It’s the dead of winter, even in endless summer California. Everything is dormant. Gray. Cold and foggy. What better time to reflect on the frightening, the unthinkable, the existential threats to Apple.
In 1997, Apple was weeks or months away from bankruptcy, depending on who you ask. Of course, Steve Jobs came back and turned it around and instilled in the company a philosophy of saving every penny that persists even as Apple has transformed itself into one of the most valuable and profitable companies around. in the world.
Given this mindset, it is undoubtedly true that inside Apple there are people who are thinking deeply about Apple’s long-term future. With over $100 billion in cash and huge profits every quarter, Apple can afford to take the long view when considering existential threats.
So why not perform this exercise ourselves? Apple is riding high right now, but 25 years ago it was near death. Life comes to you fast. What could bring down Apple?
Scenario 1: iPhone wobbles
Apple has some nice businesses in the Mac and the iPad, but the engine that keeps the ship turning is the iPhone. If the Mac and iPad disappeared tomorrow, Apple would be fine. (The rest of us would be really pissed off, though!) But if iPhone sales started to fade, that would be a killer.
Fortunately, this scenario seems extremely unlikely. The iPhone is Apple’s number one priority, and if there were any signs of shaking, the company would spring into action, even if it meant diverting attention from the Mac, iPad, Apple Watch and projects involving AR headsets and the future. automobiles.
I really find it hard to imagine a world where the iPhone and Android won’t remain the two dominant smartphone platforms for decades to come. And while fortunes may wax and wane among manufacturers on the Android side, the iPhone has the advantage of being the only product available that runs iOS. (That said, it’s hard to imagine that the two most successful smartphone makers of 2035 won’t be Apple and Samsung. They’re just so entrenched.)
Scenario 2: Government forces change
There’s a lot of talk about government regulation of Big Tech, and Apple’s App Store policies have been one of the targets. We can wonder if opening up the App Store to competition would be bad for Apple’s business or wouldn’t represent much of a change, and it’s certainly debatable whether any government action would be significant enough to have an impact. appreciable on the business rather than just forcing Apple to make minimal changes around the edges.
Foundry
The real existential threat here is that some powerful government somewhere crafts legislation or regulation that completely rewrites Apple’s business model, either splitting up the company or driving changes that make the iPhone unattractive. I can imagine half-baked scenarios here, but none that I don’t think are happening.
And the truth is, I suspect Apple played all of these scenarios and came to the same conclusion. Clearly, the company is acting like there’s no way its entire business model will be shattered by legislation, so it’s decided to fight rather than negotiate. It’s frustrating to see Apple sowing misinformation about the App Store’s contributions to online software distribution while claiming it has to charge developers to administer a secure, organized space filled with fraudulent apps. But the fact that it does suggests that even Apple can’t imagine that scenario coming to fruition.
Scenario 3: Chinese tensions boil over
A war between the United States and China, where most of Apple’s products are assembled, would be disastrous for the company. The company has key suppliers throughout East Asia, and the entire supply chain would be disrupted.
Of course, such a confrontation would likely be disastrous for our entire planet, and last time I checked, all of Apple’s competitors are on planet Earth as well. But still, if there is a company that has built its power by relying on wide open global markets, it is Apple. That’s why war with China, or even a dramatic increase in diplomatic and economic tensions, is probably the clearest and most present threat to Apple’s future.
Apple
The further we look into the future, the more likely the risks of this scenario will diminish. Apple seems to have finally realized that it needed to diversify its supply and assembly business, or at the very least, it needed to try. But still, a war with China would be very bad for Apple – we might not notice it because we’ll be more concerned about all the other terrible consequences of such an incident.
(Like I said, it’s the dead of winter. I promise the rest of this column is happier! Keep reading.)
Scenario 4: The next big thing isn’t as big as the iPhone
It seems unlikely that any device will soon replace the smartphone, one of the most successful technological products in history. Nothing on the horizon suggests that this category will disappear.
But over time, of course, the smartphone will fade. It’s inevitable. And who will be the replacement?
This is where Apple’s huge stack of cash comes in handy. Apple continues to invest in product categories – the Apple Watch, AirPods and the upcoming AR/VR/XR headset – that could eventually replace the smartphone with a more subtle, portable connection to the internet.
All the difficulties reported by Apple to bring out its first headphones make it fun to read, but the truth is that this is a very new product category. Companies like Apple and Meta will learn from their experimentation in this category. Apple compiles patents and learns a lot about what it takes to create computer products that you can wear on your face.
It’s a long game. Lessons learned by Apple in the early days of the iPhone led them to a chip design philosophy that eventually transformed the Mac. It just took over a decade to do it. I don’t know when wearable glasses or contact lenses or drones that fly in front of your face and shine lasers on your retinas will enter the public consciousness and make using a smartphone the equivalent of having a landline or to watch American television. It seems far, however. More than a decade, probably.
And since Apple identified it as the #1 iPhone threat, the company has invested heavily. It’s another one of those decisions made directly by Steve Jobs: if your product is going to be made obsolete, you should be the one to replace it.
History is littered with companies that were so big, so successful that they were unstoppable, but ended up becoming useless, going into weird business models, selling out for parts, or going bankrupt.
Nothing lasts forever, and it’s likely that eventually, some future Apples will be so mismanaged that they’ll fall into insignificance. But the success of the iPhone and the inevitability of the smartphone as a popular product—plus some wise investment in everything that comes after—suggests to me that Apple isn’t going anywhere for very long.
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