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Apple Strategy vs. Sony Corporation

27 August 2009 4 Comments

Apple is easily one of the most impressive companies out there, both as a stock and a consumer products company; the Apple strategy is even more impressive. Most people know that Apple is an extremely successful company. People recognize their products and may even know that their stock has performed well over the years. But, do they know why? Do they understand the Apple strategy?

To demonstrate a key aspect of their business strategy, it is worthwhile to compare Apple to Sony.  Sony, at one point, was viewed very similar to the way people view Apple today.  Innovative, successful, and a leader in the technology industry.  Today, Apple is the clear leader.

The Netbook Market

One of the hottest markets this past year has been the netbook market.  Interestingly, this is a market that Apple has refused to enter (unless they could introduce a product to re-define the market).  On the other end of the spectrum, we have Sony, who earlier this summer announced they would be entering the Netbook market.  Not only is Sony extremely late in entering this market, but it looks like their product offers hardly a differentiating factor when compared to other products.

Meanwhile, Apple is rumored to be working on a netbook-sized tablet device probably considered to be something along the lines of a larger iPod Touch with more netbook-like functionality.  The screen will most likely be an innovative touch screen.

So, how do these strategies differ?  Apple only enters a market when they can offer a product that is superior and changes the market.  Sony is fine with entering a market just to participate in the market.  One is a clear leader in technology and consumer products; the other is clearly not.

Stock Performance

The results of the Apple strategy can be clear seen in the stock performance of the last decade.  The following chart compares the performance of Apple’s stock with that of Sony:

Apple Strategy
I think it can easily be said that I don’t recommend Sony as a long term investment strictly based on their strategy. I do love Apple as a company and as an investment, but investing in tech stocks can be tricky.

Without a dividend yield, you have to be focused not only on buying a tech stock (such as Apple) but also on selling the stock (for a profit). Let me make this clear: the only way to make money on a tech stock with no dividend is to buy the stock and sell it for more money than you bought it. Due to the volatility and huge price moves, this is easier said than done.

The best way is to buy these stocks when the market is down. We had great opportunities to load up on Apple stock over the past year with the stock price dropping below $80. With the stock over $160 today, I wouldn’t necessarily go out and buy the stock. The Apple strategy, however, is undeniably impressive. Keep your eye out for a drop in the stock price.

4 Comments »

  • torbjorn said:

    …and knowing Sony their comp will probably be the most expensive one out there.

    For the 1st time – ever – I’m looking into buying an apple product besides an iPod. The new Macbook Pro looks to be an impressive machine. If I’m going to be spending more than a grand, I may as well put it there.

  • Kevin said:

    torbjorn:

    I’m warning you… once you go Mac, you won’t ever go back… at one point, I was as anti-mac as it gets. Now I own a Macbook, an iMac, iPhone and several iPods. Whew..

  • torbjorn said:

    Wowie. Not bad, MacMan.

    What’s getting me to the purchase point is that my iPod is giving in on me (it has come a long way), and the next ones are included in the price of their new computers. I refuse to say they come free. There’s an opportunity cost!

    It always takes me some time to process a potential purchase – but we’ll see where I end up.