Looking at Apple, generating a new billion dollar business can almost look easy. We have barely started the month of May and Apple’s latest product, which was announced in late January, is already on pace to generate $1 billion in sales in this quarter. Simply amazing. Apple confirmed yesterday that it had just sold 1 million Ipad’s, far more than expected and now on pace to become a bigger business than the Ipod or the Iphone if that is even possible. The beauty of the product is that Apple has high margins on Ipad sales by all estimates, and has spent little money on marketing the product. It helps when media around the world is putting Steve Jobs and the Ipad on the cover of every newspaper and magazine. If we estimate an average of 600-650$ per sale for each Ipad (not including money made on related products, applications, books, etc), we can see that the Ipad already has 2/3 of the billion dollar in revenues in a matter of weeks.
Apple’s stock soars…
Of course, no one will be surprised to see the impressive growth of Apple’s stock in recent weeks. The Ipad has certainly been a major success and those critics who said that the Ipad was nothing more than a big Iphone are probably very sorry if they went short on Apple’s stock. Interesting stat about Apple. I read somewhere last week that someone that would have bought Apple stock for 400$ when the Ipod was first launched (instead of buying the iconic Ipod), would now have 15,000$ worth of Apple stock today. Is the same true of the Ipad?
Google’s stock is still depressed
Now compare all of this to Google. Google has been looking for a billion dollar business for almost a decade now. Search has been an incredible business but where will the growth come from now? We wrote a series of posts recently about Google’s next billion dollar business speculating that it might be as a financial data firm, providing financial research or even as a hedge fund. There are of course many different possibilities for the search giant but it’s safe to say that Google’s story has been much different in 2010 from Apple. No big success to date and a major problem with the Chinese government has certainly not helped the stock.
Having said that, I remain an optimist regarding Google and certainly a long time bull. But certainly at this point there’s no way to give Google the win over Apple.