Apple’s Future Prospects
Let's recap Apple's current status shall we? They sell computers, software, music, movies, games, peripherals, MP3 players and now cell phones. They already dominate some of these markets (music & MP3s), they are rapidly expanding their base in their core areas (software & hardware) and they are up and coming experts in their newest endevour (iPhone). So where do they go from here?
This isn't a terribly important question today, but five years from now it will be looming over everything Apple. I say five years because that is how much time I think it will take for Apple to maximize their presence in both the cell phone market and the computer market. By then I think they will have made about as much progress as they ever will in those areas. Then they will either have to content themselves with their current size (not a bad proposition if you ask me) or they are going to have to look into expanding in to new areas. Areas that might not exactly be all that computer related.
I think this is a big reason why Microsoft has done so poorly over the last few years. They reached a point in which they climbed to the top of their mountain and then didn't know where to go from there. They tried cell phones, they tried gaming, they tried online services and nothing really took off like they were hoping. Now I realize that just because Microsoft couldn't figure something out doesn't mean that Apple won't be able to solve it either. But I do hope you see the similarities.
So what can Apple go into next? I don't see them trying to get more into the hardware game by making their own (pick one) processors, monitors, memory, graphics cards, etc. Nor do I anticipate them becoming much more software driven. That isn't to say that they won't periodically update their applications, they will. And they aren't going to turn into a game studio anytime soon. Likewise I can't see them making software that doesn't directly benefit their platform. They have plenty of 3rd party developers for that. So what should they do?
I think they will move in one of two directions. I think that they will either go after a bigger slice of the sale of digital media or they will try to build their own version of the Kindle. In the first scenario I think they will try make a universal version of their iPhone application store. And by that I mean that their goal is going to be to control all software that is purchased for the Mac. Everything will flow through their gates. Music, movies, applications, everything. No matter what you use it on, computer or portable device, Apple will try and funnel everything through its store.
On the other hand I could easily see them creating a competitor to the Kindle and and then adding eBooks to the iTMS. Of course at that point I think it might be wise to rename the store because clearly they have moved past selling just music, but that is a minor point. I'm thinking that Apple one day is going to look at what Amazon is trying to do with the Kindle and realize that if it was just executed a little better then it really could be a game changing sort of device. So maybe they will head in that direction.
Either way the decision will soon be upon them. Let us hope they use Microsoft as an example of what not to do. Where do you think Apple should go next?
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Just a note on the naming point made near the end of the article. The ‘iTunes Store’ (iTS) is the official name of Apple’s store now; it hasn’t been called the iTunes Music Store since September 2006. One could argue that as the products sold by the store expand even further, even the ‘iTunes’ part of the name should be dropped. But the iTMS moniker departed years ago.
Last year I’ve been commenting about how iTunes and the various stores within it (music, video, apps) is the secret sauce in Apple’s recipe for digital hegemony. It’s certainly playing out that way.
It’s the walled garden that Microsoft, Sony, Nokia, Google, Amazon, Netflix and everyone else out there is trying to replicate given that they can’t get in it. But iTunes is too established already for anyone else to offer an alternative. If you manage your music there, might as well manage your videos. Might as well throw in the smart phone as well, and games, and movies and whatever else Apple can think of. Why bother dealing with another website/app when iTunes can do it all quite smoothly?
Netflix is the only one that seems to be holding its own but it’s not guaranteed that it can survive the disc-to-downloads transition.
“Then they will either have to content themselves with their current size (not a bad proposition if you ask me) or they are going to have to look into expanding in to new areas.”
And herein lies with my big problem with how our stock market works. Because share holders want growth since they make more money off of stock increases than they do dividends, Apple CAN’T just be content with their current size. If they stop growing, then investors bail, Apple loses market share, and then get bought out or are forced to merge with some other giant conglomerate. So a perfectly solid and profitable company can’t just be fine with regular profits. They must expand and get into businesses they normally wouldn’t even bother with.
They need to start buying small tech companies to strengthen and expand their core businesses, that’s what. They need to start whittling down their $20B stash of cash and put it to friggin’ work. That should take care of the growth prospects and investors’ whims.
How about “Virtual Reality for the Rest of Us”? I’ve been searching for various solutions of late, and they’re largely PC of big-iron ‘nix based, and cost you your first born.
iTMS is called iTunes Store for probably two years now, I think
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