Apple and Amazon are in the same business. They want to make money. How they go about it is entirely different. Apple designs and builds technology gadgets of world renown. Amazon, except for two notable exceptions, sells products made by other companies; which makes it much like an online Walmart.
Amazon has a huge data infrastructure and a growing cloud business. And, Amazon designs and builds technology gadgets that compete with Apple. Why? The company’s founder and CEO thinks he’s the 21st century version of Apple co-founder Steve Jobs.
Apple and Amazon are not the same.
First, when Apple releases financial information each quarter, for better or worse, it also releases revenue and unit sales of every major product; iPhone, iPad, Mac. No other technology company does that, including Amazon.
TrendForce is a member of the Technology Guesstimator’s Club:
Looking at other brands, Amazon posted a phenomenal 99.4% annual growth in its tablet shipments for 2016, totaling 11 million units. Amazon benefited from its vast base of service subscribers and was very successful in its fourth-quarter promotional activities. By nearly doubling its annual volume, Amazon climbed to the third place in the 2016 ranking of tablet brands.
Apple is ranked #1, followed by Samsung. Apple’s total unit sales came from Apple. All the other numbers are guesstimates, estimates, figures pulled out of where Preparation H goes.
Wait. Amazon’s Prime service is going great gangbusters, right? Not. So. Fast. I use Amazon Prime. I like Amazon Prime. Amazon Prime doesn’t make enough revenue to cover its costs yet, so it’s not exactly putting money on the bottom line as much as it is slowly beginning to lock customers into the Amazon ecosystem.
You know. Like Apple.
Says who? Amazon:
Amazon Prime membership fees are allocated between product sales and service sales and amortized over the life of the membership according to the estimated delivery of services.
And those numbers, if you dig into them, say Prime is a cost center, not a profit center. Analyst Larry Dignan explains:
Even if you assume 100 percent of Amazon’s retail subscription revenue is Prime the annual revenue tally doesn’t cover the company’s net shipping costs for the year.
How does that underreported discrepancy compare to Apple’s numbers? Everything Apple sells these days makes huge profits. Everything? iPhone? Of course. Mac? Tops in the PC industry. iPad? A Fortune 500 company on its own. Everything else gets lumped into Services, and that alone is almost a Fortune 100 company and Apple’s fastest growing division.
We would like to know how many Watch units are sold each quarter, but I understand Apple’s reluctance to do so. Watch is an iPhone accessory, and by nature cannot compete with iPhone sales numbers, so Apple saves itself the embarrassment. But Watch is an accessory, so don’t expect it to compete with iPhone’s numbers. Mac and iPad? Maybe.
Figuring out how well a company or one of its product actually fares against competition can be a challenge.
For example, technology writers claim Amazon’s Echo device is the hit of the year, but members of the Technology Guesstimator’s Club admit that Watch sales are many times Echo sales. But Watch is not a hit; it’s a flop. Many of those same technology writers point to Microsoft’s Surface line of PCs and touchscreen tablet notebook hybrids as being a huge success while the Mac has become a flop. Except Surface sales were down during the busiest quarter of the season while Mac sales set another revenue and sales unit record; vastly outselling Microsoft’s PC line.
Lies, damned lies, and statistics.
Thanks to the proliferation of information via the interwebs it takes more effort to track down real numbers and factual information, but it can be done.