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BMW could launch a bargain basement 0 series, or Wal-mart could start selling quality products. Fundamentally there isn't much point for either because it's no
by fleitz 14y ago
BMW could launch a bargain basement 0 series, or Wal-mart could start selling quality products.
Fundamentally there isn't much point for either because it's not the right customer base. This is what branding is about, if Apple acquires a whole bunch of customers that don't care about quality and then complain that their devices don't have half-baked features it doesn't do the brand any good. These customers will destroy the brand.
I don't want to have to walk into an Apple store and wonder which is the low margin device that will fall apart / fail to perform, if I wanted to ask those questions I'd go to Best Buy.
The low margin Apple market is craigslist, if you want a 3 year old Apple device that's where you can get it.
The most confusing thing about AMZN and APPL are their respective PEs. They are priced as if each are going to adopt the other's business model.
- ScottBurson 14y ago> The most confusing thing about AMZN and APPL are their respective PEs. I've wondered about this too, but the post seems to shed some light on it. Amazon arguably has essentially no competition, while Apple, for all that it's doing well at the moment, has plenty. (I understand the point is debatable. I'm just saying, this appears to be how the market is thinking.)
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- doctorpangloss 14y agoI think the market is thinking more about selling high and buying low, and many AAPL owners are very, very high right now. :)
- cageface 14y agoThe difference here is that, thanks to volume, Wal-Mart has the kind of market-making muscle that BMW could only dream of. This isn't as important in the world of cars or TVs but the network effects of software means there's a lot more at stake in the contest for market share.
- anactofgod 14y agoAAPL's P/E ratio is ~10x. For comparision, GOOG's is ~23x. AMZN's P/E is ~3,257x. At $13.1B AAPL made 4.5x what GOOG ($2.89B) did last quarter, And, in that one quarter, earned profits that are ~7x what AMZN has made during its entire existence. So, yes. It's not entirely clear how "Wall Street" is assessing these tech companies against respective share prices.
- xenophanes 14y agoI think it might be fairer to look at AMZN's price to revenue ratio and compare that with other big companies which have margins AMZN might reasonably have when they start trying to make profits. That would maybe give a reasonable understanding of expected upside. Looking at their profits when they aren't trying to make a profit is a little silly. GOOG on the other hand I think is a fair enough comparison. Actually GOOG has pretty much failed at all their attempts to make money off anything but ads, which I consider kind of worrying. PS FYI you posted this twice and the other one is marked dead. I recommend deleting it.
- anactofgod 14y agoYup. Just noticed the extra post. Thanks.
- mmahemoff 14y agoA billion in enterprise revnue is nothing to sneeze at. http://www.businessinsider.com/google-generates-1-billion-on-five-enterprise-products-can-you-name-them-2012-6 http://www.businessinsider.com/google-generates-1-billion-on...
- tedunangst 14y agoFor example, Amazon has about half the market cap of walmart, but has 10% of the revenue. If you think Amazon can expand 5x, then focus on making similar margins as walmart, that would justify the current price.
- clarky07 14y ago
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- MaysonL 14y agoWhat's really confusing is that both are selling at (approximately) 2X sales (backing out Apple's cash).