For nervous investors, the technology industry's busiest earnings week of the year can't come soon enough.
A slew of the world's biggest technology companies – including Amazon.com Inc., Apple Inc., Facebook Inc., Microsoft Corp. and Netflix Inc. – report quarterly earnings this week. Together, their financial results not only offer a glimpse into the health of the technology industry, but the wider economy as well.
The busy earnings week comes amid investor concerns about a sharp dip in tech share prices. The Nasdaq composite index is down about 5 per cent this month, although it has shown some signs of regaining strength in the past week. The dip has forced investors to ponder whether they're witnessing a short-term correction or the start of a bubble bursting.
Together, the companies reporting this week are involved in a billion-dollar battle for dominance in the lucrative market of digital lifestyle tools.
Rather than offer customers individual tools and services, companies such as Microsoft, Apple and Amazon are increasingly trying to sell their customers on holistic solutions.
The goal of these efforts is for everything from living room entertainment to cloud storage to be purchased from the same provider. Indeed, the last month has seen Facebook purchase a virtual-reality startup and take initial steps to begin offering financial services.
"The big digital platforms all see 2014 as a potential tipping point in their battle for cornering more of the consumer's attention," Forrester analyst James McQuivey said in a recent research note. "That's why Facebook bought Oculus VR, Amazon released FireTV and Apple will redesign its iPhone."
Perhaps the most closely watched earnings report will come from Apple – a company that has remained relatively quiet recently, even as rumours swirl about its product intentions for 2014.
There is some speculation that the iPhone-maker will look to revitalize its customer base by entering an entirely new product category, such as wearable technology like smartwatches. In the smartphone market, where Apple still generates the largest single portion of its profit, most of the recent market attention has been focused on competitors' devices, such as the new S5 smartphone from Samsung, which runs on Google Inc.'s Android operating system.
According to Canaccord Genuity analyst Michael Walkley, Apple is likely to claw back significant market share in the high-end smartphone market in the second half of this year, as it is expected to release new iPhones with larger screen sizes. The move would mark a strategic shift for Apple, which has maintained fairly unchanging screen sizes across its smartphone line.
Earlier this year, Apple issued guidance predicting it will post revenue this quarter of between $42-billion (U.S.) and $44-billion. That's roughly exactly as much revenue as the company generated in the same quarter last year. The guidance highlights the reality that, while still hugely successful, Apple may no longer be the hyper-growth company it was during the height of the iPhone and iPad market dominance.
Microsoft will also be the subject of close scrutiny this week, as investors look for more clarity on new chief executive officer Satya Nadella's strategic direction for the company.
In recent months, Microsoft has largely focused on providing customers with cloud-based services and software. But the company has also been especially aggressive in expanding its market share in the mobile sector. Currently, phones running on a version of the Windows operating system make up a relatively tiny portion of the North American market (ahead of BlackBerry Ltd., but well behind Apple and Google).
However the company recently allowed third-party manufacturers to build Windows-based devices with screen sizes below 9 inches without having to pay licensing royalties.
"This is a smart move," said BGC Financial analyst Colin Gillis, "but only because the company is in dire need of market share in tablets and smartphones to foster developer interest and engagement."