Apple and the burden of being a behemoth

“In the annals of meaningless milestones, Apple’s latest achievement — surpassing Microsoft, circa 1999, as the largest U.S. company ever — is right up there,” John C. Abell opines for Reuters. “I mean, how high is up? How big is BIG? What does Apple win, Johnny!?”

“But it did get me to thinking again about the lifespan of successful tech and Internet companies. There seems to be a trajectory that grants them life in the fast lane for 10 to 20 years before they are overtaken, made obsolete or dismissed as boring,” Abell writes. “During the tech bubble of the late ’90s there were a lot of screwy valuations for companies that are now worth exactly nothing. Netscape was valued at $4.2 billion by AOL. Yahoo paid $5 billion for Broadcast.com. CMGI bought a search engine called AltaVista for $2.3 billion and scotched a deal to sell another, Lycos, for more than $100 a share. Terra then purchased Lycos for $12.5 billion. Microsoft came by its valuation honestly. It powered virtually all of the computers in the world, and its Office suite was ubiquitous — and neither of these facts has changed. Microsoft hasn’t faded as much as its buzz has.”

“Can Apple avoid doing the same? I think the answer is a qualified yes… if or when Apple is eclipsed in this meaningless milestone, it certainly won’t be for the same reasons Microsoft fell from that perch. There may be some tepid selling that may depress Apple stock with the rollout of the iPhone 5 and the anticipated iPad mini in September — this ‘buy the rumor, sell the news’ strategy is very common with Apple. But there is no reason to believe that sales for these devices won’t be as robust as those of their predecessors,” Abell writes. “The real question is: When will Apple run out of ideas? That fear was given a new voice when Steve Jobs died last year. It is hard to imagine that his particular genius could be captured even by the management team he cultivated during the staggeringly successful — and unpredictable — last decade… But don’t count on many misfires from this behemoth for some time to come.”

Full article – recommended – here.

Related articles:
Amidst economic doldrums, Apple’s market value hits all-time record; surpasses Microsoft’s set during 1999 bubble – August 21, 2012
Apple beats Microsoft, sets all-time record for company value at $621 billion – August 20, 2012

14 Comments

  1. Even Apple was small it is still well loved and supported because they made beautiful lasting products!

    All companies start that way till they become too big and some become too greedy.
    Hopefully Apple will not just be another in a long
    Line of insustainable company bought low from
    Whiting due to greedy scumbags who are in it only for the $$$ .

    That said it is worrisome what Apple has done post Steve jobs .
    Apple need some golden mantra !
    A 10 commandment that can never be crossed

    1. from your previous post it’s easy to realize you’re a apple hating moron who pretends to have some care for apple.

      Go troll somewhere else.

      Apple is stronger now than it ever was and getting stronger.

  2. Well, if the average life at the top is only 10 to 20 years and Apple only arrived there this year, I predict we have 10 to 20 years to go before we need to worry.

  3. I am a little more cautious than some of you….when Steve Jobs was around, things seemed to go pretty well….amazingly well actually….I don’t know what the future holds for Apple but it is best to keep an eye on them. It is entirely possible the best days for Apple as far as cash goes but I am not so sure about customer care….I think Customer Care will be far ahead of anyone else but I suspect it won’t be as good as it was. That to me says long term Apple will slip and somebody else maybe will take over but that is a LONG way into the future and the world would have to go through a technological shift that at this point would be impossible to predict. Very few saw the PC coming and even fewer predicted how CHEAP memory would become. The lack of Steve Jobs at the helm makes me nervous. John Browett in charge of retail makes me REALLY nervous.

    Splat

  4. i’m sorry but microsoft had a p/e that was way, way too high for what it did (office and windows). it was that high for the same reasons as the other companies mentioned – the tech bubble and irrational exuberance. there is no tech bubble now (if you ignore amazon and Facebook and maybe a few others). apple has a business plan that involves making stuff people want – rational exuberance!

    1. Absolutely! Microsoft had a PE ratio at its peak of 72. That compares to Apple at about 15. But it’s even worse than that. Apple is growing so rapidly that a PE ratio based on Trailing Twelve Months (TTM) is very misleading from where it is today and even further off from where it will be in another 12 months.

  5. I always love the way the iHaters call Apple products toys for the technically handicapped consumer. It’s rather hard to believe that a toy company could end up so wealthy. Companies such as Hasbro, Mattel and Lego don’t even come close to Apple in wealth. The iPad has been called such a useless toy, yet consumers are buying them by the tens of millions.

    In a way, the iHaters are looking down on the rest of the computer and smartphone industry because they’re saying a toy company can earn more money than the most powerful computer companies on the planet. That’s pretty amazing when you think about it. The iPhone is considered merely a toy by the iHaters, yet it’s worth more than all of Microsoft’s products revenue combined. That’s one awesome toy.

  6. Apple TV, iCloud, iPhone are all still just developing their potential. How about your entire life history, every paycheck, every purchase, warranty, receipt, marriage licene(s), divorce(s), lifelong passports all available through Passport? iBank is just around the corner? Car apps that drive your car, giant screen movie watching from your favorite chair in your living room, the sky’s the limit. If Apple doesn’t start a bank, I’ll be disappointed. I love my online bank in France (Boursorama.com) but I’d LOVE iBank.

  7. Microsoft did NOT come by its valuation honestly. It was twice convicted of illegal behaviour which unfairly shut out competition. Prior to Microsoft’s illegal tactics becoming prevalent, the microcomputer industry was much more dynamic and exciting with multiple OSes, Hardware vendors and Software vendors. The mobile landscape of today more closely resembles the wild west of early computing than does the painfully dull world of desktop computing as dominated and stifled by Microsoft.

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