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Is Apple a bubble?

On September 21st, the shares of Apple reached $705 and became the company with highest market capitalization in  history, beating Microsoft, which in the nineties got a capitalization of 620,500 million dollars. Even with  the death of its CEO, Steve Jobs, Apple continued its exponential growth.

Everything was perfect. Despite of the small disappointments that the new Iphone 5 caused in the market, it achieved records in sales in the first weeks. A few days later, the decision of having its own map system seem a disaster, the maps had so many errors that Tim Cook had to had to apologize publicly.

Later, Apple introduced its new product, the iPad mini, smaller and more affordable, to fight against other tablets. In my opinion, this has broken what I really think is a key factor in the success of Apple, the luxury image, which has provided so many benefits to the American firm.

To all of this, we must add that Tim Cook has removed the vice president of iOS and the senior vice president of the physical stores of Apple from the management of the firm.

After these facts, the investors seem to distrust Apple. The shares has fallen $129 in one month.

I think Apple is not longer the technological reference and the absolute leader which become with Steve Jobs. Maybe this is not only Apple’s responsibility (with all of its mistakes) but also the investors, whose expectations about Apple’s products and figures were too high. As well, in the other hand, the competitors are doing the things correctly, making the work hard for Apple.

However, Apple’s figures are still enviable. iPhone’s income (26,910 million dollars) is higher than Microsoft’s income with all of its products (16,008 million dollars). New iPhones and iPads’ sales always beat the previous versions, and although the competence is doing a great job, Apple is still the King of the market.

Maybe if Apple would sell its products cheaper, (iMac, MacBook) would attract more potential customers, but this could break the firm’s exclusivity image which governs the company; Expensive products, not to suits all the budgets

In the following months we will realize if Apple is a bubble or not

Source| El Blog Salmón Economist

Images| Apple

  • Carlosgasol18

    Great article! Just… I don’t think they have lost the luxury image because 330 $ is not what I consider “cheap”. You must compare with the others 7 inches tablets (around 200$)

  • http://www.facebook.com/dajuru Dani Jurado

    Thank you Carlos, maybe you’re right, but you cannot deny
    that with the new iPad, Apple is opened to a new more affordable market with
    new potential clients.

Author Spotlight

Daniel Jurado Ruiz

Dani Jurado

Currently working as senior auditor for a Big Four Company in Belfast, UK, previously worked in an import and export company in Shanghai, China.

BBA at ETEA Business School (Córdoba, Spain) and having studied at The University of Birmingham (UK: BBA & EBBS), and at Kyungsung University Read Full

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