Tuesday, March 31, 2015

The Clash of the Tech Titans


Apple,Amazon and Google
Three tech giants are vying for your attention. They not only want you to buy their products, they also want you to invest in their future vision by buying shares. When you hear the names Amazon, Apple and Google, it seems like a no-brainer; investing in one of these three greats is bound to be lucrative, right? Not necessarily. As with any other investment, only looking at it superficially could land you in hot water.

Tech success in three easy steps

Creating a successful tech company used to be clear-cut: 

  1. Create a progressive product people need
  2. Take control of the market 
  3. 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.

Amazon


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


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.

Google


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.