12/27/2012 5:30 PM ET|
The hunt for the next Apple
Long the market's hottest stock, Apple is faltering, raising questions about its future. Picking the next Apple -- a game changer ready to take off -- is daunting, but here are 3 contenders.
As long as there's an Apple (AAPL), investors will wonder, what's the next Apple?
The question is valid, because even great companies falter. Economics change. Technology shifts. Even those that adapt don't grow like successful startups forever.
Apple, of course, occupies a unique position in the business cosmos right now. It reinvented itself, starting in late 2001, from a closely watched and admired personal computer maker into something more profound, thanks in large part to the late Steve Jobs' brilliant flair for marketing.
Now iPhones, iPads, iPods, the iTunes store and Apple stores around the world are instantly recognizable, generating astonishing amounts of revenue and profit. The stock is up 18,800% since the company went public in 1980 -- and more than 520% since the March 2009 market bottom. Its market capitalization jumped to $660 billion in mid-September.
But the shares have fallen more than 26% since. The debate rages as to whether the stock has peaked or this represents a huge buying opportunity. Yet even with the pullback, Apple's market value of $484 billion makes it bigger than Exxon Mobil (XOM) by itself and Microsoft (MSFT) and Google (GOOG) combined. (Microsoft is the publisher of MSN Money.)
And that raises a question you can ask of any huge company: Can such a giant continue to reward investors with huge gains over time, or is the better buy a "next Apple" that's just starting its road to riches?
Comparing any company with Apple is tough. But I have three "next Apple" candidates for you, drawn from three game-changing fields: electronic payments, electric cars and three-dimensional printing. I'll get to those companies in a minute, but first we need to look at why Apple works so well.
Looking for new ways to compete
The story of Apple's 1976 founding by Jobs and Steve Wozniak is well-documented in computer lore.
But the powerhouse Apple we know today didn't exist until Jobs, ousted in the mid-1980s, returned as a consultant in 1997. At that time, the computing environment was changing. Apple seemed unable to find a CEO who could make the company much more than a niche maker of computers that appealed to students, geeks, artists and desktop publishers.
Computers were becoming a commodity business, one box basically the same as another. Jobs was smart enough to see that his company would get nowhere if it couldn't differentiate itself -- and he was showman enough to find the way.
One result was the iMac computer -- one piece, colorful, fun to look at and easy to use.
Next -- and much more important -- was the iPod music player, introduced just after the Sept. 11, 2001, terror attacks. The iPod generated $146 million in sales its first year. By fiscal 2005, it represented a third of Apple's $14 billion in revenue and had changed the music industry.
The iPod naturally led to the iPhone, introduced in 2007. The iPhone in all its iterations generated $80 billion in revenue in the 2012 fiscal year, about 51% of Apple's total and more revenue than Dell (DELL). The iPhone commands about 53% of the domestic smartphone market.
The iPhone led to the iPad tablet, introduced in 2010. The iPad now generates about 20% of Apple's business. Sales have grown more than 2,800% from $5 billion in fiscal 2001 to more than $156 billion in the latest fiscal year. In the process, Apple has more or less fulfilled the groundbreaking vision that Jobs laid out in a 1983 speech: "What we want to do is we want to put an incredibly great computer in a book that you can carry around with you and learn how to use in 20 minutes."
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So mobile is close to peaking....WHAT?? That is ridiculous, there is a revolution going on in computing. How can Samsung be suggested as an alternative? if this is true, they just make phones and use a free operating system that may or may not be the best moving forward as it's up to Google, no differentiator from others, seems like that would be a bigger problem to retain sales. Apple has the hardware and the operating system, applications and cloud, plus they have shown superior hardware packaging designs, pick up an iphone 5 vs anything else. If even bigger screens are in well not brain surgery to do that if needed, but they will match screen ratios, unlike the chaos in Droid. Google and Samsung will no longer have the benefit of sitting on Apples board,or supplying parts so no visibility going forward as to what Apple is doing.
The next Apple is Apple everyone else is taking scatter shots to try and emulate what they HAVE DONE but, have still not got all the pieces.......never mind where they are going.
FYI 3 D printing has been around for decades, I doubt your average person is going to design 3 d parts which you would need to do. If they decide to do this there are a multiple of services out there that will make the "part" if you e-mail the file. Better quality parts, next day service and cost is very competitive compared to owning and servicing one of the 3 d printers. This is excitement from people who have not come into contact with this technology in my opinion. Besides you are suggesting a private company to invest in? Huh?
Apple has 100 billion dollars in cash,,, they could do a lot of good things with that money,,, hoever they eat 150 dollar lobsters on friday nights, while people toil for 2 dollars an hour, so they and some crooks on wall street can gamble lots of cash everyday, and the criminal part is thier are little kids staving in garbage dumps just down the street and
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The remainder of the week will feature August Durable Orders (Briefing.com consensus -16.3%) and the third revision of Q2 GDP with the latter set ... More
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