The First Trillion

(WSJ graphic)

When Steve Jobs died on October 5, 2011, the sense of loss was coupled with foreboding about Apple's long-term future. Without Steve, Apple's world-changing days appeared to be over.

The pessimists were proven right in the short-run; it turned out there was no Apple TV or other disruptive product in the pipeline. The Apple Watch, introduced in 2014, was indeed a new and different product, but even today is a trivial item--not even worthy of separate mention like the iPad, iPhone, Mac, or iTunes---in the income statement.

And yet, despite the lack of excitement, Apple's market capitalization has nearly tripled since Steve Jobs' death to the once-unimaginable value of $1 Trillion.

Apple has achieved this milestone by sticking to its knitting, i.e., being the quality leader in its markets. Adhering to this principle means that Apple won't add product lines--where's the TV that's been hinted at since 2011?--just to avoid being typecast as an iPhone company. Finally, in 2018, with its services (iTunes, iCloud) having ramped to $40 billion per year in revenue, the slow transition away from the iPhone is being recognized by the stock market through a gradually rising price-earnings ratio.

Meanwhile, because of the company's demonstrated un-willingness to place profit over principle, Apple's customers are staunchly loyal. The first trillion is always the hardest.