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Has Apple peaked?

by Scott Bicheno on 22 July 2010, 07:00

Tags: Apple (NASDAQ:AAPL)

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Where do we go now?

It could be argued that ruffling the feathers of some of its hardcore following is a necessary price to pay in becoming the biggest technology company in the world, but that depends in Apple replacing every lost customer with at least two new ones.

So far, that has probably been the case, at the very least. Apple continues to beat analyst estimates with its quarterly earnings and its share price has tripled in the past year or so. And investors are rarely fan-boys, at least in their day jobs.

The most publicised measure of Apple's rise has been it overtaking Microsoft to become the world's biggest technology company by market cap. But at time of writing the companies had changed places again - albeit briefly - ahead of their Q2 earnings announcements. Microsoft has plenty of problems of its own, but you have to wonder if Apple's share price has peaked.

This will surely be the case if Apple doesn't maintain the precedent it has set for itself and come up with another OMG product in the next few years. And while it remains debatable whether the iPad deserves to be put in the same category as the iPod or iPhone, the relative speed with which the rest of the industry is producing equivalent products implies Apple no longer has such an advantage over the competition.

At the same time it's under pressure to maintain its margins in this increasingly competitive environment. In the absence of new ‘must have' products, Apple may be forced to try to extract more from its existing ones by charging for incremental improvements. This is what seems to be really annoying the fan-boys, whose mood won't be improved if the rumour that Apple will charge for the iPad upgrade to iOS 4 turns out to be true.

"On a personal level, I used to feel like I was in a kind of semi-secret club, that I was privy to a world of simplicity that other people didn't know existed," Shaun concluded. "Now I feel like a statistic and that I represent nothing more than a semi-tapped financial resource to a company interested only in how much more they can get off me. For several years now, the vibe I have been getting from Apple is one of greed, instead of exciting innovation. Not happy."

It must be said, however, that Shaun remains equally sceptical about the ability of the rest of the industry to capitalise on this chink in Apple's armour. I am less so.

Apple's advantage has always been primarily in producing intuitive software. With Android, Google has shown that two can play at that game and in the mobile device market - where the biggest tech innovations are likely to occur for the foreseeable future - Apple is going to have to come up with something pretty special to set the world alight as it did with the first iPhone. Of course it can, but based on recent events, that seems less likely.

This piece isn't designed to predict the demise of Apple - that would just be stupid - but to question whether the phenomenal success of the past few years can be maintained. In announcing record quarterly results yesterday, Steve Jobs promised amazing new products still to come this year. Apple TV maybe? Regardless, nobody is more aware than Jobs of the need for Apple to maintain the high standards it has set for itself.



HEXUS Forums :: 26 Comments

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Urrghh… Steve rant about this whole cliché makes me want to throw up!
True, and I think he's about to experience a little media revenge along similar lines to this article ;)
Not that it will matter though. Apple fanbois are among some of the most loyal….

Although you could replace “loyal” with a few choice words. Point is that I don't think Jobs cares, nor the people that buy his stuff.
When Steve Jobs said all smartphones have reception problems I went ballistic, especially since he mentioned my lovely, reliable Bold 9700 as one of the phones with reception problems…I hate Mr Jobs.
Apple have looked invincible before, and it's all gone wrong before - and the last time it was when they were convinced that they could release anything they wanted with a fruit logo on and people would buy it; have they peaked? I don't think they've necessarily jumped the shark, but the increasingly strident cries of “there is no problem” seem to be falling on hostile ears. The climbdown from their instructions to their support guys to under no circumstances hand out free bumpers is embarassing, and the omission of a camera from the iPad with an obvious intention to add one later and get people to buy a new device when they release one with is likely to prove too cynical for even the hardiest fanboi to swallow without demur. THIS seems to be becoming a more widely accepted view…