Apple (NASDAQ: AAPL) is enjoying stronger growth across services and the wearables segment. Its leading source of revenue is the iPhone which accounts for more than half of its annual net revenue. In fiscal 2019, Apple’s revenue from iPhone was $142.4 billion and that from services $46.3 billion.
Apple’s revenue from sales of the iPhone was around $22.5 billion lower compared to the previous year in 2019. However, the overall revenue of the company fell by only $5.4 billion because of revenue growth across all other segments.
The revenue of Apple from sales of iPods increased by around $2.9 billion reaching $21.3 billion in 2019 compared to $18.4 billion in 2018. Apple’s revenue from sales of Mac also experienced slight growth and rose by around half a billion reaching $25.74 billion in 2019 compared to $25.2 billion in 2018.
Apple’s revenue from wearables, home, and accessories grew by around 40% rising to $24.5 billion in 2019 from $17.4 billion in 2018. Net Revenue of Apple from services grew to $46.3 billion in 2019 from $39.75 billion in 2018.
Apple net sales of Services and wearables in millions 2017-2019.
Net income of Nike in the first quarter of 2019 grew 25% (compared to previous year) to $1.4 billion driven mainly by strong revenue growth and gross margin expansion while diluted earnings per share grew 28% to $0.86 reflecting a 2% decline in the weighted average diluted common shares outstanding.
HP is a leading brand of PCs and laptops. In 2015, HP and HPE became two separate divisions. HP became the division that runs the PC and printer businesses. It has been leading the PC industry for years with the highest sales in the market. Apart from being an innovative brand of PCs tablets and printers, the company is known for its focus on product quality and customer experience. This swot analysis lists its strengths, weaknesses, and challenges.
HP is among the strongest PC brands which have successfully retained its leadership position in the market. A sizeable chunk of its revenue comes from notebooks and desktops. However, in the printer market too, it has maintained its strong position. This has led to stronger financial performance. Its revenue has climbed steadily over the past three years having reached 58.5 Billion dollars in 2018.
One important reason behind HP’s leadership position in the market is its consistent focus on research and innovation. Its products are the most popular because of their productivity and performance. The company invests a significant sum each year in research and innovation. In 2018, it invested around $1.4 Billion in R&D.
Brand equity or how customers overall perceive a brand which includes its image and customer experience as well as the level of trust and loyalty it enjoys, is also an important strength of HP. Due to its focus on product quality as well as customer experience and brand image, the company is among the most trusted PC and laptop brands.
Strong portfolio of computing products:-
HP offers a large range of laptops, desktops, and related peripherals. The company has brought products to the market at varying price ranges. This has helped the brand tap into both the lower and higher-end segments. From affordable to premium, it has brought models of laptops in all ranges. A large product portfolio is also a key strength of Hewlett Packard.
Declining PC market:-
The PC market has kept declining over recent years. Rising sales of smartphones and mobile devices have led to reduced sales of PCs and laptops. After having declined for several years, the PC market is seeing stagnant growth. This is affecting the sales and revenue of leading PC brands like HP negatively.
Growing operational costs:-
With time the operational costs of HP have also kept growing fast. In 2018, the total costs & expenses of HP grew to $54.4 Billion from $48.5 Billion in 2017. (HP Annual Report 2018).
Diversification can help HP find faster growth and grow its sales and revenue. By entering new businesses and markets, the company can grow its sales and revenue as well as the customer base globally.
Marketing and customer engagement:-
The rise of new technologies like digital technology and AI has brought fresh opportunities for large and global brands like HP in terms of marketing and customer engagement. HP can use these opportunities for connecting with its users and to grow its customer connection stronger.
The level of competition in the PC industry is high. There are several major rivals of HP in the market including Lenovo, Dell, and Apple which are also intensely focused on innovation. Overall due to the high level of rivalry, the battle for market share is intense leading to higher costs of research and development as well as marketing.
Like the entire technology industry, the PC industry is also facing higher government control and regulatory pressure. Apart from the rising compliance-related costs, the level of oversight is also making it difficult for businesses to find faster growth or to diversify. Regulatory pressures add to operating costs of HP and can have a negative impact on bottom-line performance.
Rising costs of raw materials and labor:-
The costs of labor and raw material have continued to grow rapidly leading to higher operational costs. This creates pressure on the profits and profit margins of brands like HP.
A Comparison of the R&D Expenses of Amazon and Google
Amazon R&D Expenses (Mn)
Google R&D Expenses
The leading tech brands spend a large fortune each year on ersearch and development to find faster growth and improve their products and services. from Apple to Google, Microsoft, Amazon and Facebook, all the tech giants have experieenced a sharp increase in their research and development expenses during recent years. Apart from increased competition, growing market demand and user base are the leading factors driving the fast growth in R&D related costs.
Amazon is the leading e-commerce and cloud technology brand in the world. The cloud and e-retail industries both are experiencing increased competition in recent years. As a result Amazon has continued to grow its research and development expenses year over year faster. In 2019, the research and development expenses of Amazon reached $35.9 billion, which was around 24.5% higher than the previous year. For several years continuously, Amazon has remained the largest R&D spender in the entire business industry followed by Alphabet, the parent company of Google. In the previous year (2018), Amazon had spent around $28.8 billion on research and development.
Compared to Amazon, Google (Alphabet) invested less in research and development. However, it is still the second-largest R&D spender in the entire industry. The R&D expenses of Alphabet were $26 billion in 2019 compared to $21.42 billion in 2018, 21.5% growth year over year. Google enjoys the largest market share in online search and advertising. Most of its revenue is generated from digital advertising. However, the research and development expenses of Google have also grown very fast during the last five years. Its 2019 R&D expenses were more than double that of its investment in research and development during fiscal 2015, when it spent $12.3 billion on R&D.
While Amazon and Microsoft are currently leading the cloud industry in terms of revenue, Google’s growth in the cloud segment has also been impressive. Compared to the two leaders, Google’s revenue from cloud has grown slower. However, the impressive growth it achieved in 2019, signals a stronger performance in the cloud segment in the years ahead.
Amazon versus Google revenue from Cloud services.
Google Cloud Revenue ($mn)
Amazon Cloud revenue ($mn)
While Google has more than doubled its revenue from the cloud services in just two-three years, its net revenue from cloud computing was still only a little above a quarter of what Amazon generated from cloud services in 2019. Google generated $8.9 billion in 2019 from cloud services compared to $5.8 billion in 2018. On the other hand, Amazon’s revenue from the cloud segment reached $35 billion in 2019 compared to $25.7 billion in 2018.
Google (Parent company Alphabet), the search engine giant relies mainly on digital advertising as its main source of revenue. The company was founded in 1998 by Larry Page and Sergey Brin who stepped down from the leadership positions of Google (including the parent company). Sunder Pichai is the new CEO of Alphabet. Apart from search and advertising as well as social media (YouTube), the company has also introduced a large range of cloud computing products for individuals and enterprises. The headquarters of Google (Googleplex) is located in Mountain View, California, United States. Apart from its core business which is Google, Alphabet, the parent company owns several other smaller companies collectively called other bets.
Amazon (NASDAQ: AMZN) is the largest e-commerce brand and one of the leading cloud computing brands. The company was founded in 1994 by Jeff Bezos. It has seen enormous growth over the last five years and has greatly extended its range of cloud-based services. Amazon has its headquarters in Seattle, Washington, United States. The CEO of Amazon is Jeff Bezos. Amazon Web Services (AWS) is Amazon’s cloud services platform. Amazon is also the largest R&D spender in the entire business industry. The company has divided its business into three main segments that include Amazon North America, Amazon International, and AWS.
Top competitors of Walmart in the US and their 2019 revenues.
2019 Revenue (billions)
There are a large number of players in the US retail industry including the physical retail leader Walmart and the ecommerce leader Amazon. The retail industry has seen a lot of growth in the recent years driven mainly by growth of ecommerce and higher spending due to increased economic activity and higher employment. In fiscal 2020, Walmart enjoyed heavy growth in its ecomemrce sales and revenue. From $25.1 billion in fiscal 2019, the ecommerce revenue of the company in 2020 grew to $35.9 billion.
There are a large number of competitors of Walmart in the US and the list includes both big and small players. Here are the most significant competitors of Walmart in the US.
The Kroger Company:
The Kroger company is headquartered at Cincinnati, Ohio, United States. It is among the largest food retailers in the US. Kroger’s physical retail store network is spread through 35 US states and the District of Columbia. It has 2,757 supermarkets and multi department stores operational in the US supported by 45 distribution centers. Nearly half a million associates work at the Kroger company. The company also runs 1,567 supermarket fuel centers and 35 food production plants as well as 256 jewellery stores. The company had consolidated net worth $122.3 billion in 2019. It experienced 2% same store sales growth in fiscal 2019. Kroger like Walmart has been investing in e-commerce for faster growth and during the last quarter of 2019, its ecommerce sales grew by 19%.
Costco is also one of the leading US based retail brands. It operates membership based warehouses in the US and some more international markets. Its operating model is very different from Walmart or the other retailers. Like Walmart, Costco has also been investing in technology for faster growth in e-commerce sales. Costco enjoys very strong reputation in the US retail industry mainly because of its customer focus and an organizational culture that is centered upon diversity, inclusion and satisfaction of customers, employees and other stakeholders.
Costco operated 785 warehouses in 2019 of which 546 were in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, one in Iceland, one in France, and one in China.
Costco also operates a private label brand called Kirkland Signature (a direct competitor of Sam’s Club). In 2019, Costco’s net sales reached $149.4 billion (6% growth compared to the last year).
Home Depot is the largest home improvement brand in the world. Its headquarters are located at Atlanta, Georgia in the United States. The company offers a very large range of home improvement products and apart from that it offers building material, lawn and garden products and home decor products as well as home improvement services. As of fiscal 2019, Home Depot’s number of operational stores was 2,291. The consolidated net sales of Home Depot reached $110.23 billion in 2019 compared to $108.2 billion in 2018 (2% yoy growth).
Walgreens Boots Alliance:
Walgreens boots Alliance is another US based retailer that sells health and wellness products apart from beauty and lifestyle products. Walgreens and its subsidiaries are present across 25 countries. Its phsyical stores (including the companies in which it has an equity investment) are located across 11 countries. A total of 18,750 such stores were operational as of 2019. Walgreens also operates one of the largest global pharmaceutical wholesale and distribution networks which has more than 4001 distribution centers delivering to more than 240,000 pharmacies, doctors, health centers and hospitals each year in more than 201 countries. In fiscal 2019, the consolidated net sales of Walgreens reached $136.9 billion.
Target Corporation is also mong the biggest players in the US retail industry. Its headquarters are located at Minneapolis in Minnesota, United States. Target was founded in 1902 as Dayton DryGoods Company. However, the first Target store opened in Minnesota in 1962. Target stores are operational across all the 50 states of the US. Target is a general merchandise retailer and sells a large range of products. Its net revenue in fiscal 2019 reached $77.1 billion. The number of Target stores operational in 2019 was 1871 and the number of distribution centers that support its retail network was 41. Target also owns 42 unique brands not available at other retailers.
Amazon is the world’s largest ecommerce brand with a global presence. It was founded by Jeff Bezos and has its headquarters in Seattle, Washington, United States. Amazon’s global sales and distribution network caters to a large audience globally. Apart from that its ecommerce websites are supported by a global network of global warehouses for supply and distribution.
The consolidated net sales of Amazon have more than doubled in the last four years mainly because of growth in demand, technological innovation and customer experience. Amazon is also a leading cloud technology brand, but ecommerce accounts for the largest part of its revenue. Its business operations are divided into three segments including North America, International and Amazon Web Services. In 2019, the consolidated net sales of Amazon reached $280.5 billion, rising from $232.9 billion in 2018.
Lowe’s is the second largest home improvement brand in the world. It was ranked at the 40th spot on the fortune 500 list in 2018. The company serves more than 18 million customers each week in the US, Canada and Mexico. Its largest market is the United States. The US market accounted for more than 90% of its revenue in 2018. Net sales of the company reached $72.1 billion in 2019. The company employs around 310,000 people. Lowe’s sells merchandise in 13 categories ranging from appliances and tools to paint, lumber and nursery products. The company also sells around 400,000 products online.
Best Buy is also one of the biggest retail brands in the United States. It sells merchandise in the following main categories: computing and mobile phones, consumer electronics, appliances, entertainment, services and other.
Apart from the US, Best Buy has operations in Canada and Mexico. As of the end of fiscal 2019, Best Buy had 1187 large format and 51 small format stores in its domestic and international markets. There were a total 1,026 Best Buy stores operational in the US in 2019 and 212 in its international markets. The consolidated net revenue of the company was $42.9 billion in 2019 compared to $42.15 billion in 2018.
Quarterly revenue of Restaurant Brands International 2015-2018
Revenues are in million dollars.
Restaurant Brands International (RBI) owns Tim Hortons, Burger King and Popeyes.
The main source of revenue for Restaurant Brands International (RBI) is the royalty it receives from the franchisees as well as the sales from the company-owned restaurants. Canada and the US are the leading markets of RBI.
Revenue of Restaurants Brand International 2010-2018
Revenue ($ Million)
Restaurants brand international owns Burger King, Tim Hortons and Popeyes. Its total revenue in year 2018 grew to 5.4 Billion dollars. RBI’s business generates revenue from the following sources: (i) franchise revenues (mainly royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees) (ii) property revenues from properties it leases or subleases to franchisees and (iii) sales at restaurants RBI owns (“Company restaurants”). Tim Hortons gets revenue from sales to franchisees related to RBI’s supply chain operations, that include manufacturing, procurement, warehousing and distribution, as well as sales to retailers.