Trillion
Apple’s insanely great run…
Note: this post was adapted and expanded upon from my newsletter earlier this week.Almost exactly six years ago, I wrote a post on TechCrunch marveling at Apple’s market cap. The company had just hit $623 billion, which meant it was in new territory: the most highly valued U.S. company ever (surpassing 1999-era Microsoft, not accounting for inflation).
That seems so quaint now.
Apple, of course, surpassed $1 trillion in market cap this week. Writing that sentence feels almost fake because reading that sentence feels almost fake. A trillion dollars. In an era of “that’s a lot of money”, that’s a lot of money. The New York Times came up with a clever visualization in an attempt to showcase just how much money it is, relative to some other companies that are a part of all of our daily lives.
Even more mind-boggling is that the majority of this company value has accumulated in the post-Steve Jobs era of Apple. When Jobs passed away, the company was worth a “mere” $350 billion. That was $650 billion ago. That was just seven years ago.
Of course, it has mainly been the products that Jobs put in motion that have propelled Apple to this milestone. Namely, the iPhone. It will go down as one of the — if not the — best business of all time. Some of that was good fortune (the phone makers were asleep at the wheel) some of it was good timing (AT&T needed something to combat Verizon in the subsidized carrier wars), but most of it was just a truly great product. All of us, whether you’re an iOS user or an Android user, now carry around a device that’s a direct descendent in your pocket at all times. And it’s undoubtedly your most-used computer.
And the iPhone truly did bestow a “halo effect” over every other Apple product. This had started happening thanks to the iPod, but the iPhone bolstered, extended, and expanded the ring. It is why Apple became the most valuable company — a trillion dollar company.
Where does the company go from here? The current narrative is around continued “beats” thanks to a growing average selling price (ASP) of the iPhone. Will this fall’s new iPhones continue that trend? Don’t be surprised given the rumors of a so-called “iPhone X Plus”, which undoubtedly could be, and probably will be sold for $100 more than the current iPhone X models.
Beyond that, it’s all about the steady growth of the Services side of the business. It’s already a quiet juggernaut — bigger than the Mac or iPad businesses. If Apple can connect the dots for a “Prime”-like subscription offering tying everything (Apple Music, iCloud, the forthcoming video offerings, maybe even Apple Care?) together, watch out.
Those are the low-hanging fruit. To continue beyond the trillion-dollar mark (again, nuts) and keep ahead of the fast-charging Amazon, Apple does still need a “what’s next” part of the story. An “Apple Prime” offering would undoubtedly satiate Wall Street for some time, as would further cracking the Chinese market, or figuring out the Indian market. But ultimately, with Apple, you grow or don’t grow based on amazingly great hardware products.
The iPad is great but we seemingly know its limits now. The Apple Watch is nice and growing, but slowly. The AirPods are fantastic, but will probably never be a massive core product line. HomePod? They’ll undoubtedly re-think it (think: smaller and more Echo-like), but that’s just as much about fixing Siri as anything else.
So is it a true television product? (Probably not big enough given the margin pressures of that market and the scale at which Apple already operates.) A car? (Maybe, but how many starts and stops have there been already?) A bank? (Don’t laugh!) Some AR goggles? (Seems most likely in the short-ish term, but the market remains anything but proven.) And so we wait to see.
So much has been said and written this week reflecting back on the time Apple was left for dead. But even far more recently than that, it would have been preposterous to say it would one day be worth a trillion dollars. That number may as well have been infinity.
Even just those six years ago, as I wrote:
At that point, the race may be on to the $1 trillion market cap.
It sounds crazy to think they could hit that mark.
