“Apple’s business model focuses on making a profit on hardware. Surprise – they have more in cash than the entire net worth of Amazon, which makes the rival Kindle tablet line,” Brian S. Hall writes for Unwired View.
“Apple is also worth more than double Google, which makes nothing on hardware. In fact, Google may lose money on Nexus hardware. Their goal, of course, is to make that money back (and much more) in software and ‘soft’ services. To date, this strategy has failed – Android has cost more than it’s generated,” Hall writes. “Similarly, Apple is worth more than double Microsoft as well. Microsoft licenses its Windows Phone 8 platform and has long made nearly all its money off software. Apple is not just worth more than Microsoft, Apple’s profits are greater as well… Almost 90% of new smartphones sold in China use Android. These millions of devices, however, generate almost nothing for Google, Google Play, Google Maps, et al., due to China’s restrictions on Google and its services. I have to ask Larry Page: if Apple sells just 5 iPhones in China, say, or maybe 10, have they generated more profits in China than Google’s Android?”
Hall writes, “Both Google and Amazon continue to offer more and more free services to evermore demanding customers but the bottom line has not improved. Exactly how much do Amazon and Google need to give away before Apple can no longer make a profit on hardware? Or is this a completely backwards notion of the reality of the market? Show me the money! If software is eating the world, than the world is an empty, zero calorie meal.”
Much more in the full article – recommended – here.
The title of tis article ia incorrect an reminiscent of a yello journalism teaser. The correct title should be Google and Amazon’s lousy business model dooms them to oblivion. What has Apple’s App Store done for the software business?Only revitalize it create a more true and free market place that has broken the logjam of frozen feces created by the likes of Adobe and Microsoft and others of their ilk. Rather than gargantuan behemoths of code that are bulky and slow with too much brawn and not enough brain, we have much more efficient apps that take a core concept and refine it over time. The Darwinian principals are alive and well because I’d the App Store and the iPhone. We are all better off do it.
I agree. The real “problem” if there is one, is the age old big fish eating little fish hunter/prey equation. Google, and Amazon, like MS in the past is able to eat everything in it’s view with little fight from the little guys. They can afford to work and offer products and services for no profit or even a loss for the sake of market-share.
It worked for MS, for a long time, but eventually a disruption comes about and the monopoly comes crashing down.
We will see how long the scorched earth game Google and Amazon are playing will last, how long can they subsidize their appetite.
Exactly. Google–for now at least–has a cash cow to subsidize their sell at a loss model.
But Amazon’s strategy seems to be to give away the razors and blades and the shipping and sell shaving cream at cost. And Amazon has NO cash cows.
& Amazone is the omnipotent tech company & (to ad insult to injury) Wall Street’s tech darling with…. What’s their p/e again? Apple currently has the necessary tools in their arsenal @ this point to reach $1000.00. Come one, come all naysayers, where are all your snide comments? My track record speaks for itself. AAPL long and hard right up the ass end of all those who doubt AAPL.
Developers on Apple devices are typically getting paid well, do to many reasons such as the quality of their platform, growing customer base, and it having relatively little piracy. How is Apple killing the software biz exactly?
Steve Jobs realized early on that success is spelled by getting a totally integrated product in a consumer’s hands.
Selling only one component in a product recipe doesn’t let you be a leader.
What’s interesting about googs android is that it’s open source which means it’s easily reskinned ( example kindle os ) which is probably it’s major weekness.
Maybe in the future well see
Kindle os , facebook os, Twitter os, samsung os!!! , all Android ( reskinned ) but not really android.
ANDROID WILL EAT ANDROID
But, but, but . . . Android makes up for it on volume. 6 bazzillion times $0 gives you . . . . a lot of money doesn’t it?
When you ignore the expensive contract that many sign up for, Android is $200 less than iPhone. It must be a great deal then, right? Oh, and don’t forget that Android phones are made exclusively in the USA and that brings home the bacon, right? And they are not really knock-offs like everyone says, they are completely different.
The headline is misleading. I think, Apple is saving the software business in a big way. I never bought so much software than before. The plain and simple reason is the convenient app store both on iOS and OS X.
I think the point if the article is to point out Apple’s superior business model vs Google and Amazon’s flawed business model. Apple uses software as a means of selling hardware. The App Store generates little to no profit for Apple; but it is one of the primary tools used by them to sell hardware, where the real money is. Contrast that with Amazon and Google, which uses cheap, zero margin hardware to sell software and services. Selling hardware at or below cost in order to generate software sales is a fatally flawed business model, proven by the fact that despite its 72% marketshare, Goigle makes nothing on Android and Amazon’s profits are near zero. The money is not in selling software; it’s in selling hardware…