3 What-Ifs to justify Apple's stock price
by phil on Sunday Mar 7, 2010 1:00 PM
Apple just broke into the top five biggest publicly traded U.S. Companies. What's interesting about stock prices is how quickly our brain comes up with rationalizations. What could possibly justify this price? If you believe in market efficiency theory, Apple's price predicts the value of the company 5-10 years into the future. Why is it nearly the price of Microsoft?
1. What if the Mac has reached its tipping point?
What if the Mac is at the tipping point needed to get out of the single-digit market share and defeat the network effects of Windows? You could cite the fact that Valve announced that Steam and the Source Engine will be ported to the Mac as evidence of that tipping point, as gamers have been rejoicing in the past couple days, "Yes, I can finally leave the PC. Between Blizzard and Valve's catalog, I have all my gaming needs." Hardcore gamers and professional creatives are at forefront of workstation computing power. The professional creatives are already all Mac, but the hardcore gamers have nearly been all PC. This could change.
2. What if the iPhone takes it all?
What if this fake study I've been touting is true, that college students on average spend more time computing on their iPhones than they do on their laptops. I'm nearly certain this is true. College provides an adverse environment to personal computers due to all the beer cups everywhere, and I don't need a study to show that students obsessively check facebook in-between (and during) classes on their iPhones. The computing habits of college students are some indicator of adults' future computing habits. Also, what if the numbers for Android growth are short-lived, and users realize the only reason they have one is because they hate AT&T. Once Apple goes multi-platform I'm going back to the iPhone.
3. What if the one-good-PC computing environment breaks completely?
What if the PC breaks completely. I just read a study about how sitting down all day nullifies whatever gains you make exercising. For a moment, I thought about getting a stand-up desk for my workstation, which led to a re-imagining of my entire digital existence: I'm stretched out on my couch reading with my iPad; I'm streaming videos through my Apple TV; I'm doing random computing tasks on my laptop on my table; And then maybe, every now and then, I'm using my stand-up workstation for actual work or gaming, which could actually very well be Mac (all I need is fast Photoshop and a good Valve/Blizzard game). And then when I'm outside of the home, it's all iPhone/iPad. One of the principles of good ergonomics is variety, and if Apple's got great user experiences on laptops, workstations, eBooks, phones, and media hubs, then they're the king of the new multi-platform reality.
If only one-and-a-half of these things is true, then extrapolated 5-10 years into the future, Apple is at least as big as Microsoft.