Apple on top
The iPhone is largely responsible for the firm’s remarkable success.
Following the passing of Apple’s visionary co-founder Steve Jobs in October 2011, people questioned what the future might have in store for the iconic tech company and Jobs’ chosen successor CEO Tim Cook.
In the biggest of understatements, Apple and Cook have done just fine, thank you. Indeed, long before surpassing the monumental $1 trillion market cap milestone Thursday, Apple had snatched the trophy as the world’s most valuable company.
Cook, an industrial engineer, was Apple’s chief operating officer under Jobs. He left a position at Compaq, then the No. 1 computer maker, in 1998 when Jobs enticed him to Apple.
When Cook became CEO of Apple in 2011, six weeks before Jobs died, many in the industry worried that Jobs’ legacy would be difficult to live up to and that Apple might suffer without its iconic leader at the helm.
At the time, Andy Hargreaves, an analyst at Pacific Crest Securities, expressed a concern that was much discussed in Silicon Valley. He told the Los Angeles Times it would be impossible to replace Jobs. “There’s no way you’re going to be as dynamic a company without him.”
Apple’s upward trajectory has proved those concerns to be unwarranted.
Two months before Jobs died, Apple displaced Exxon Mobil and became the most valuable company in the Standard & Poor’s 500 stock index. Although it hasn’t always held the top slot during the ensuing years, Apple with Cook at the helm has always been
close to No. 1.
How did Apple maintain its perch, and, just as importantly, what does it do to stay there moving forward?
The quick answer in both cases hinges on the iPhone.
Without a doubt, getting to $1 trillion has as much to do with the spectacular success of the iPhone as anything else, and yes, you can continue to give Jobs credit for that.
The iPhone as a product line stills carries Jobs’ lasting legacy and pedigree – even as it influences a host of ancillary products that have come under Cook’s watch, from the Apple Watch to AirPods. The iPhone remains key to Apple’s increased push into areas such as health care, augmented reality, the smart home and mobile payments.
Consider that at the time of Jobs’ death, the iPhone 4s had just been introduced, but there were a lot more sales – and new iPhone models – to come. By the summer of 2016, Apple collectively sold its one billionth iPhone. And last fall, when Apple started selling the iPhone X – in which Apple boldly ditched the Home button that had been there since the original iPhone’s debut in 2007 – the handset blew passed another milestone as the first of its models cracked the $1,000 price barrier.
Even at that lofty sum, the iPhone X became the best-selling of all the iPhones since it became available, pushing the overall average selling price for the Phone to $724 in the company’s most recent financial quarter. So much for the naysayers who couldn’t imagine anybody paying that much for a phone.
The question now is whether Apple can sustain that success with the new models that are expected to be unveiled in September. Will Apple play it relatively safe or push innovation further? Speculation is that three new phones are coming, including a model much larger than the X. We’ll see.
Apple is sometimes criticized – I’d argue unfairly – for not being able to launch a product since the iPhone that comes close to duplicating its success. But name one other company that has.
Even with a slip-up here and there, Apple still dominates most of the product categories in which it competes. So while overall sales of the iPad, and the tablet category generally, have been in decline and well past their peak for a few years now, Apple still sold more than 11 million units in the most recent quarter and leads all its rivals in market share. These days, iPads start at $329, with higher-end Pro models fetching $649 on up. The market may not grow again, but it’s not going away either.
Shifting to wearables, Apple doesn’t break out sales for the Apple Watch, but the company’s smart watch has become the best-seller in that category, too.
Apple also appears to have a big hit on its hands with AirPods, and I’d expect new models to arrive relatively soon, maybe versions that are water resistant or that add noise-canceling technology.
Much of Apple’s future will be tied to its increasingly lucrative services business, which includes Apple Pay, AppleCare, iCloud, licensing services and more. Coupled with the iPhone, Apple’s efforts in these areas will go a long way toward determining how long Cook & Co. will remain the world’s most valuable company.