Has soaring Apple won the tech wars?

Apple has just produced another series of record numbers with soaring sales of iPhones and iPads adding more than $35bn to its value (which had fallen recently due to misplaced fears that its growth was slowing), adding $12.6bn to its cash pile which now stands at about $110bn.

Pity it doesn’t pay tax on much of this – but there you go.

Which raises the question: has Apple won the tech wars?

Now this might seem a thoroughly daft question like: is this the end of history? Because, by definition, it never is. And in the tech field most people thought, just a decade ago, that Microsoft (software) and maybe Hewlett-Packard (hardware) had won the fight. Events thereafter have shown pretty conclusively that they hadn’t. The main reason being Apple.

So why is the high-flying Apple any different?

Firstly, because it’s become so big and rich (the biggest company in the world by market value) that few people can compete with it. Maybe only Samsung.

Secondly, unlike with many huge companies, there’s no evidence that its capacity to invent things and change the business environment has atrophied. If anything, the opposite is the case.

Thirdly, it has redefined the tech market in the eyes of consumers. People now want an iPhone or IPad, not a mobile or a tablet computer. The same is arguably becoming true of Mac computers. The only people who don’t have them are people who can’t afford them (but still want them). Which is just fine for Apple as it can’t make any more anyway.

Fourthly, it’s demonstrated, just like the !9th and early 20th century great entrepreneurs, that the way to make real money and achieve absolute market power is via a vertically-integrated business model, one where you produce everything and can therefore charge accordingly.

Are there any clouds on Apple’s horizon?

The tax issue is clearly one. Apple runs an aggressive tax avoidance policy across the whole company, funnelling its European sales thropugh low tax Ireland for example, while booking expenses in higher tax countries. The company is an enthusiastic user of Caribbean tax havens.

This no doubt served Apple well when it was struggling to convince the world that its vertically-integrated Mac computers were better than a combo of Microsoft and HP but, with the tidal flow of money that started with the iPod and iTunes, it’s become an embarrassment. Apple positions itself as the big company you should treat as a friend but being among the world’s biggest tax dodgers hardly fits well with that.

The second one is the monopoly issue. Apple has taken over from Exxon Mobil as the world’s biggest company by market value. Exxon is one of the ‘seven sisters’ oil companies that emerged from the enforced break-up of John D. Rockefeller’s Standard Oil in the early days of the last century. The same could happen to Apple one day, particularly if it doesn’t clean up its tax act.

But, for the moment, Apple, under new CEO Tim Cook, is master of all it surveys.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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