Earlier, I linked to this set of three pie charts by Ed Bott, but it’s worth mentioning something else about them. The subtle point that it seems Bott is trying to make is that out of Microsoft, Apple, and Google, Microsoft has the best business because it’s the most well-rounded. (Meanwhile, Google has the worst because it’s entirely dominated by one thing: advertising.)
At a high-level, that’s an interesting point to make, I think. But without context, the Apple chart is a little misleading.
It looks like Apple’s business is mainly about iPhone. And while it’s true that the iPhone is responsible for over half of Apple’s total revenue, it’s important to consider that Apple’s total pie is now significantly larger than Microsoft’s. Actually, it’s more than twice as large.
Put another way: Apple’s iPhone business alone is larger than all of Microsoft’s businesses combined.
And — just as remarkably — if you took away Apple’s iPhone business from the chart, the remaining Apple businesses would still be larger than Microsoft’s total business. And Apple’s earnings would look a lot more evenly distributed then.
Point is: these charts don’t actually show Microsoft is a better business because they’re the most diversified. They just show how out-of-this-world Apple’s iPhone business is at this point.
Update: Just to drive the point home…