Commentary

Apple: The First Trillion-Dollar Company?

  • by , Featured Contributor, January 13, 2011

I participate on panels at a lot of trade and banking conferences, but probably none as fun and engaging as this past Tuesday's Gridley & Company's IDEA conference in New York. On our panel, which closed out the conference, was Kevin Ryan, CEO of Gilt Groupe; George Bell, CEO of Jumptap;  Russ Fradin, former CEO of Adify and now CEO of Dynamic Signal; and our moderator, Henry Blodget of Business Insider.

The panel was a repeat performance from last year and, just as they did the year before, our hosts opened up the bar before the session started, and made sure to serve the panelists in addition to the audience. As you can imagine, it only enhanced what was certain to be the kind of frank discussion you might expect to hear from some grizzled digital entrepreneurs. That chemistry led to a number of thought-provoking exchanges among Henry and the panelists, but one really stood out for me.

At the end of the session, Henry asked what we thought about Apple's prospects over the next few years. We all agreed that Apple was on a tear and that the company's growth wasn't likely to slow down for some time. Then, Henry asked how high we thought that Apple's stock price could go. Kevin jumped right in and declared that Apple could be the world's first trillion-dollar company. Apple is doing great, but that's a pretty bold statement, given the company's current market capitalization of just above $300 billion dollars.

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I think Kevin is right. Here's why:

Apple is out-innovating and out-executing the entire market. No other company is delivering better consumer electronics products with better content and communications experiences to the market, and iterating them constantly, than Apple.  Not only that, but no one else is delivering consumer electronic products and related software and content at the scale, and with the degree of customer service, that Apple is today. Not Sony. Not Samsung. Not LG. Not Google. No one.

IPhone and iPad market apogees well in the distance. As many iPhones and iPads as Apple has sold so far, the company has barely begun. Only this week did the largest mobile carrier in the U.S. announce plans to sell and support iPhones. IPad penetration in the U.S. is less than 3% of consumers. Hardware costs for both products are falling at an extraordinary rate. It is not inconceivable that in three years iPhones will be free with a standard mobile contract and iPads will cost less than $50. And, what happens when the 700 million Chinese and Indian mobile telephone users have access to affordable iPhones and iPads?

No close competitors yet. I spent the better part of last week at the Consumer Electronics Show. For as much cool stuff as I saw, I didn't see anything that was ready to truly rival Apple's products. Certainly, competitive or even superior products will show up in the market soon. However, given the rate with which Apple's business is accelerating, it has established a lead on competitors that will be nearly impossible to close.  Apple is likely to be still gaining -- not losing -- market share for the better part of this decade.

What about Facebook? Kevin also said he thought Facebook could very well be the second trillion-dollar company. Might that happen? I don't know, but  Facebook is certainly building an extraordinary business with extraordinary prospects for the future. Of course, I don't think that company strategists are doing anything that necessarily makes their success mutually exclusive to Apple's.

What do you think? Will Apple become the first trillion-dollar company?

5 comments about "Apple: The First Trillion-Dollar Company?".
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  1. Lief Larson from Workface Inc., January 13, 2011 at 3:18 p.m.

    "given the company's current market capitalization of just above $300 million dollars."

    I believe you meant Billion.

  2. Omar Sefian from BuildDirect, January 13, 2011 at 3:48 p.m.

    Current market cap of apple is Market Cap: 316.76B

    I believe he did mean Trillion.

  3. R.J. Lewis from e-Healthcare Solutions, LLC, January 13, 2011 at 7:41 p.m.

    Well I bought 15 iPads for staff and two for Christmas presents this year. I also "liked" this article via Facebook. .. So I'm doing my part for both companies...

    To have Apple triple in market cap is not such a stretch. The forward looking P/E is only 15. If they keep performing, keep innovating, and keep delivering superior customer service, why not? Add in a little multiple expansion as we pull out of a recession and that will close the gap from doubling to tripling.

    Whether they will be first or not is a whole other question. What I find fascinating is the pace of innovation today and the speed with which business moves.

    Facebook launched in 2004. Today it has 500MM users. Who's to say the first trillion dollar company has even been founded yet. Thanks to FB, the Internet and technologies liked those produced by Apple, in this interconnected world great ideas grow and flourish faster than they ever had before.

    I'd take some odds and bet on the come. I don't think we've even seen the first trillion dollar company yet... and there will be many.

  4. Dave Morgan from Simulmedia, January 13, 2011 at 8:08 p.m.

    Yes. The "$300 million" is a typo; should be "$300 billion"

  5. Nancy Medinakochis from Dish Network, January 14, 2011 at 5:53 p.m.

    I am a mom and a tech geek. There are definitely some interesting applications that I have come across that make my life more organized. One of my favorite products is GoogleTV. I love the integration I have experienced with Google TV. The Logitech Revue product works better with DISH Network than any other tv provider. As an employee at DISH, I believe it is one of the best products we have been associated with-next to our own developed DVR technology. Readers of your article can go to http://www.youtube.com/watch?v=tiIPoWXALbs to view it or to DISH’s website http://www.dishnetwork.com/googletv for more information!

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