20. July 2017
Source: The Economist
Today the world’s largest software company reports earnings for the second quarter. Its share price is at an all-time high, elevated by expectations that the chief executive, Satya Nadella, will continue to transform the company and develop new business lines.
Mr Nadella, who is enthusiastic about artificial intelligence (AI), wants Microsoft to become an “AI-first” firm. He has pumped more time and money into Azure, its cloud-computing business, hopeful that it will account for much of the firm’s future growth.
But the company faces stiff competition from deep-pocketed rivals, such as Amazon and Google. Jefferies, an investment bank, reckons Azure will chalk up around $5bn in sales in 2017, or 21% of the market—an impressive sum but far less than Amazon Web Services, with 71%. Investors will be looking for clues as to how much new cloud business Microsoft has won. When expectations are great, even good results can disappoint.
22. August 2016
Source: The Wall Street Journal
The ultimate question facing Tim Cook five years into his tenure as chief executive: Are Apple’s best days behind it?
One of the most important succession plans in corporate history will hit a milestone this week.
Five years ago, Apple Inc.’s iconic and visionary co-founder Steve Jobs passed the torch to his handpicked successor, Tim Cook. The official transition took place six weeks before Mr. Jobs passed away.
Now Apple is the world’s largest company by market value and remains one of the most influential. Its $53 billion in net income last year was greater than the combined earnings of technology behemoths Facebook Inc., Google’s parent Alphabet Inc., Amazon.com Inc. and Microsoft Corp. Apple recently sold its billionth iPhone. Read the rest of this entry »
4. May 2016
The Apple CEO is on the defensive as iPhone sales are falling
Apple CEO Tim Cook believes the negative sentiment around his company lately is overblown.
Speaking with CNBC’s Jim Cramer, Cook defended Apple’s performance after billionaire investor Carl Icahn sold his position in the company. “I think that’s a huge overreaction,” Cook said. “We just had an incredible quarter by absolute standards.”
Icahn’s move was largely due to Apple’s lagging performance in China, the investor told CNBC. The Cupertino, Calif. company revealed in its most recent earnings report that its revenue there, its second-biggest market, fell by 26%. Still, Cook told Cramer that he “could not be more optimistic about China.”
Apple’s iPhone sales, down 16%, also disappointed Wall Street analysts in the most recent quarter. Additionally, the firm offered a less rosy view of its future than analysts expected. “It was a pretty good quarter,” said Cook. “But not up to the street’s expectations clearly.” Read the rest of this entry »
15. April 2016
Source: The Economist: Schumpeter
An old management idea gets a new lease of life
APPLE and Tesla are two of the world’s most talked-about companies. They are also two of the most vertically integrated. Apple not only writes much of its own software, but designs its own chips and runs its own shops. Tesla makes 80% of its electric cars and sells them directly to its customers. It is also constructing a network of service stations and building the world’s biggest battery factory, in the Nevada desert.
A century ago this sort of vertical integration was the rule: companies integrated “backwards”, by buying sources for raw materials and suppliers, and “forwards”, by buying distributors. Standard Oil owned delivery wagons and refineries in addition to oil wells. Carnegie owned iron-ore deposits and rail carriages as well as blast furnaces. In his 1926 book “Today and Tomorrow” Henry Ford wrote that vertical integration was the key to his success: “If you want it done right, do it yourself.” He claimed he could extract ore in Minnesota from his own mines, ship it to his River Rouge facility in Detroit and have it sitting as a Model T in a Chicago driveway—in no more than 84 hours. Read the rest of this entry »
11. April 2016
It followed Apple’s lead.
Platform businesses are disrupting the traditional business landscape in a number of ways—not only by displacing some of the world’s biggest firms, but also by transforming familiar business processes like value creation and consumer behavior and altering the structure of major industries.
And if they hope to fight the forces of platform disruption, entrenched companies need to reevaluate their business models. They’ll need to scrutinize what they spend on marketing, sales, product delivery, and customer service and imagine how those costs might be reduced or eliminated in a more seamlessly connected world. They’ll need to examine the individuals and organizations they interact with, and envision new ways of networking them to create new forms of value.
Nike has proven to be one of the most intelligent incumbent companies seeking new ways to survive and thrive in the world of platforms. Some of the competitive steps they’ve taken may seem obvious. They aren’t.
Platform Revolution: How Networked Markets Are Transforming the Economy—And How to Make Them Work for You
Pipeline businesses like Nike have traditionally scaled in one of two ways. Some expand by vertical integration, owning and integrating a greater length of the value-creation-and-delivery pipeline—for example, buying upstream suppliers or downstream distributors. Others expand by widening the pipeline to push more value through it. When consumer goods companies grow by creating new products and brands, it’s an example of horizontal integration. Read the rest of this entry »
21. January 2016
Source: The New York Times
There’s a little parlor game that people in Silicon Valley like to play. Let’s call it, Who’s Losing?
There are currently four undisputed rulers of the consumer technology industry: Amazon, Apple, Facebook and Google, now a unit of a parent company called Alphabet. And there’s one more, Microsoft, whose influence once looked on the wane, but which is now rebounding.
So which of these five is losing? A year ago, it was Google that looked to be in a tough spot as its ad business appeared more vulnerable to Facebook’s rise. Now, Google is looking up, and it’s Apple, hit by rising worries about a slowdown in iPhone sales, that may be headed for some pain. Over the next couple of weeks, as these companies issue earnings that show how they finished 2015, the state of play may shift once more.
But don’t expect it to shift much. Asking “who’s losing?” misses a larger truth about how thoroughly Amazon, Apple, Facebook, Google and Microsoft now lord over all that happens in tech. Read the rest of this entry »
26. April 2015
Source: The New York Times
Apple can’t grow like this forever. No company can.
In a few short years, Apple has become the biggest company on the planet by market value — so big that it dwarfs every other one on the stock market. It dominates the Standard & Poor’s 500-stock index as no other company has in 30 years.
Apple’s market capitalization — the value of all of the shares of its stock — is more than $758 billion, greater than any other company’s. Yet the Wall Street consensus is that Apple is still having a growth spurt. In fact, if Apple’s watches, phones, laptops and other gadgets and services keep generating favorable publicity — and if its quarterly earnings report on Monday is as strong as the market expects it to be — there’s a reasonable chance that Apple’s value will keep swelling. Not far down the road, it might even reach the $1 trillion level that some hedge funds predict. Read the rest of this entry »