Compare

The template only earns its keep if you actually put two cases next to each other.

This is the reason every teardown answers the same questions in the same order. Put a luxury house beside a console platform and the differences stop being vibes — one is refusing sales to protect a price, the other is selling below cost to collect a toll, and both are defending a moat.

Case ACase B

Technology · NASDAQ: AAPL

Apple

Sells roughly 240 million phones a year at a premium price, then collects a high-margin toll on the software, storage and services those phones make it painful to leave.

Technology · NASDAQ: AMZN

Amazon

Runs a near-breakeven retail operation at enormous scale, and earns essentially all of its profit from renting out the two things that operation forced it to build — computing capacity and shelf placement.

The thesis in one line

Apple does not sell you a phone. It sells you a decade of photographs you cannot take with you.

The store is not the business. The store is the customer acquisition cost for the businesses.

Verdict

Watch it

Own it

Moat

Wide

Switching costs · Brand · Scale economics · Process power

Wide

Scale economics · Network effects · Process power · Switching costs

Porter's five forces

Competitive rivalry

Threat of new entrants

Threat of substitutes

Buyer power

Supplier power

Competitive rivalry

Threat of new entrants

Threat of substitutes

Buyer power

Supplier power

Headline figures

Revenue: ~$416B
Services gross margin: ~75%
Active devices: >2.35B
Shares retired since 2012: ~40%

Net sales: $638B
AWS share of operating income: ~58%
Retail operating margin: ~5.4%
Third-party share of units: ~60%

Unit economics

One iPhone owner, over a four-year replacement cycle

Services is 16% of this user's revenue and 23% of the gross profit. That gap is the entire investment case, and it only exists while the user stays.

One $50 third-party item sold through Amazon

Amazon captures roughly 38% of the sale price and carries none of the inventory risk. The seller took the risk, paid for the warehouse, and then paid again to be found in a search of Amazon's own catalogue.

What would change her mind

If Apple ships an on-device assistant that a meaningful share of its base uses daily in preference to a third-party app — measurable through Services revenue per device accelerating above 15% growth without a price increase — then Apple has won the transition it is currently losing, and 35x is cheap. Conversely, if the Google default payment is struck down on appeal and Services growth falls below 6% for two consecutive quarters, the annuity is smaller than the market believes and the multiple has no support.

If AWS revenue growth falls below 15% for two consecutive quarters while segment operating margin also declines, the cloud business is being commoditised rather than merely contested, and the capex is being spent defending share rather than buying growth. That combination — decelerating growth and compressing margin at the same time — breaks the thesis outright. A single weak quarter on either measure alone does not.

1 mechanism in common

vertical integration