Tech success in three easy steps
Creating a successful tech company used to be clear-cut:
- Create a progressive product people need
- Take control of the market
- Rake in the serious cash involved with controlling a bit of popular tech
This is how Bill Gates did it with Microsoft in the 90s, not to mention Cisco Systems and Intel. At the turn of the millennium things changed; the new-fangled industry greats are completely different.
Amazon, Apple and Google
These companies have huge product lines, all tied together in some way supporting the core revenue stream. Think of them as well-run towns: to figure out whether a town has strong future potential, it takes careful consideration of every aspect. Let's take a look at how these companies measure up to one another.
The biggest online vendor in the world still rakes in millions of dollars in sales every month, but the losses have been snowballing over the past few quarters. Although CEO Jeff Bezos' idea of establishing long-term market leadership instead of focusing on short-term gains may work out in the long run, bad decisions like the Fire phone (Amazon's smartphone) is cause for concern.
The verdict: Don't buy Amazon shares. If you have Amazon shares, sell them asap.
Apple sells experiences rather than products, and it seems like the iPhone is the top selling 'experience' around. More than half of the company's substantial revenue is made up of iPhone sales; it is even eating into Android phone sales for the first time in two years. Apple stock is available at discounted rates despite having a higher yield, and the company's revenue growing more than a third faster than the current average of big tech companies.
The verdict: Buy Apple stock now.
Not many company names have been converted into a verb. Even though Google Glass and other nifty gadgets are available on the market, advertising is still where most of the company's revenue comes from. The hardware serves a dual purpose; although not a lot, it brings in some money and it puts the search engine (the real money-maker) out there. Google stock is reasonably cheap now and prices appear to be steadily dropping. Whether this is a temporary setback or cause for long-term concern is not certain. But, Google is Google so may be worth hanging onto for a while.
The verdict: Hold on to shares and keep a watch on prices.