Analyst concerns about the future of AAPL are so commonplace that they led to the “Apple is doomed” meme. But one of them has written an excellent counterpoint to the narrative that it’s vital for Apple to quickly find and launch The Next Big Thing …
Benedict Evans writes that no matter what arguments and panics occur around the company’s prospects, the simple fact is that it reliably keeps turning metal into money – even if I might take issue with the “exactly on schedule” part!
Every year, with metronomic precision, it delivers another new set of hardware and software, and another set of technology building blocks that fit into a decade-long strategic plan. Never mind Apple in the 1990s — Microsoft in the 1990s could never manage this.
Every year a whole new phone arrives, exactly on schedule, keeping or leading the pace for the entire industry, and then ships in the hundreds of millions of units, machined out of aluminium and stainless steel, at a 40 per cent gross margin. This is very hard.
Apple pioneered PCs, and then lost the market and barely survived. But now it’s bigger than PCs — there are more iPhones and iPads in use today than all PCs combined, and they run chips created by Apple that are ahead of anything from Intel or Qualcomm.
In Microsoft’s era everything in tech was a PC accessory, but now PCs are smartphone accessories, and Apple does smartphones very well.
That isn’t true of everyone, for example. Quite a few of us here see the Mac as our core device, and gamers too would take issue with the claim. But I think it’s true of mass-market consumers: The smartphone is the center of their digital lives.
Evans acknowledges some of the challenges for AAPL. In particular, Services revenue will take a hit from antitrust measures. App Store revenue will take further hits, and it’s unclear how long the company will be able to continue raking in a cool $10B a year from Google to be the default search engine on iPhone. But the company would thrive without either.
He argues that there’s too much concern about how long it will take Apple to launch the next big product category. It will do so sooner or later, but …
Meanwhile it will carry on making a certain kind of product for a certain kind of customer. That’s been the plan ever since the original Macintosh, and in some ways all that’s changed is how many more of those customers there are. The original Mac sold a few hundred thousand units in 1984, but Apple now sells half a million iPhones every day. Apple and the market grew into each other.
I don’t think Evans is arguing for complacency. Large, dominant players do sometimes end up left behind. Look at Microsoft and BlackBerry in the mobile space, for example. Apple does need to keep asking “What’s next?” But there’s every reason to believe that it continues to do just that, and that at some point it will indeed find The Next Big Thing. Meantime, it keeps shipping, and people keep buying.
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