With the increasing cost of content to support Amazon.com, Inc. (NASDAQ:AMZN)’s Prime shipping and video streaming service, the company could quickly find its already thin margins squeezed even further. Going from mid single digit to low single digit profit margins can materially alter a company’s long-term outlook. And that’s just how thin Amazon’s margins are.
Conservative investors should be wary of Amazon.com, Inc. (NASDAQ:AMZN)’s “prime” share price.
Getting in on the act
Now, Microsoft Corporation (NASDAQ:MSFT) looks to get in on the ecosystem act, too. Its new Windows 8 OS has the look and feel of its Windows Mobile OS that runs on cell phones and tablet computers. While the new Windows OS is getting panned for its changes, it’s likely to catch on as more new computers get sold with the OS already installed.
Once customers are comfortable with the changes, buying a Microsoft Corporation (NASDAQ:MSFT) tablet computer or Windows Mobile phone will be equally as comforting an experience. Thus, an ecosystem is born. Microsoft shares have started to pick up now that investors are getting more comfortable with its mobile push. Sales, meanwhile, dipped in 2009, but have grown regularly otherwise. The bottom line, though weak recently, has been similarly strong over the past decade.
Microsoft Corporation (NASDAQ:MSFT) still has turnaround potential despite a recent price jump. Plus a 2.60% dividend yield and history of annual dividend increases should interest income investors.
Keeping ’em in the house
Apple Inc. (NASDAQ:AAPL) offering to let customers trade in their old phones will keep them in the Apple ecosystem and help boost sales of new products. It also lets Apple resell the old phones into emerging markets to get more customers hooked on the Apple way.
As the company looks to create more services, like it recently announced iTunes Radio service, keeping customers attached to the Apple ecosystem will be increasingly important. That’s particularly true as sales in mature markets inevitably slow.
Apple Inc. (NASDAQ:AAPL) shares yield around 2.80% and have been relatively weak of late. However, the company looks like it is making solid moves to solidify its market position. Conservative investors might actually prefer the turnaround potential here more than at Microsoft Corporation (NASDAQ:MSFT).
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
The article Maintaining the Apple Ecosystem originally appeared on Fool.com.
Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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