Apple recently became the first trillion-dollar company, but we know it’s not going to grow much bigger for the very obvious reason that it’s not planning to get into any new product categories. Which makes a ton of sense.
Writing for InvestorPlace, Ian Bezek tells us “Why Apple Stock May Fall Victim to the Winner’s Curse.”
The gist of Bezek’s piece is something along the lines of “Apple needs to launch a revolutionary product or it won’t reach $2 trillion. And no, I haven’t heard any rumors regarding Apple’s new product categories.”
… following great success often comes mediocrity or worse. And sadly, it looks like Apple may follow in the footsteps of other highly successful entities...
Apple simply can’t ride its dominant iPhone all that much farther and remain a growth company. It needs a major new revenue generator to support the next $1 trillion of market cap, which is why talk of Apple’s moves into cars, healthcare, finance, and other fields broadly separate from its core business seem so appealing.
Hold onto your seats, because this is the one and only mention of rumors that Apple is in fact planning to expand into other product categories. Now Bezek’s piece moves from “Apple needs a revolutionary product” mode to “Apple isn’t making a revolutionary product” mode.
So far, Tim Cook has demonstrated competence as Apple’s leader, but not much beyond that. There’s no clear sign that Cook will be able to lead Apple into broad new growth categories.
Wait. What? You want Apple to give a clear sign of what its future plans are? That’s absurd. How about the reports that the Apple Car will come in 2025 or the augmented reality headset will show up in 2020?
AAPL Stock May Seem Cheap, But Its Best Days Have Passed
If AAPL stock is going to continue putting up great returns, it needs a big new product category.
Okay… and did Bezek forget that within seven years, there could be two huge new products?
Since Steve Jobs passed, what new revolutionary product has Apple launched?
Since 2011, what revolutionary product has any company launched?
Nothing on the scale of the iPhone has happened in the past seven years, but if you’re measuring Apple’s current success by comparing its latest products to the biggest consumer product of the century, you’re doing something wrong.
In the seven years since Tim Cook became CEO of Apple, the company has launched the Apple Watch, which Bezek dismisses as “not a game changer” despite the fact that it is the definition of the modern smartwatch. It’s launched the iPad Pro, which hasn’t made the iPad a smash hit but has redefined Apple’s tablet lineup. It’s launched AirPods, which are nigh-universally regarded as the best of their class. It’s launched the iPhone X, which has set the tone for the design of nearly every smartphone this year and has defied sales expectations despite costing a grand.
None of these products is quite “revolutionary,” but why does a company need to launch revolutionary products in order to continue growing? Why is it that Bezek thinks Apple should be in such a rush to get the next game-changer out? And why does he ignore the likely possibilities of an AR headset and a car?
But the era of life-changing returns from AAPL stock has ended.
Because Bezek is remarkably talented at ignoring rumors, even the ones he mentioned just a few paragraphs earlier.
Even if Apple’s future success does depend on launching a revolutionary new product, to suggest that the company isn’t working on anything truly new under Tim Cook is absurd. If the reports of an Apple Car and an AR headset are true, Apple still has plenty of growth ahead of it.