At the beginning of this month, the market value of Amazon exceeded a trillion dollars for minutes, and quickly lost about 50 billion dollars. Amazon's trillion hit came a little over a month after Apple exceeded that value. As you can see, both Apple and Amazon have been growing substantially over the past few years, so will that growth continue?
A report from the BBC stated that Apple and Amazon are fundamentally different from each other, just like the difference between apples and oranges.
Camel; A consumer technology company that offers in-demand devices at high prices and has customers who are willing to pay for those expensive products. Since Apple began selling the iPhone for the first time in 2007, the company's shares have risen by 1100% and jumped by nearly a third in the past year.
As for Amazon, the online retailer, it witnessed a steady and rapid rise in its share price, as its market value jumped from $ 600 billion to $ 700 billion in just 16 days. While Apple took 266 days between the two values, i.e. from 600 to 700 billion dollars.
Although Apple and Amazon offer different products and services, their focus is primarily on technology, and they are on top of the FAANG companies with the highest shares among the companies.
Which of the two companies has the best long-term growth prospects?
Here's a look at some of the key areas for each company
Hardware sales
Most of Apple's revenue comes from sales of its own devices, especially the iPhone, iPad, Mac and iPod. Apple owns only 14% of the global phone market, yet its revenues are higher than its closest competitors.
According to strategic analyzes, in the first quarter of 2018, Apple accounted for $ 61 billion in revenue, while Samsung made only $ 19 billion, followed by Huawei in third place with $ 8 billion in revenue.
The head of research and consulting at Windsor Holden, "specializing in the auto and parts trade," said Apple's reliance on iOS devices is its source of strength, but moving forward is its biggest challenge, as its user base will have very limited growth opportunities. By this, we do not mean that Apple’s revenues will decrease anytime soon, but the opportunity to generate significant new revenues will decrease over time. ”
Amazon has been below expectations over the past five years with its various devices, which include e-readers such as Kindle, Kindle Fire tablets, Echo smart speakers, and other products.
It is possible that Amazon will maintain its pace of growth, because it can sacrifice the profit margin on the devices, because they get revenues from various services, as said Roberta Cozza at Gartner research and consulting in the field of information technology.
According to Juniper research, 1.5 billion smartphones were shipped in 2017 around the world, however the growth of shipping of these phones will continue to slow over the next five years, as most consumers in Western markets already own advanced smartphones, and few of them will upgrade.
Apple faces huge competition from smartphone makers, especially in China, who offer premium devices that are much cheaper than Apple and Samsung devices. In the midst of this competitive landscape, you have this level of goods and the low cost in your hands, so it becomes dangerous for Apple to rely heavily on hardware sales, added Ms. Cozza.
Smart homes
One of the main areas of business growth potential is smart homes.
Both Apple and Amazon have developed smart virtual personal assistants, and smart wireless speakers, but at this point Amazon has a clear advantage.
As it is known, Apple's default assistant is Siri, and a wireless smart speaker called HomePod. And Amazon's default assistant is Alexa, and a smart, wireless speaker called Echo.
◉ HomePod focuses on providing a music experience.
◉ While Amazon wants you to use Echo to control your home and manage your daily life.
Indeed, the Amazon device had a much higher home penetration than its Apple counterpart. And if you talk to people about these products, they will easily say that working with Amazon devices is much better, because you are dealing with an integrated system. It has become very easy for third parties to create Alexa personal assistant apps. While Apple still maintains its grip on its personal assistant within the walls of its iOS system.
Services
When it comes to services, Apple and Amazon offerings also vary widely:
◉ Amazon focuses heavily on e-commerce, apart from devices, and also sells apps, has cloud computing, video streaming with exclusive TV content, and other products.
◉ The cloud computing service proved to be particularly profitable, as it witnessed a 49% jump in sales to $ 6.1 billion in the second quarter of 2018, and operating profits rose to 1.67 billion dollars compared to 916 million dollars in the same period of the previous year.
◉ Juniper estimates that the cloud computing market for software, platforms, and infrastructure as a service will be worth more than $ 145 billion in 2020. Amazon is the largest player in the market with a third of the market share.
“The power of Amazon in cloud computing was evident in the past, and it is the most capable of attracting an enormous group of customers from large companies such as Netflix and other companies and individuals,” says Mr. Holden.
Going forward, the main player will be the Internet of Things (IoT), especially given AWS wide-ranging services and the ability to provide advanced computing services.
Aside from devices, Apple is focusing on Apple Music, Apple Pay and Music Tracks, and the App Store apps.
But Apple will likely develop other services, says Ms Cozza. “Apple has other methods, such as its penetration into e-learning, wearable devices and healthcare,” and all of this has met with widespread acceptance in those circles. There are still a lot of opportunities for Apple, in which it can grow and develop more and more.
Long-term growth
Both Apple and Amazon are hugely successful companies, and in fact the combined value of the two companies can exceed the value of 25 major US companies.
The BBC said, "The admiration still surrounds both companies, but there are concerns that Apple will not be able to continue to rely on the iPhone significantly, while competition is increasing dramatically in the current period."
She added, Apple's share price growth has seen many stops and starts again. Apple needs another revolutionary product, and new markets to sell. Or, their growth will stop and decline dramatically.
As for Amazon, because it is a smaller company than Apple, it does not have much presence in many countries, so it has more room for growth than Apple, which already has a high customer base.
With Apple, the chances are you will only buy one product per year. Amazon has much more potential than that of Apple.
With the growth of both companies in such a large way, but they face threats on their head from government organizations, and you see the newspapers crowding with headlines day after day, about Trump and Apple in particular.
However, the consensus confirms, that it is unlikely that the fortunes of Apple or Amazon will decline anytime soon. But the question remains which will reach $ 2 trillion first?
Do you think both companies will continue to grow in the long term? Do you think that Apple is really threatened by the decline of its stock and market value? Let us know in the comments.
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