Apple is worth almost one trillion dollars. Here’s why it's only the beginning.
Apple is about to be valued at $1,000,000,000,000.
That's one trillion dollars.
That’s two Facebooks.
Or two Berkshire Hathaways.
Or fifteen Goldman Sachs.
This week, WIRED argued that Apple’s move into a value category all of its own making could be the start of its eventual decline. Of course, an arbitrary value, a yard stick, isn’t the reason for any eventual decline, but companies who have built such market dominance in the past typically do slow and some, eventually, fade. But, throughout its history, Apple has re-written history. So comparing and predicting their ascent/decline by looking at companies like Exxon and Chrysler seems a little blunt.
But like an oil or car company, the problem for Apple is their reliance on hardware. And, as we’re constantly told, hardware is fast going out of fashion.
Doom mongers point to IBM or Nokia. Behemoths of their age, now dust-gathering relics from a time when microchips, monitors and keypads really mattered. They still matter today, of course. As Apple proves.
Alphabet — worth about two-thirds of an Apple — is desperately looking to diversify ahead of time, to the point of neglecting their core product. By looking ahead, some say they’re overlooking the now, which is something Apple can never be accused of.
But in looking to create new iPhone 8s for December 2017, what is Apple doing about 2022 or 2027? Anything? Of course they are but, of course, we don’t know. They never tell. Nor should they. But in looking to book short-term, annual profit to satisfy those who genuinely prize the trillion dollar price tag, i.e. shareholders, perhaps they are overlooking long term development? At a time when development is eye-wateringly rapid and eye-wideningly fantastic, this problem of potential stagnation and regression may affect their long term future.
For one good reason I think this view is without foundation.
And that reason is the $250 billion Apple holds in cash.
Apple can — and will — continue to fund growth by doing what they do best — first-class hardware — whilst allowing their competitors and rivals to innovate around them. As and when appropriate, they’ll deploy the cash from their war chest, cherry-picking what they think the future looks like from the most successful companies that grow up around them in the ecosystem they have built. As per their purchases over the last year, the future according to Apple includes AR, VR and data.
WIRED is right: tenure at the top can be remarkably short-lived. But the end of tenure at the top doesn’t occur when you have 25% of your market cap sitting in cash products, waiting for a home.
As long as these cash reserves remain high, Apple will continue to thrive and grow by doing what it does best, whilst buying up the innovation and success of others.
$2,000,000,000,000? Why not?