Is Apple Inc. worth its share price?

With the 17% share price drop last week Apple lost $50b of its worth, Exxon is the world’s biggest company again. Apple shipped more iPhones and iPads then ever before, but analysts think the company isn’t able to show more growth and profitability. Compared to the growth in profit, costs grow faster, and production in Asia is often staggering. Has Apple reached a glass ceiling? The phenomenal growth of the past years has come to an end, or is this a temporary stopover?

It is interesting to analyze these developments, they stand out from Apple’s ongoing expansion in the mobile market.  The successful proprietary platform against the rest of the open world. We’ve seen this before in IT history with IBM’s midrange platform, further back with products of other companies like for example DEC.  Every time somebody thinks up something really smart, it is quite often a proprietary development. Hardware, software, database and development restrictions all come from one supplier. The world responds with ‘open’ developments’, like UNIX, like Android, like Open Source. A new equilibrium is constantly being formed.

Or is it the magical touch Steve Jobs gave his company? We must admit that Tim Cook isn’t nearly as visible. These iPhone 5 troubles with Apple maps, would they have occurred with Jobs still around? What’s up with Apple’s long awaited TV platform? Competition is fiercer than ever with Microsoft entering the mobile arena.

Consider it from a common sense perspective, is our humble opinion. Never in history, a company nor a person was able to stay at the very top for an indefinite period of time. The world just doesn’t work that way, although some would like it to be.  It is no surprise that Apple is being punished for its beautiful track record, it is a statistical certainty it would have happened. According to Schumpeter’s theory moreover, a period of disruptive innovation is followed by innovation based upon this new technology. Besides, perhaps more than ever, companies will be criticized these times for not innovating fast enough, delivering fast enough, responding fast enough: moving fast. As people expect to have the world’s information at one’s fingertips, anytime, anywhere, the pressure for fast has grown even more. It’s the way people talk. We conclude that this speculation is nothing to worry about. Apple still performs at the very top, the market is big enough, and still growing, for Apple to stay the world’s most distinguished IT company for a longer while. However not solely relying on it anymore, we will happily await whatever promising products Apple is going to introduce in 2013, and draw our conclusions again later!

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