Think. Think Different
Back in 1985, the biggest company in the U.S. based on market value was IBM. Digital Equipment was a strong second in the mainframe business, both companies selling large systems to corporations and governments. IBM’s slogan at the time was simple and just one word – THINK -- a slogan adopted many years before by former CEO Thomas Watson.
On the other hand, Apple Computer was an interesting but much smaller company competing with Compaq, among others, in the personal computer space. Steve Jobs was responsible for the slogan Apple was using in 1985 – THINK DIFFERENT.
After the recent quarterly earnings disappointment, IBM now ranks 11th among US technology companies in terms of market value. Apple sits atop this illustrious list, followed by Microsoft, Google, Intel, Facebook (now considered a “Communications Services” company by S&P), Cisco, Oracle, NVIDIA, SAP, and Adobe all have a market value greater than IBM. FYI, market value is calculated by multiplying shares outstanding times the current share price. On Wall Street, fortunes have been both lost and made based on the price changes in IBM and Apple.
In reflecting on this tremendous change, I find it ironic that the building blocks of each company AND their official slogan are quite similar yet the outcome for each has been very different. Both emphasized computers and both demanded one THINK. I remember analyzing mutual funds and seeing IBM as a top holding in growth funds, value funds, technology funds, core funds, and of course the top holding in index funds. Everybody it seemed had a piece of Big Blue. I remember thinking, if everyone already owns IBM, who is left to buy this thing?
It is even more ironic that the patterns that have driven this change – IBM staying wedded to large mainframes aimed at big business and big government while Apple focused on personal computers and devices – can be seen in their recent ventures into artificial intelligence. We have been told that AI is one of the “next big things”. All sorts of companies are pursuing AI, including many of the top technology companies listed above.
Watson, IBM’s artificial intelligence product, is aimed at massive and complex issues such as diagnosing and treating cancer. Meanwhile, Siri helps pick your playlist. These two companies have placed billion dollar bets on artificial intelligence, and while it is fascinating to think what Watson might be able to do, Siri is in our kitchen, TV room, or maybe even the bathroom, giving us answers to life’s daily questions.
Both companies still use the slogan they used in 1985. Think or Think Different. You be the judge.
Ralph McDevitt
October 21, 2018
Views expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.
