The Apple earnings reports have been astronomical for the past two quarters, with each one easily beating the predictions from Wall Street experts. The question with any company that enjoys this type of growth has to be, “how long can it last?” Well, according to George Colony, the founder and the chief executive officer of Forrester Research Inc., it won’t be ending any time soon.
In an interview with Bloombergs, Mr. Colony is forecasting that Apple’s meteoric ride will continue through at least 2012, and that the company will surpass International Business Machines Corp. (IBM) next year, and Hewlett-Packard Co. the year after that based on gross sales. “They’re going to be a $200 billion revenue company,” Mr. Colony told Bloombergs.
What is intriguing here is that Colony isn’t saying this mass amount of revenue is going to come from the sales of computers, but more from the iOS devices and the resulting applications. He sees the Web slowly turning into what he refers to as the “app Internet” which will see people increasingly accessing online services via applications they can use on the go as opposed to using more traditional means. He sees the application industry growing into a $35 billion dollar industry of its own as more startups and traditional companies jump into the fray, citing the Hilton Hotel chain’s current experiment of allowing customers to open their hotel room doors via an app on their iPhone.
Branching off from the “app Internet” idea, Mr. Colony does have a concern that some companies are far too web-centric, and could potentially be “risking massive disaster” by not reacting quickly enough to the growing app culture. He mentioned Facebook as an example of a company that has not updated its iPhone app frequently enough, and has yet to release one optimized for the iPad. Facebook CEO Mark Zuckerberg has stated publicly that the iPad app is not a priority due to the company viewing it as not being mobile enough, but seeing as Apple sold 15 million units last year, and the iPad 2 appears to be selling as fast as the company can build them, he may want to chuck that argument out the window in the not too distant future to stay relevant.
While I have stated many times that I am not a fan of analysts in general because I feel they get away with stating the obvious at times, I think Mr. Colony is owed some consideration in this instance. His reasoning seems sound, and it certainly goes along with the trend we’ve been seeing for some time now. With the apps factored into these numbers, there is less of a burden on Apple itself to continue to produce these growing numbers.
Mr. Colony did add in one caveat to everything, however, and that is if Steve Jobs should vacate the roll of CEO for any reason. While he was sure that Apple has enough product in the pipeline for three to four years (iPhone 8? iPad 5?), Mr. Jobs leaving the company would definitely have an impact on Apple’s stock valuation, but of course that doesn’t mean people won’t continue to flock to every new product they offer.
What do you think? Can Apple keep up this growth pace to eventually outstrip the likes of IBM?