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Analyst Opinion – If you work for Apple, own stock or are otherwise connected to the plucky company from Cupertino, congratulations. You have every right to drink it in after yet another momentous day in the history of an organization that seems to rewrite it on a regular basis. Enjoy it while it lasts.
Don’t get me wrong: I’m not heralding the end of Apple as we know it. If anything, its transformation since Steve Jobs returned from exile in 1996 and rebuilt the company has been nothing short of breathtaking. It took media players and smartphones from awkwardly engineered devices only geeky early adopters could love to monster-selling, easy-to-use must-haves we can’t live without. Apple continues to define leading edge industrial design while it somehow manages to avoid the worst the recession can dish out.
In many ways, today’s Apple is the quintessential American business success story – one that stands in stark and welcome contrast to the disintegrating domestic automotive industry, not to mention the now-maligned financial industry that got us into this mess in the first place. It hasn’t been afraid to set its own agenda, and in doing so has avoided the brutal sameness of commoditization that has victimized so many of its competitors (Dell, are you listening?)
But the two often intersecting worlds that have fuelled Apple’s tremendous run-up over the last dozen or so years are going through their most tenuous period ever. Apple’s two major franchises, Mac computers and iPhone/iPod smartphones and media devices, sit in the middle of markets currently undergoing unprecedented change. Demand for conventional desktops and laptops is cratering. The recession’s partly to blame, as tight finances make consumers and business alike more likely to hold on to what they’ve got for a little while longer. But the long-term trend was already in play even before the bottom fell out of the economy. That’s because everyone who’s going to buy a PC already has one. The North American market is mature, and consumers in emerging regions like Asia and Eastern Europe are just as likely to skip conventional form factors altogether and latch on to mobile devices.
Speaking of which, the iPhone’s massive success to-date is about to be tempered by the arrival of a veritable flotilla of competitors. Will any one of them kill off Apple’s darling phone? Not by a longshot. But a more crowded marketplace means somewhat flatter future growth prospects for a brand that up until now has operated amid relatively little competition.
Apple’s a company that’s clearly in its element because it has ruthlessly tuned into what consumers need and want, and has refused to deviate from its mission. It’s the kind of business acumen that’ll be studied for decades. But as successful as Apple has been, the world isn’t standing still, and, at some point, the pillars of its current success won’t be enough to keep customers coming back for more. As demand for Macs, iPods and, yes, even iPhones flattens out, Apple needs to create more pillars to remain dominant in the years to come.
Carmi Levy is a Canadian technology analyst and journalist covered with scars from his years leading IT help desks and managing software development projects for big bad insurance companies. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.