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What exactly does it mean for Apple to be a “growth” company?

One of the most consistent questions asked about Apple at the moment is whether it will ever be a “growth” company again. And, of course, the answer you’ll see is usually “no”.

I disagree. There’s nothing in the present state of Apple and its core businesses which indicates it won’t continue to be a growth company. In fact, it has grown all the way through Tim Cook’s leadership.

What it won’t necessarily be is the kind of hyper-growth company it was during the earlier days of the iPhone. But the kind of opportunity which the iPhone represented are rare, and largely driven by factors outside the direct control of the company. The iPhone was launched into a mature mobile phone market, where there was weak competition and the potential for high margins. Apple’s execution was superb, which enabled them to grow massively and quickly, but it took the existence of a particular set of market conditions to allow this execution to work.

I don’t see any potential product categories which would present the same level of hyper-growth opportunity as smartphones did. TV is huge in revenue, but short on margin, and massively complicated. The regular update cycle is too long to support rapid repeat sales if you look at TVs themselves. You can sell a $100 product like the Apple TV, but it’s effectively a peripheral, a value-add to the iTunes/iOS/Mac ecosystem.

Wearable a feels like a big opportunity to me, but as a value-add for iOS devices rather than a standalone. It’s a way of getting iPhone and iPad owners to pay another $100-250 rather than a $20bn business on its own. And with more and more iPhones sold through the Apple Stores, Apple has a clear path to upselling customers with an incredible health-related wearable.

So where could Apple get iPhone-levels of growth? I just don’t see anywhere. To put the size Apple is at into a little context: if Apple somehow magically owned the entire global online ad market in 2016, it would only add another $163bn of revenue: that’s less than the $170bn revenue the company earned in FY 2013.

It seems, then, Apple is doomed to be merely an enormous, vastly profitable player in the biggest technology markets on the planet until whatever the next big wave is comes alone. And when that wave comes along, it will have to completely miss it or fail to execute as brilliant as it did with the iPhone. At that point, yeah, Apple will be doomed. As doomed as, say, IBM. I’m sure Tim Cook will live with that possibility.

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