From Christopher Mims’ “Move Over, GE. The Tech Conglomerates Are the New Leaders of Industry.” in Saturday’s Wall Street Journal:
As General Electric and other old-school behemoths break up, Amazon, Apple, Alphabet, Microsoft and Meta are taking their place as the do-everything companies of the future…
The corporate passing of the torch has been in the making for decades. But this month punctuated the transition, with GE, Toshiba and J&J all saying they would split apart in an attempt to get leaner and more efficient. The same week Amazon boosted its investment in electric truck company Rivian, which went public Nov. 10 and now sports a market cap roughly on par with GE.
But there are important differences between today’s tech conglomerates, which continue to grow in value and scope, and those of yesteryear, say those who study the history of the subject. The way today’s big tech conglomerates glue their products together into “platforms” makes them potentially much more dominant and long-lasting than the industrial conglomerates. In those older conglomerates, sibling businesses weren’t nearly as interconnected or mutually supporting, and instead vied for investment from their corporate parent.
“For Apple, all of its products are plugged into this one platform,” says Kim Wang, an assistant professor of strategy and international business at Suffolk University’s Sawyer Business School. “How could you ever divide up Apple—it is like cutting an egg in half,” she adds.
My take: Apple is the canonical digital-age conglomerate. Less like an egg than a vertically integrated multi-cylinder engine pieced together through the slow, careful accumulation of talent, technologies and processes.
Unfortunately, Apple could easily be split up in any number of ways because each product division “could” be a stand alone business supporting a single platform under agreed upon license.
Then you haven’t seen “Rocky”.
An understanding of what Apple is requires far more inspection.
Curious. Has Microsoft’s “hostage” user base been growing lately?
So they’re now leasing, instead of selling, a newer kettle of fish in the fish market that they control and it’s now in the ether instead of on the counter.
So what’s so vertical about this?
User base growth. Any?
Therein lies the difference in Investor Sentiment between AAPL and MSFT. Just comparing gross revenue, net income, or EPS doesn’t tell anywhere near the whole story.
Operating margin expected at 50%+.
Market cap at 2.5T
Ahhh…the blessings of being the first to monopolize and providing maintenance and horizontals to that.
I ask again — growing user base?
Please, anyone. Don’t let this slip by with only a “crickets” response.
“I ask again — growing user base?”
Per Yahoo Finance, over the last year, MSFT grew 17.5% while Apple grew 33% – and Apple has twice Microsoft’s revenue base. The valuations Mr. Market is giving these two companies is bass ackwards.
IMHO.
I will grant you that Microsoft has a higher margin percentage, but even so, Apple cleared about (94.7-61.3=) $33.4 B/year more – and that Apple pie grew 65% (!!) last year.
Now THAT’S some “large numbers”!
Remember us saying, “As long as it takes”?
MSFT’s rebirth has nothing to do with the Windows franchise, it is a rather large orphan, and it’s being surpassed by MacOS and Apple hardware.
Not hostage. Captive.
The simple difference between the two was and remains the hardware-software interconnect. Not coincidentally, IMHO, this is where the present “attack” on Apple is vectoring in from….
Bravo PED.
Spoken like a shareholder.
Apple: “…a vertically integrated multi-cylinder engine pieced together through the slow, careful accumulation of talent, technologies and processes.”
Wonderful simile! Thanks!
Apple, Inc.
Apple Computer, Inc.
Apple iPhone, Inc.
Apple iPad, Inc.
Apple Wearables, Inc.
Apple Services, Inc.
Personally, I don’t like it. The structure would force the segments to compete for resources, instead of cooperating to a common goal.