Alphabet on Tuesday became the world’s most valuable company. A position previously occupied by known to be occupied by Apple.
Alphabet, a company founded in 2015 by Larry Page and Sergey Brin, took over the affairs of Google and its other subsidiaries as their parent company. Aside Google, it has Nest Labs, Google Fiber, Calico, X, GV, Verily, Google Capital et al as its subsidiaries. As at 1st February 2016, its revenue climbed to 71.8 billion USD (2015). In getting to this exalted position, Alphabet’s revenue and earnings both were on the rise at $21.3 billion in revenue and earnings of $8.67 per share. To cement its position as the number one company, its market capitalization stood at $558 billion after jumping about 8% after its Q4 report; in contrast, Apple’s market capitalization stands at $535. Since Apple’s stock has not performed well in the past year, that gave Alphabet the needed edge to over-take as the world’s most valuable company.
You will recall that Apple has traditionally occupied this position since about 2011, after overtaking Exxon. The rise which could be attributed to its very successful product lines especially the iPad and iPhone. Before now, the last time Google has been ahead of Apple was way back in 2010, just before Apple’s launch of the iPhone got them way ahead of Google, with a difference in share value of over $400 billion. Now it seem the table had turned, all thanks to Apple’s share not performing so very well, in comparison to that of Alphabet’s.
How did Alphabet Arrive at this position?
Here’s the contrast, Alphabet is basically a software company, with a little bias for hardware, while Apple is the reverse. When we carefully look at the preceding circumstances, you will agree that the company deserves to be in this position. Core businesses like its mail platform – Gmail had grew to over 1billion active users, its search engine is yet to have a match, YouTube and other products performing well, its advertising business, paid click rose at 31% year-over-year, though there was a slight decrease in cost-per-click at 13% drop.
I think the major cause of this shift is due to the fact that whereas Apple depends solely on revenue from its flagship product – the iPhone, accounting for about two-third of its total revenue, Google has a wide range of products and services, which to an extent, are all performing well enough. If Apple thinks that it would stay ahead in the mobile market ahead of every other persons, it may have committed a big blunder. It is also believed that Google is set to capture 32 percent of the mobile ad market this year and next, which will keep them ahead of competition from Facebook, which currently have about 20% of the market. The company generates so much profit from its digital ad business that it can invest in all sorts of potential growth areas, even in autonomous driving and extending life sectors.
Congrats to Alphabet but they should know that the exalted position of most valuable company isn’t a birth right for them, Apple or any firm, It takes a whole lot to stay afloat, especially in the technology industry where innovation is key to staying on top.
Alphabet is an American multinational conglomerate created in 2014 as the parent company of Google and several other companies previously owned by Google. The company is based in California and headed by Google’s co-founders, Larry Page and Sergey Brin, with Page serving as CEO and Brin as President. Alphabet’s portfolio encompasses several industries, including technology, life sciences, investment capital, and research. The establishment of Alphabet was prompted by a desire to make the core Google Internet services business “cleaner and more accountable” while allowing greater autonomy to group companies that operate in businesses other than Internet services.
Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976, to develop and sell personal computers. It was incorporated as Apple Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. The American multinational technology company designs, develops, and sells consumer electronics, computer software, and online services. Its hardware products include the iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPod portable media player, and the Apple Watch smartwatch. Apple’s consumer software includes the OS X and iOS operating systems, the iTunes media player, the Safari web browser, and the iLife and iWork creativity and productivity suites. Its online services include the iTunes Store, the iOS App Store and Mac App Store, and iCloud. Apple is headquartered in Cupertino, California.