A Bite of the Apple?

DISCLAIMER: this column is in no way an endorsement to purchase Apple stock. It is, however, a road map on how Apple could very well be the first publicly traded company to reach a trillion-dollar market capitalization. While the idea isn’t actually a new one ( Forbes speculated on this milestone two years ago when the company’s stock was a pre-split, high-flying $700 a share). This time around, the path is clear and there’s nothing stopping the trendsetting tech giant from getting there.

At the time of this writing, Apple shares were being traded at $705 (or post-split $104) fresh from the hugely successful launch of its new super-sized iPhone 6 and 6+. For comparison sake, new iPhone 6 weekend sales topped 10 million, smashing the old record set last year by the 5C and 5S models by more than a million units. And a key thing to note: sales included one less country than last year – China – a country long viewed as pivotal for Apple in order to reach the next threshold in its earnings potential. Sales in that country are expected a month or two after the initial launch.

With those afterburners already in place, the Cupertino, Calif., company has a market valuation of $600B-plus. By the time 2015 rolls around, two new major moves by Apple raises its game a serious notch; the first being the digital wallet, Apple Pay.

While others have taken swings at mobile payments – notably Google Wallet, PayPal and Square – none have reached the upper decks in the game-changing fashion for which Apple is known. As usual, Apple has a few major advantages to make success a strong likelihood, particularly its ecosystem and user-interface. The way Apple Pay works is stunningly simple: aim your phone at a merchant base station to purchase and click the finger scanner on your iPhone (known as TouchID) in lieu of entering a PIN number or signing a credit card slip. Apple’s advantage: 800 million credit card owners who already use their iTunes system.

Aside from speed and ease, the upside for consumers is security; nothing is left behind at the point of sale, and even Apple doesn’t have a copy of any data concerning the purchaser. The idea of such a powerful feature adding $100B to Apple’s capitalization is hardly farfetched.

The other driver in Apple’s prospective march to trillion-dollar status is more of a wildcard but no less buzzworthy: Apple Watch. Like the mobile payment space, wearable tech is a white-hot sector where several attempts have been made and failed to generate interest. Consumers seem generally uninterested in carrying yet another mobile device wherever they go, no matter how small. Once again, Apple has a huge advantage with both user interface (i.e., beautiful designs) and ecosystem (one-click payment for Apple Pay or even to swap a movie via Apple TV). Some leading propeller-heads estimated each device will cost Apple $75. With a $349 starting price tag, 25 to 50 million units will be sold in year one if 20 per cent of iPhone users buy an Apple Watch. Translation: $100B cash.

If a one trillion dollar valuation still sounds absurd, consider Apple added $400B of its value only six years ago and that sales in China went from zero to $12B in two short years. And unlike its past, the company now has an arsenal of low-cost, older but still high quality models for targeting rapidly growing developing countries.

And if nothing else, the post-Jobs era has shown the company to be long-term thinking, perfectionist and willing to buck industry trends in order to get things done right – the perfect storm for reaching the historical trillion dollar cap benchmark.

“For comparison sake, new iPhone 6 weekend sales topped 10 million, smashing the old record set last year by the 5C and 5S models by more than a million units”