Has Apple Peaked?
Published: Friday, February 15, 2013
Updated: Sunday, February 17, 2013 17:02
If you have followed the market over the last few months then you know that the Apple stock has lost about a third of its value. It is always kind of funny that when a company does exceptionally well, like Apple did, the commonly held sentiment is that it is going to continue to go up forever. Now that it has fallen from its pedestal as the world’s most valuable company, reports of its demise have been frequently overblown.
Apple has not peaked so much as it has plateaued. Think of it this way, how many people do you know who have iPhones? I could probably count on only one hand the number of people I know who do not have them. When everyone has the product, even if they are constantly innovating, it really difficult to sustain the kind of booming growth that we have seen for Apple over the last ten years.
The other issue for the technology giant is increased competition from other companies. Companies that five years ago you would never have expected to give Apple a run for its money are now lining up to be considered the next tech monolith. Consider this: Amazon is actually losing money on its Kindle Fire in order to increase its market share, but you know what? It’s working and is generating a lot of hype for a company which previously was much more of an eBay than a Microsoft.
Speaking of Microsoft, despite the fact that they have been banished to Apple’s shadow in recent years, they have massive amounts of capital on hand and are desperately working to revitalize their image. If you have seen a Microsoft Surface, you can attest to the fact that it is a fantastic product; one which is definitely comparable to if not better than the iPad. Consider also the Nexus tablet Google is producing and it is going to be hard for Apple to maintain its monopoly on the tablet market.
Therein lies the problem for Apple. In the iPhone and the iPad, they released two devices which were so fresh and so innovative that they were able to act as a monopoly for several years. Now that we are seeing other great products enter the market, Apple cannot possibly sustain its growth.
The question at hand is: Do you believe Apple can continue to stay two steps ahead of the competition? Kobe Bryant once said, “These young guys out there are playing checkers, I’m out there playing chess.” Eight years ago, laptops were quickly replacing desktop computers, but now thanks to Apple it is tablets that are taking over. Returning to the initial question of peaking, the answer depends on how much faith you have that CEO Tim Cook has the ability to continue the innovative imagination of the visionary that was Steve Jobs. If you think Apple has enough geniuses on payroll that their next market changing product is right around the corner, then they definitely have not peaked. Bear in mind that the first iPad was released almost three years ago now, but the other tablets on the market have emerged only in the last year. That gives Apple a three year head-start on developing the next great product.
However, if you think that the market has caught up to them and competition from Google, Amazon, and a rejuvenated Microsoft is going to be enough to keep Apple close to the pack, then you will probably believe that Apple has hit a plateau. As far as where I stand, Apple is not going to continue to grow at the alarming pace it was able to sustain for so many years. That said, I have been wrong before, especially concerning Apple, so I would not be surprised to be proven wrong again.