Apple Inc., Google Inc. and Amazon.com Inc. rose up by riding consumer demand for their products. Now the companies are trying to keep their growth streaks going by tapping another type of customer: businesses.
While the technology giants have long had offerings for businesses, they are now broadening their product line-ups and more aggressively marketing them to companies. Google is pushing to get its computerized eyewear, Glass, into corporations while Apple is adding management tools to its upcoming iPhone operating system. In total, businesses are set to contribute more than 15 percent of Apple’s sales by 2016, up from less than 10 percent now, while Amazon’s enterprise revenue is projected to reach about 10 percent in 2019, double from 2013, according to Evercore Partners and International Strategy & Investment LLC.
The moves to get deeper into the traditional customer strongholds of Microsoft Corp., Hewlett-Packard Co. and Dell Inc. have been building all year. Last month, Apple unveiled a pact with International Business Machines Corp. to help sell its gear to corporations. Google, which today celebrates its 10-year anniversary of trading as a public company, in June added unlimited storage for businesses and debuted new mobile tools for enterprises. Google and Amazon also slashed the prices of their cloud-computing services for businesses earlier this year.
The companies are seeking to sell more into businesses as corporate spending on technology hardware, software and services is projected to reach $1.6 trillion worldwide this year, up 7.7 percent from a year ago, according to IHS Inc. That’s slightly bigger than the $1.5 trillion global e-commerce market and the $140 billion online advertising market, according to EMarketer Inc.
It’s also a way to make up for slowing growth in each company’s larger business. Apple’s sales are estimated to be up 5 percent this fiscal year, compared with growth of 45 percent two years earlier, while Amazon’s revenue is anticipated to rise 22 percent this year, a deceleration from 27 percent in 2012, according to data compiled by Bloomberg.
“Some of these companies have to broaden their revenue base,” said Danielle Levitas, an analyst at Gartner Inc. “If there’s too many fish in your pond — or your pond is reaching saturation — you need another place to play.”
Denting Sales
Apple, Google and Amazon need to tap into meaningful pools of spending to make a dent in their already-enormous sales. In total, the three companies had combined revenue of $305 billion in their 2013 fiscal years, according to data compiled by Bloomberg. That’s larger than Singapore’s economy, according to data from the World Bank.
“When you’re a company as big as an Apple, an Amazon or a Google, there are only so many markets that you can go to that will actually move the needle,” said Ben Schachter, an analyst at Macquarie Securities USA Inc., who covers the companies.
The percentage of revenue from business customers is climbing for Apple, Google and Amazon — with room for more growth. While Apple gets less than 10 percent of its annual $170.9 billion in revenue directly from corporations, that’s up from less than 5 percent in 2009, according to Brian Marshall, an analyst at ISI.
Amazon received about 4.5 percent of its $74.5 billion in sales from business-focused cloud offerings last year, up from 1 percent in 2010, according to Evercore Partners. Google gets “well less” than 5 percent of its $59.8 billion in annual revenue from businesses, up from less than 1 percent in 2009, according to Schachter.
Representatives for Apple, Google and Amazon declined to comment.
Speaking Up [eap_ad_1] Executives at Apple, Google and Amazon have turned up the volume on what they can offer companies. Enterprise is part of a “trifecta of emerging new businesses,” Google’s former chief business officer, Nikesh Arora, said earlier this year on a call with analysts. Through its IBM partnership, businesses are set to “be one such catalyst for future iPad growth,” Apple Chief Executive Officer Tim Cook said on July 22.
Other consumer-technology companies are also taking more steps to sell to businesses. Facebook Inc., owner of the largest social-networking service, last year acquired a startup called Parse that offers technology to help companies more quickly build an application and keep users engaged.
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