Apple retail vs. Amazon retail

Asymco’s Horace Dediu offers some interesting observations regarding Apple retail vs. Amazon retail:

• Since 2008, Amazon’s sales grew by a factor of 2.18. Apple’s combined iTunes+Retail grew by 2.14x.

• Apple’s gross retail revenue was $11.1 billion in Q4, 52% of Amazon’s overall revenues.

• Apple’s operating income from retail in 2012 was $6.8 billion, over ten times Amazon’s $676 million.

More info, including the usual excellent charts, in the full article here.

19 Comments

          1. icloud and amazon’s cloud are nothing alike

            the consumer cloud from amazon is just a front end for EC2 and their other real cloud services. most of your apps wouldn’t run without amazon’s cloud services

    1. Absolutely. Apple is valued on what it can sell and profit by now. Amazon is valued on owning an entire space. Apple does not and will not ever own it’s space that it competes in. Amazon is heading in that direction every day. Apple has competitors. Amazon rolls over them like a steamroller. Apple is unbelievably profitable. Amazon………….well we’re just not sure yet? But you’re right, they are two different animals and should not be compared. No one is forced to invest in AAPL or AMZN. You plays your money and you takes your chances. It’s up to you. Fortunes have been made by investing in both companies. And in the end, that’s what matters. Profit. Did you make it or not? Did you take it off the table when you knew that you should? Profit. It’s why you invest.

      1. AMZN up 2 % today. AAPL down 2 % today. Different strokes for different folks. Cut your losses when you need to. Take your profit when you should. Invest wisely. Stay in touch with your money.

        1. Really? I’m going to guess if we met nose to nose you wouldn’t be so brave. So how about this, I’ll post what I want and you can still be a fanboy? I try to post objective comments. You are simply a fanboy. But if you’d like to discuss this in person we can get together.

  1. I am not sure I buy the “Amazon owns it’s own space” statement. Wal Mart would disagree – over time there is NOTHING Amazon can sell online that Wal Mart can’t also offer – and price match if it chooses. I wonder what % of Amazon’s sales are driven by the lack of sales tax – which is gradually going away.

    1. Online. The online space. But I do wonder about the tax situation in the future. That will be a heated battle. And with this current administration I don’t think Amazon will do well. Although that does seem to be a state-by-state issue currently.

      1. But own the space to what end?
        With Amazon’s P/E, they’ll simple never “make it back” unless something changes. Do they think at some point Amazon will pass a threshold and will be able to own the “online department store” space more-or-less indefinitely? (Then they’ll ratchet up margins and have a real business.)

        If that’s the case their only real “moat” is logistical excellence and scale. (I know it’s apples to oranges, but that didn’t work out so well for Dell.)

        If that’s Amazon’s plan, there are too many “ifs” for me.

  2. At its core, Amazon is not much more than a low margin retailer. The goods it sells are general line items with steep price competition. They’re trying to diversify into data hosting and video streaming services, but in general, their operations are ultimately about product fulfillment on finished goods and services. And that means that the profit margins will match more closely with what you typically see in retail — low.

    Apple is a manufacturing business with a strong emphasis on direct-to-consumer distribution. The retail component is simply a marketing and distribution mechanism. The operational components of Apple are all high value activities. Apple is a high margin business because of what it produces, how it’s produced, and how it sells what it produces.

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