A new piece from the New York Times acknowledges the astounding past and present successes of Apple, quickly becoming the world’s biggest publicly held company. But for as much as Apple may seem unstoppable, financial analysts can already see the end of its success lifecycle.
When you consider the amount of time, energy, interest, and money that a large segment of the population invests into Apple, it’s difficult to imagine a day when the company could ever be eclipsed by another electronics giant. Could another company come along and be cooler than Cupertino? Could the iPhone — perhaps the world’s only product that doubles as a cultural artifact — be usurped by a new, novel device that makes our favorite smartphone seem outmoded?
Given the passing of Apple Founder and CEO Steve Jobs, who is largely accredited with the ingenuity of Apple’s landmark products, some imagine it to be a possibility. I’ve argued that Jobs’ role as pioneer and visionary at Apple is not dissimilar to Walt Disney, and his critical role in founding and launching the Disney empire. But just as it can be argued that the Disney brand has ebbed — or is perhaps even on the wane — consumers wonder if Apple’s brightest days are now behind them.
According to an interesting new piece by the New York Times, that might be the case — and the reasons might be far more empirical than simply saying that the company will underperform due to Steve Jobs’ passing.
Writer James B. Stewart explains that, according to the mathematical proof known as the “golden theorem,” “Apple is so big, it’s running up against the law of large numbers.” The result is an insurmountable trajectory towards reaching critical mass and no longer being able to create significant growth — or at least the booming growth that we’ve come to associate with Apple. Stewart explains it this way: “To increase its revenue by 20 percent, Apple has to generate additional sales of more than $9 billion in its next fourth quarter. A company with $1 billion in sales has to come up with just another $200 million.”
Upon faced with this reality, some Apple fans might be compelled to pump their fists and proclaim the company’s infinite greatness, saying that no sales target is too big for Apple to hit. But that’s pie in the sky. This isn’t about “Apple hating,” it’s simply a numerical fact that, based on historical data, shows us that there is an inevitable rise and fall to great companies. Just as the great people who found them come and go in this world, so too do the businesses that bear their names and/or visions.
In this way, it becomes apparent that maintaining something like 20 percent growth will be impossible: “If you extrapolate far enough out into the future, to sustain that growth Apple would have to sell an iPhone to every man, woman, child, animal and rock on the planet.” We wrote an article a while back about how a study found that 35% of all consumers say they will purchase the iPhone 5. Even if that astounding number comes true, someday it still might not be enough to satisfy Wall Street.
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