Five Things That Could Derail Apple
Apple stock has topped $300 per share, giving it a market cap of around $275 billion.
How did it get there? After losing the PC wars to Microsoft in the 90s, Apple has used hit products like the iPod and iPad to reinvent itself as the leading company in the next chapter of computing – mobile.
But especially when a stock like this hits a historic high, the responsible investor has got to look at what could go wrong—so let’s do that. Here are the top five danger spots for Apple over the next year or so.
1: Carriers. Yes, there’s a threat from Google’s Android OS for smartphones, but more important is how Apple protects the average selling price the carriers pay for iPhones, now north of $600. To achieve that, it will have to keep hitting home runs with its A4 chip, and developing innovative features that entice wireless customers to pay more for data plans.
2: Pricing. Apple clearly has a hit on its hands with the iPad, and can go in one of two directions: Keep it as a standalone product a-la the iPod, or sell it through carriers for broader distribution. If it makes the right choice, it will be able to maintain high margins while also getting it into the hands of more customers.
3: Android. Here’s the real issue with Android: as it gets more competitive, it lowers the price Apple can charge for iPhones. That puts pressure on Apple to get other revenue streams like iAd going. If it fails, it could put pressure on margins.
4: Hollywood. If Apple can’t get streaming TV shows and movies from all the major networks and studios, that will hamper the adoption of media-centric devices. Somehow Apple has to convince studios that it's in their interest to release more content in digital format—so far, most of Tinseltown isn't buying it.
5: Macs. They might not get the attention growth-wise , but they’re still a big contributor to revenues. If Apple can’t keep growing share, it’ll hurt. Good thing Apple is showing off a new version of OS X next week, OS 10.7 Lion.