Growth comes organically– expanding the customer base and adding new products which customers buy and use. Growth comes from new product markets which attract customers who help add to revenue and profit growth. And, growth comes from buying a company with products that fit plans for the future. Where is Apple’s growth going to come from in the era of Peak Gadgets™?
Buy? Or, Build?
Just looking down the technology pipeline a few years I see two problems. First, growth of the current product line has stalled for a couple of years already. Revenue is good for Mac, iPhone, and iPad; profits are the best in the land, but where’s the growth that investors want to see?
Services? Yes, Services is Apple’s fastest growing fruit but it is based entirely on hardware sales, so where’s the next line of hardware? Watch? Apple TV? AirPods? Headphones? iPhone cases? Those combined are about as much as gets lost each year in the sofas of Apple’s new Apple Park headquarters building. Chump change, so to speak.
Where could Apple invest big money to see some big growth?
Watch is made up of a bunch of sensors, so maybe future growth comes from Apple Glasses or improved health monitoring and sensors. Facial recognition, as in Face ID, seems like a hot feature to help Mac, iPhone, and iPad customers upgrade their products, but where is the next great thing?
Second on my list of opportunities goes beyond organic and build internally and into the realm of buy somebody else which has a product line that fits with Apple’s future plans. A chipmaker? A display maker? A battery or glass maker? If any one of those had technology that would be tops for more than a year or two then maybe the investment would be worthwhile, but that’s not the case; many of those products have mature technology and the vendors sell bullets to everyone shooting at Apple.
How about buying a car company?
I was for Apple buying and or building Apple Car before I was against it, but it is worthwhile to revisit the idea because automobiles, trucks, and transportation are so much a part of humanity. Alex Web says Apple should buy James Bond’s favorite carmaker– Aston Martin. If not, then how about Alfa Romeo? Or, McLaren? Or Chrysler-Fiat (just kidding)?
It isn’t as if Apple does not have the financial wherewithal to buy or build or both. With $200-billion sitting around here and there to infinity and beyond, Apple could start from scratch and reinvent the entire people moving industry. Or, just buy a halfway decent luxury brand, turn it into a self driving Car for the Cool™, charge a premium and market it to Apple’s 1-billion customer base and call it a day.
As Webb explains, the real problem of designing and building a futuristic self-driving, moonlight solar-like powered vehicle is fraught with speed bumps. Google doesn’t have a self-driving care on the market but parent company Alphabet has 600 self-driving vans on the road, has orders for a few thousand more, while Apple has a few dozen; all in California.
What’s what with that picture?
Everything. Unless there is some deep dark secret that made the transfer from One Infinite Loop to Apple Park without anyone on the outside knowing what it is, a secret so valuable that it could launch Apple growth into another iPhone-like experience and catapult APPL beyond $1,000 a share and alter the course of human transportation, the Cupertino gadget maker needs to come up with something big and soon.
The natives are getting restless.
Just between you and me and a bridge in Brooklyn that I know is for sale and I could get you for a good price– cash only– the car business or people moving business isn’t where it’s at unless we’re talking Star Trek-like Transporter beams.
Sensors. That’s where it’s at. That sweet, sensitive spot between Siri and artificial intelligence and sensors that can watch and learn and speak or inform appropriately is where Apple’s future will be because sensors go into gadgets and Apple is a hardware company that makes and sells gadgets and if, and it’s a big if, the future means we’ll have fewer personal transportation devices to tote us around all over town, then we’ll have more money to buy more gadgets that have sensors.
Sensors is where Apple’s big money needs to go these days.