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February 28, 2012

Dominance of Apple and other companies

Zerohedge makes a big deal about Apple being worth more than the entire valuation of the Retail segment of the S&P index and more than the S&P Semiconductor index They claim that having only a few big products is not sustainable. Apple is in a business where they have to continue to innovate but they can sustain with a few dominant products and services for many years. Sony was the winner in consumer electronics for over a decade with the Walkman.

The valuation of the retail is about half in Walmart $200 billion. Walmart has been up in that $200-300 billion valuation range since 1998). Walmart was even more dominant for a few years. Amazon is worth $83 billion. Home Depot is worth $73 billion and has been in that valuation range since 1998.

For many years almost all of the valuation and profit in semiconductors was in Intel and the X86 processors.

There are big winning companies that suck up all of the profits for a long time.

Microsoft has been worth about 200 to 300 billion for a couple of decades

Google has been about $200 billion since 2007.

Certain businesses are better than others. Google has achieved its success and profitability with a better online ad matching and selling system. It is mainly a one trick pony in terms of profitability. Microsoft stood on Windows and microsoft office for many years and now they get some profit from XBox.

IBM's dominance from the late 60s through the 70s and into the 80s was based on the 360 mainframe server series. Everything else was a sideshow in terms of profits.




Apple is dominating several industries using their products.

They are dominating music, publishing, various aspects of commerce, communication, and other media.

Just considering the gadget part of the equation is to not understand the profitability and reach of what Apple is doing.

Google, Amazon and chinese competitors will be assaulting Apple's positions but it is not just gadgets.

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