Like manufacturing moving to China, for cost reduction, services are moving to India or other parts world as cost reduction initiative.
China manufacturing vs US manufacturing is 1:5 range appx. If a part is made in USA that may incur $100 which will incur $20 at China (this includes mfr+ship+insurance) until reaching US port.
Same way, service in India vs service in USA is 1:4 range appx.
For both, quality is a question, but US companies like AMZN freely getting returns. Even after returns, cost is way low.
That is why Trump wants to stop this, but it is beyond his level as the cost outside is so low, businesses keep on getting it from outside.
Exactly, many American companies are not capable of making high quality products. For example, GTAT canât make good quality sapphire in sufficient quantity. Now INTC canât make 9nm.
Despite trailing far behind the leaders, Amazonâs ads are having an outsize effect on the company itself. Its revenues from ad sales worldwide in 2018 could hit $8bn, contributing perhaps $3bn in operating profitâover a quarter of the total. Michael Olson of Piper Jaffray, a brokerage, says that by 2021, it is âhighly likelyâ that profits from Amazonâs ad business will exceed those from its lucrative cloud-computing unit, Amazon Web Services. Amazon loses money on its core e-commerce business, but can use the fat profits from advertising in the same way as it has used the cash from cloud computingâto push into new businesses and countries, says Brian Nowak of Morgan Stanley, an investment bank.
Careful in trusting such article. Do you honestly think that it is possible. Draw on your experience with MU. Personally I doubt that would happen. Advertisers donât switch that easily.
Amazon reportedly has its eye on restaurants, gas stations, and other stores that wouldnât consider Amazon a direct competitor.
For now? Those who work with AMZN on this is not thinking long term.
The Journal reported that Amazon may also hit snags with which companies are willing to assist a company thatâs likely a direct retail competitor and is credited with starting the âretail apocalypse.â
Itâs getting so small players wonât be able to compete. The big cloud players are all designing their own chips that are far more efficient than anything that can be bought. Few companies have the deep pockets to design and build their own chips. Itâs really bearish news for Intel and possibly nVidia.
You do not need to curseâŚTrump is there to take care of it.
How?
When I wanted to choose either AMZN or AAPL, I finally landed at AAPL for the reasons given below.
AAPL has iphone and computer products, which are mostly on essential commodity as of now. The P/E is very low that is good for recessionary period. They will also go for service side. They become dividend payer, good for investors. Above all, certified by Berkshire.
AMZN is completely service, higher P/E. However, they may eventually reduced the P/E over time, equally good, non-dividend payer.
When it comes to tariff impact, Amazon sellers import will be higher than AAPLâs import content.
Amazon sellers margin will be lessor than Apples margin on imported goods.
Apple is going for joint venture with Foxconn for winconsin factory, will resort to local manufacturing while Amazon sellers unlikely do by virtue of small players.
IMO, tariff impact (already 10% in force) to AMZN is higher than AAPL. I did not even split 50:50 but went to AAPL fully.
Short-term, hedge fund managers might be pumping AMZN not AAPL, so is a better trade Ask manch, he knew. Hence, I might lose the bet because this pumping.