Tech gi­ants bat­tle it out, but Google takes the lead

CityPress - - Business - MOY­AGABO MAAKE moy­agabo.maake@city­press.co.za

The bat­tle of the tech gi­ants was on again this week when Ap­ple re­leased its re­sults for the three months to Septem­ber, a week after ri­val Google did the same, and for roughly the same pe­riod.

The iPhone maker said it made $42.1 bil­lion (about R462.3 bil­lion) in rev­enue, a 12% in­crease on the same pe­riod last year. This was less than Google’s 20% in­crease in rev­enue, which came in at $16.5 bil­lion.

Ap­ple CEO Tim Cook had to field ques­tions from un­happy an­a­lysts in a con­fer­ence call on Mon­day, es­pe­cially about flag­ging sales of the iPad tablets. Although Cook said the company was “work­ing hard” to fill or­ders for the new iPhone 6 and 6 Plus mod­els as fast as pos­si­ble, and Mac rev­enues were up 18%, Ap­ple’s pub­lished re­sults showed iPad sales dropped 13% year-on-year.

Cook said Ap­ple had sold 237 mil­lion tablets in four years. “That’s about twice the num­ber of iPhones we sold over the first four years of iPhone,” he said. He dis­missed the dip in sales as a “speed bump”.

Another is­sue was the company’s decision to lump Ap­ple Watch and Ap­ple Beats into a new re­port­ing cat­e­gory called “other prod­ucts”.

In May, Ap­ple an­nounced a $3 bil­lion deal to buy Beats Mu­sic and Beats Elec­tron­ics from mu­sic icons Jimmy Iovine and Dr Dre, giv­ing it ac­cess to pre­mium head­phones, ear­phones and speak­ers, as well as audio soft­ware tech­nol­ogy, mu­sic and mu­sic sub­scrip­tions.

An­a­lysts had pre­dicted huge sales for the Ap­ple Watch, which will start shipping early next year, and were sur­prised by Ap­ple’s decision to lump it with other ac­ces­sories.

Cook said Ap­ple’s com­peti­tors were look­ing for that in­for­ma­tion and it was bet­ter for the company to ag­gre­gate it.

Google still makes most of its money from ad­ver­tis­ing, which ac­counts for more than 88% of rev­enue. But its Play Store – where users can shop for apps, games and books, and in some coun­tries, movies, mu­sic, and dig­i­tal news­pa­pers and mag­a­zines – is be­gin­ning to make a stronger show­ing.

Google fi­nance chief Pa­trick Pichette told an­a­lysts Google’s non­ad­ver­tis­ing rev­enue grew 50% year-on-year to $1.8 bil­lion “driven by growth mainly from the Play Store but also com­ple­mented by an in­crease in li­cens­ing rev­enue”.

Omid Kordestani, its chief business of­fi­cer, said he ex­pected non-ad rev­enue to in­crease.

“We’re see­ing re­mark­able mo­men­tum in our newer non-ads busi­nesses whether it’s Play, Hard­ware or Google For Work,” he said.

Its ex­pen­sive foray into hard­ware own­er­ship has come to an end with the Jan­uary sale of its Mo­torola business to the Len­ovo Group for $2.1 bil­lion. In that quar­ter, Google wrote off $185 mil­lion from the business. Google has re­tained most of the Mo­torola patent port­fo­lio, which Len­ovo will get a li­cence for – mean­ing that Google will ring up more li­cens­ing rev­enue.

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