Apple's Next Big Thing
In the wake of the Tim Cook interview that aired on NBC last night, I started thinking about what the "next big thing" could be for Apple. How long can they ride the iPhone/iPad (mobile computing) wave which together accounts for about 75% of the companies profits. Lets take a quick look at the history of other computing devices growth to maturity.
If we look at the maturity of the desktop PC market since the widespread availability of the internet (roughly 1995), sales have gone from 47.1 Million worldwide annually, to peak in 2008 at 138.1 Million PC'ssold. That's roughly a 13 year span of year-over-year growth. As for laptops over the same time frame, 10 Million were sold in 1995 to 169 Million units in 2010. Laptops are still a growing market with sales projected to reach 264 Million units in 2014, probably cannibalizing the sales of traditional desktops.
Of course the next phase of mobile computing came in the form of the smartphone. In 2005, the smartphone market, which was still in it's infancy, reached 39.4 Million devices sold worldwide. Of course at that time, none of the current market leaders even existed. Companies like Nokia, RIM, Motorola and Palm dominated the market. Fast-forward to 2011 and you've got a whole new set of players (Android, Apple, Microsoft and RIM) with worldwide sales at 487.7 Million devices by the end of the year, with projections of 717.5 Million estimated to sale in 2012. Tablets are on the same trajectory, with the launch of the iPad in 2010, sales reached 17 Million. With Android tablets beginning to gain their footing, lead by the iPad, tablets are estimated to sale 122 Million by the end of 2012.
Growth of smartphones and tablets are expected to skyrocket over the next few years, with the smartphone market possibly maturing in the next 3-5 years. The growth potential of the tablet market is astronomical. It's already one of the fastest selling new products ever in history. I believe the growth rates will resemble the smartphone market, but faster and probably higher as their is more value in a tablet for a child than a phone, plus there's no monthly bill. As mobile processor technology improves the software capabilities of tablets will exponentially increase, continuously making desktops and even laptops a little less of a necessity every year. Each generation of personal computing devices are reaching a larger amount of people in shorter amounts of time while maturing faster.
This brings me to my original question, how long does Apple have until the iPhone (60% of profits) or smartphones in general matures to a point where they stop selling at current rates and/or usurped by another unknown product. What will they do next as an encore after revolutionizing mobile computing? Tim Cook hinted strongly last night that the true Apple TV is on the way. In whatever form it appears, set-top box or actual television, there is no way it will have the incredible profit margins or generate revenue like the iPhone has. The iPad has much smaller profit margins than iPhones and only account for roughly 15% of Apple's profits. And while the tablet assummingly has longer legs than smartphones, the profits won't make up the difference if smartphone sales slow. With Google gambling on Project Glass, I have to believe Apple is secretly working on it's own wearable computing device to unveil once the smartphone has run its course or slightly before.