Apr 11 2022, 06:36 PM
QUOTE(Toku @ Apr 11 2022, 06:02 PM)
Hi Sifu TOS 
,
Would like to ask you why you like MSFT , AAPL and don't like GOOG business model? How do you dissect them in detail? Need to learn more from you.
Appreciate your kind sharing.
Wow my status upgraded already ,Would like to ask you why you like MSFT , AAPL and don't like GOOG business model? How do you dissect them in detail? Need to learn more from you.
Appreciate your kind sharing.
No lah, I am just an intermediary who transfers information from newspapers to this forum. Not really anywhere near dwRK or Ramjade's level. They are the real gurus.
As for why I like MSFT and AAPL but not GOOG. It's just my own view. You can come up with yours after studying the companies' financial statements (10-K, 10-Q etc. ) and read some newspapers too.
MSFT has a monopoly in the OS world and office suites/productivity tools and they can keep acquiring competitors or smaller firm to retain their positions. Their next breakthrough would be gaming (Xbox pass, hailed as the "Netflix" of gaming for its subscription model). (I would like to see them take down Sony and Tencent.) MSFT also has a fast growing cloud computing business, which is also highly profitable. Another thing that sets MSFT apart from other Big Tech is it's mainly a software firm, so the overhead cost is very low and they have little issues with say WFH. They can also pay very little tax by booking their profits in tax heavens (artificially inflating their prices there while lowering the prices in major markets) and/or play around with intangible capital allowance tax incentives.
For AAPL, the software side is the same as MSFT, with their iOS, App Store, iTunes, Apple TV etc. For hardware side I value their chip designers. AAPL has some of the best chip designers in the world, a key asset. Its closed i-ecosystem can keep the preying eyes of competitors out of it for as long as it likes, as long as people buy into its products' design and philosophy. AAPL used to be a high-end product, but has expanded its ecosystem to the mid-class smartphone segment in recent years to capture market share, and hence profit.
GOOG mainly relies on ads to survive. More than 90% of GOOG revenue/profit comes from advertisement, so they essentially rely on a monopoly in platform to sustain themselves. But platform, unless it's closed like AAPL's, is subject to competition with people immitating your model. This is what happened to FB with TikTok coming in and take away users' screen time. Advertisers are realistic animals. Once no one use your platform, they shift and move away. Cut-throat business to maintain a platform. GOOG made its ad money out of google search results, Youtube and Play Store apps. Youtube can see potential challenges from TikTok if they extend their video length. GOOG search engine ads and Play store ads revenue are rather stable for now, but to grab user's attention you need to pay for it. GOOG pays a lot to maintain Google as the default search engine on AAPL's devices, as you can read here:
https://www.wsj.com/articles/the-apple-goog...share_permalink
Just Google (no pun intended) "Google-Apple search deal" and you can find infos online. These costs are known as "traffic-acquisition cost" and are the subject of antitrust regulations back in 2020.
AAPL and MSFT don't rely on ads (and hence less need to maintain their platform) as their main revenue stream, and many of their incomes are recurrent in nature especially for MSFT, like Xbox pass and Office 365 for MSFT and iTunes/Apple TV subscription for AAPL. I personally favour these types of businesses, but it's just me.
This post has been edited by TOS: Apr 11 2022, 07:51 PM
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