Google is the Least Diversified Technology Company

Dan Frommer over at SplatF decided to figure out how diversified today’s top technology companies are. There’s a thousand ways to slice and splice the sort of data he uses, so his results can certainly be debated, but he exercises a simple method that works well enough: which companies draw the highest percentage of their revenue from a single product or service? 

According to his calculations, Google is the least diversified business in tech, relying on one thing—advertising—to pull in over 95% of its revenue. That sounds like a terrible business model on paper, but it’s hard to argue with the company’s multi-billion-dollar success. Amazon is number second with “product sales,” which is arguably an unfairly broad category—after all, they no longer sell just books, but an extremely wide range of goods. And certainly the Kindle sales shouldn’t be included with regular, third-party product sales, because that’s their own major side project.

Most of the non-diversified companies, Amazon aside, are advertising based: Pandora, Facebook, Yahoo, AOL. You’d likely see Twitter way up there but Dan only covered those who reported numbers in the December 2011 quarter. HP is the most diversified, relying on PC sales for only 30% of its revenue.

An interesting follow-up chart would be profits, where Apple and its iOS devices—the iPhone accounts for over half its business and boasts staggering margins—would surely dazzle.

Chart: Dan Frommer, SplatF