Apple's Greed Stifles Growth While Amazon Forges Ahead

| About: Amazon.com, Inc. (AMZN)
This article is now exclusive for PRO subscribers.

Summary

Apple is focused on short-term profit and lacks innovation.

Amazon.com has emerged as the key competitor in home automation, long an Apple target market.

Google Home is enjoying real success in this arena as well, leaving Apple in the dust.

Apple (NASDAQ:AAPL) is letting greed get in the way of growth. Those aren't my words, they come from a recent article on ZDNet.com. However, it echoes a story I have been telling for a couple of years.

Apple simply wants to sell as many devices as it can at the highest margin possible. Apple lags its competitors in innovation and has done virtually nothing but tweak its devices for the past few years.

Adding a larger screen, a faster processor or a higher resolution camera just doesn't count as innovation.

Meanwhile, Apple's actual competitors - Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN) - are running away with a vast potential market that has been Apple's target for years.

Amazon's Echo and its baby brother Echo Dot are great examples.

Echo Dot is an $89.99 device that does everything you wished your iPhone or iPad would do in your home, does it better and does it more cheaply. Integrated with Amazon's Alexa - a competitor to Apple's Siri - it offers voice controls that actually work. Order pizza, play your favorite tune, call Uber (UBER) for a ride, or listen to the news and all a simple voice command away.

Source: Amazon.com

For its part, Alphabet's Google has trumped Apple in smartphones with its Android OS commanding over 80% of the world's devices, and Google has introduced Google Home, an intelligent speaker similar to Amazon Echo but with connections to a more limited set of devices.

In the meantime, Apple piddles around with Apple TV and its boring and buggy Siri system.

Smartphones have been Apple's greatest success but strategy has been its greatest failure. In the name of short-term profit (and there is no doubt Apple has made a lot of money), Apple has ignored the compelling need in technology to look ahead and innovate. I am sure the focus on short-term profits has made many Apple managers wealthy beyond their dreams and not a few shareholders as well. But that gravy train is running out of steam while Google and Amazon.com power ahead.

Google has danced with Apple for the title of world's most profitable company with the two neck and neck at about $500 billion market value. Amazon.com is well behind at roughly $300 billion, but in my opinion is the race horse most likely to cross the finish line first in the minds of investors.

The past twelve months make the point. Amazon.com is up 72%, Alphabet's (Google) shares are up 36% and Apple's shares are down 23%.

Look out a few years and watch this drama unfold, and I am betting you will see Amazon.com leap to the front of the pack as a serious contender while Google continues its impressive performance and Apple keeps buying back stock and fiddling with its dividend, preferring to crow about its cash hoard than its product portfolio.

I have no positions in any of these stocks today. I would be long Amazon.com but since my son works for the company, I prefer not to put him in a position that might be considered a conflict.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.