google but with less success in diversification. As a percent of revenue, Facebook is enormously profitable but is the purest one-trick pony of the five.
Are Apple’s numbers sad?
It’s sad that Apple even gets compared with Alphabet, Microsoft, Amazon, or Facebook. None of those companies are the same, but all are somewhat direct or indirect competitors with Apple or one another and each with great wealth and a large customer base. But it’s Apple’s numbers and product line which dwarfs the others.