Tech, profits and the future

Shira Ovide of the New York Times writes a daily newsletter, “On Tech.” It is mostly always interesting and in a non-geek kind of way. Yesterday’s newsletter was interesting because it followed up on something I heard the other days on the radio news – that Apple was considering investing in the electric car market. The final shape/vision of the investment was to be determined, but either way, it was surprising. Seems like a bit of a stretch at first glance. There is the old story of the railroad companies that did not understand their business was transportation, not just railroads and so missed out on automobiles/trucking, airplanes, and the like. Who knows what Apple is thinking? They view their business in ways that have been innovative and profitable. Very profitable.

And that is Ms. Ovide’s point. There are lots of companies that have lots of profits that have been building up to huge reserves of capital. She writes  “Apple is branching into fitness class subscriptions and (maybe eventually) cars because it’s trying to find a second act after the iPhone.”

Like Google and Amazon, Apple has a warchest of assets for capital investment. In-house capital investment is inevitably going to lead the corporate leaders to look for new avenues/markets/products. Do you know where Amazon makes it money? While their classic “sell everything” business does well – there is only so much you can make on a blender. Their most profitable center, by far, is AWS – Amazon Web Services. It is has been the source of funds for them to enter the grocery market (Whole Foods), pharmacy (Amazon Pharmacy), and people are wondering if their delivery service will overtake UPS and FedEx. Google is an advertising company. Everything else is secondary at least as far as profits go. And they will go somewhere.

Do we as a society need an Apple-branded car? We probably need the fitness class, but that is already a crowded market – of course we could just eat less…. Amazon – not sure we need their new offerings.  But as they say, they will offer the market place the new product and the market will “vote.” It makes me wonder about how much we should expect of corporations to be “citizens” and promote the common good.

A lot of people point out that Amazon Smile encourages charitable giving. There are several things that give me pause. (a) If I spend $20 at Amazon Smile, they donate $0.10 to my charity of choice. (b) If I spend $20 at Amazon they give nothing. (c) it would be a trivial matter for Amazon.com’s software designers to allow shoppers to make a one-time request to have 0.5 percent of their purchases go to charity, and make that the default option every time a customer visits the Amazon.com site. And so (d) makes me wonder if Amazon is “trolling” a bit. Amazon net charitable giving is about 0.012 percent of revenue. Walmart gives about 10x more charitably. Microsoft about is about 40x more charitable.

Still… it all makes me wonder. If you are looking for a conclusion, sorry – I don’t have one. But I continue to muse about these things.

1 thought on “Tech, profits and the future

  1. It is an interesting subject….why electric cars as new business for Apple? Then again cell phones for a computer company? What do they invision an electric car to be…an extension of smart technology? I wonder.

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