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Adding almost $100bn to a company’s sales in a single year is a record for the ages.
That is what Apple will be closing in on when its fiscal year ends next month. For Tim Cook, who this week completed a decade as chief executive officer, it looks like the ultimate vindication.
Whether fair or not, though, history judges tech CEOs on the new things they invent and the markets they pioneer. On that score, Cook, at 60, still has something to prove.
Apple would add the $100bn in sales if it exceeds analysts’ expectations by as much this quarter as it did in the last two. Even if it comes up just short, the one-year gain would nearly match Apple’s entire sales from the last year Steve Jobs was at the helm.
This could well mark a high point. Apple’s sales — and its stock price — have moved in giant three-year cycles for more than a decade, hitting a peak nearly a year after the release of each important new iPhone release. If history offers a guide, over the next two years sales growth will stall, becalming its share price, up 22 per cent in the past six months.
What’s more, the pandemic has pumped up the latest three-year cycle. Housebound consumers have had fewer calls on their discretionary spending, and the enforced rise in digital activity has lifted demand for its apps and services. Both tailwinds will abate.
Yet Cook’s record as a builder is unquestionable. This has not just involved turning the iPhone into a business approaching a quarter-trillion dollars of sales on its own, but assembling an ever-expanding constellation of gadgets and services around it.
Towards the end of his life, Jobs worried that Apple had failed to tame the emerging world of cloud services: The cloud now acts as a second, less-noticed platform for Apple’s technology ambitions, playing an important supporting role for the experiences delivered on its gadgets.
Devices like the Watch and AirPods, along with the widening array of services — many of which didn’t exist or were in their infancy when Jobs was alive — should notch up combined sales of over $100bn this year, up from $42bn four years ago.
From here, the critics start to carp. Some complain that Apple merely “milks” its existing market, rather than doing anything genuinely new. Grabbing a bigger share of the digital pie created by the iPhone means elbowing out other companies that were once allies or partners, and risks a regulatory backlash.
These tensions have already appeared. Apple’s App Store fees, which Goldman Sachs estimates will bring in $19bn this year, face private legal challenge and regulatory investigation. Selling valuable real estate on the iPhone to Google apps — bringing in an estimated $15bn — figures prominently in a US antitrust suit against the search company. And should Apple succeed, new services in areas like fitness, gaming and streaming video will squeeze out other companies that see the iPhone as an important distribution channel.
Another moan points out that none of Cook’s new endeavours has created a giant new, independent business. Why hasn’t Apple invented the next personal computing platform yet, or at least given us a clear glimpse of what lies beyond the smartphone era?
Then again, no other company has yet defined that next computing platform. The smartphone looks set to stay at the centre of the tech world for a long time to come.
From the outside, it is impossible to tell if the design flair, the technological invention and the marketing genius embodied by Jobs remain as strong as they were when the iPhone was invented. With more than 1bn iPhone users and a brand that Cook has successfully burnished, though, Apple has a better shot than most at shaping the next iteration of personal tech.
Another question hanging over the Cook legacy is whether a company the size of Apple should step more definitively beyond its roots. The $700bn in stock market value that has flowed to Tesla indicates the huge value Wall Street ascribes to a software platform on wheels. For Cook, who has dallied for years with an on-again, off-again Apple car project, that is one of his own biggest unanswered questions. How much can one company do?
On a market value of nearly $2.5tn, or seven times its value when Jobs died, the Apple that Cook has built is a stock market phenomenon. It almost seems unfair to claim, as some in the tech world do, that he still has so much to prove.