UPDATE: Disappointed by Tesla's Battery Day? The electric-car maker has been winning by playing the long game
By Daniel Newman
At this week's so-called Battery Day,
The speculation around electric vehicles (EVs) comes with an inherent risk.
Apple (AAPL), Nvidia (NVDA), Qualcomm (QCOM), Amazon (AMZN) and Microsoft (MSFT) all come to mind.
Apple constantly went against the grain. Most notably, its closed ecosystem was always a point of contention. The "Think Different" company built a platform that was extremely sticky for its users, but that didn't work with any standard operating system. The company focused on building products that customers loved to use. Then it built ecosystems for music and apps. Now this is expanding into health care, gaming, TV and more. Many thought Apple would struggle to grow a meaningful streaming and services business, but in the span of a few years, the company has shown success moving in that direction
Qualcomm has constantly faced regulatory pressure for playing in the intellectual-property (IP) and chip-making business. The company is arguably the most important contributor to 5G, and its technology is featured in pretty much every mobile device on the planet, either as part of the system itself, or its patents as part of another chip makers' system. This business model requires investing in R&D years ahead of new standards and risking big dollars to reap the rewards of being on the front edge of new standards. Regulatory scrutiny has held back the company's stock price at times, but the business' stability as a critical component to the world's connectivity standards makes it robust.
Nvidia's recent $40 billion acquisition announcement of Arm (http://www.marketwatch.com/story/nvidias-deal-with-arm-paves-the-path-to-a-trillion-dollar-market-value-2020-09-14) will follow a similar suit for IP and chip making under the same roof. Moreover, Nvidia's longer-term vision puts the company at the forefront of artificial intelligence (AI), which will be one of the biggest tech booms and investment areas over the next decade.
Microsoft went bold after appointing Satya Nadella, which saw the company go all in on cloud computing. This meant disrupting its steady, but antiquated, licensing business and building an almost entirely new stack and business model in almost every facet of the company. Short term, the risks were big and there was a lot of uncertainty for the company in the long term. Clearly, thinking long was the right strategy as the company's market cap has, at its peak, more than tripled in the time since Nadella took over six years ago.
Amazon made two big bets on the long term that paid off. First, that shoppers would move to do almost all types of purchasing online, and, second, and the one that I parallel more to
Big Tech parallels
For investors, this should provide a bit of comfort despite knowing that in the short run
Disclosure: The author has a stock investment in
Daniel Newman is the principal analyst at Futurum Research (https://futurumresearch.com/), which provides or has provided research, analysis, advising or consulting to Qualcomm, Nvidia, Intel, Samsung, ARM, and dozens of companies in the technology industry. Follow him on Twitter @danielnewmanUV (https://twitter.com/danielnewmanuv).
-Daniel Newman; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
September 25, 2020 16:59 ET (20:59 GMT)
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