Tale of two companies: Apple's profit and Amazon's loss

Apple made $8bn profit last quarter, while Amazon lost $28m. Yet the two companies are treated as equally successful. Why?

Two giants of the technology world posted their quarterly results yesterday evening, with the differences highlighting the gulf between them – both in finances, and perceptions.

Apple's earnings report for the fourth quarter 2012 showed an $8.2bn profit on $36bn in revenue. This is a new Q4 record for the company, topping this quarter last year when it earned $6.62bn profit on $28.27bn revenue. The gains were largely due to an increase in stock shipped: iPad sales went from 11m to 14m, and iPhone sales from 17m to 26.9m, both year-on-year (the figures don't include the iPhone 5 to any significant degree, which was only on sale for the last nine days of the quarter). The rest of Apple's business held largely flat, with the exception of the iPod line which continued losing share to smartphones. The average gross margin, in particular, was essentially unchanged at 40 per cent.

At the other end of the West Coast, in Seattle, Amazon announced its results. Net sales were up 27 per cent year-on-year, at $13.81bn – but operating income fell to a loss of $28m, down from the $79m profit it made last year. That loss wasn't unexpected – the company had been warning that it expected a loss of between $50m and $350m – but it reaffirms the image of Amazon as a company unconcerned with profit.

Much of the money has been spent on heavy investment, and the Verge writes that Amazon Web Services and Kiva Systems have been particular beneficiaries of the spending. The former is the spin-off from the company's core business, and provides web services – hence the name – to a number of other companies, ranging from garage start-ups to behemoths like Reddit. That business suffered a blow earlier this week when it experienced a sustained outage, which underscores the need for further investment.

Kiva Systems is Amazon's recently-acquired robotic warehouse-management system. Depending on how cool you find robots in warehouses, it does pretty cool stuff for Amazon's productivity, but has yet to be put into widespread usage.

Despite the fact that these results are as different as night and day, reaction to both was muted. Apple failed to meet the guesses made by Wall Street, which had forecast even higher sales particularly of iPads. The Q3 results were artificially depressed by the lack of availability of the then-new first generation retina iPad, and some were expecting a bigger bounce back from that than there actually was.

There was also disappointment in financial sectors about Amazon's performance. This is the second quarter running in which the company has posted a loss, despite sales in the tens of billions, and many investors are starting to wonder if the company really is preparing for profit, or if this is the way Amazon will always be run.

I wrote last week about the ways Amazon could be planning to get into profit, and they all boil down to dominating a market. Either the company's expansion into same-day delivery allows it to conclusively deal the killing blow to traditional retail; or it's domination of book selling allows it to bully publishers into handing over ever greater shares of the margin; or its new Kindles allow it to move low-margin sales of physical media over to high-margin sales of digital media.

At the time, I worried about the pitfalls that lay in the way of each of those aims, but it looks like there might be a new one: if Amazon's investors see many more quarters like these last two, they may not stick around for the promised light at the end of the tunnel.

The Grand Central Apple Store, a recent opening by the company. Photograph: Apple

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How the Standing Rock fight will continue

Bureaucratic ability to hold corporate interest account will be more necessary now than ever.

Fireworks lit up the sky in rural North Dakota on Sunday night, as protestors celebrated at what is being widely hailed as a major victory for rights activism.

After months spent encamped in tee-pees and tents on the banks of the Canonball river, supporters of the Standing Rock Sioux Tribe finally received the news they’d been waiting for: the US Army Corps has not issued the Dakota Access pipeline with the permit it requires to drill under Lake Oahe.

“We […] commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing" said a statement released by the Standing Rock Sioux tribe’s chairman, Dave Archambault II.

With the camp’s epic setting, social-media fame, and echoes of wider injustice towards Native Americans, the movement has already earned a place in the history books. You can almost hear the Hollywood scriptwriters tapping away.

But as the smoke settles and the snow thickens around the thinning campsite, what will be Standing Rock’s lasting legacy?

I’ve written before about the solidarity, social justice and environmental awareness that I think make this anti-pipeline movement such an important symbol for the world today.

But perhaps its most influential consequence may also be its least glamorous: an insistence on a fully-functioning and accountable bureaucratic process.

According to a statement from the US Army’s Assistant Secretary of Civil Words, the Dakota Access project must “explore alternate routes”, through the aid of “an Environmental Impact Statement with full public input and analysis”.

This emphasis on consultation and review is not big-statement politics from the Obama administration. In fact it is a far cry from his outright rejection of the Keystone Pipeline project in 2015. Yet it may set an even more enduring example.

The use of presidential power to reject Keystone, was justified on the grounds that America needed to maintain its reputation as a “global leader” on climate change. This certainly sent a clear message to the world that support from Canadian tar-sands oil deposits was environmentally unacceptable.

But it also failed to close the issue. TransCanada, the company behind Keystone, has remained “committed” to the project and has embroiled the government in a lengthy legal challenge. Unsurprisingly, they now hope to “convince” Donald Trump to overturn Obama’s position.

In contrast, the apparently modest nature of the government’s response to Dakota Access Pipeline may yet prove environmental justice’s biggest boon. It may even help Trump-proof the environment.

“Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it’s clear that there’s more work to do”, said the Jo-Ellen Darcy, the Army’s Assistant Secretary for Civil Works.

Back in July, the same Army Corps of Engineers (which has jurisdiction over domestic pipelines crossing major waterways) waved through an environmental assessment prepared by the pipeline’s developer and approved the project. The Standing Rock Sioux Tribe subsequently complained that the threat to its water supply and cultural heritage had not been duly considered. This month’s about-turn is thus vital recognition of the importance of careful and extensive public consultation. And if ever such recognition was needed it is now.

Not only does Donald Trump have a financial tie to the Energy Transfer Partners but the wider oil and gas industry also invested millions into other Republican candidate nominees. On top of this, Trump has already announced that Myron Ebell, a well known climate sceptic, will be in charge of leading the transition team for the Environmental Protection Agency.

Maintaining the level of scrutiny finally granted for Standing Rock may not be easy under the new administration. Jennifer Baker, an attorney who has worked with tribes in South Dakota on pipeline issues for several years, fears that the ground gained may not last long. But while the camp at Standing Rock may be disbanding, the movement is not.

This Friday, the three tribes who have sued the Corps (the Yankont, Cheyenne River, and Standing Rock Sioux Tribes) will head to a hearing before the Inter-American Commission on Human Rights, seeking to increase pressure on the government to comply with both domestic and international law as it pertains to human rights and indigenous soveriegnty. 

What the anti-pipeline struggle has shown - and will continue to show - is that a fully accountable and transparent bureaucratic process could yet become the environment's best line of defence. That – and hope.

India Bourke is an environment writer and editorial assistant at the New Statesman.