Apple’s valuation grew to over $700 billion today as shares increased by 0.8 percent. Apple is the largest company in the world by market capitalization, ahead of Exxon by nearly $300 billion. Apple’s unveiling of the new iPhone 6, Apple Watch, and Apple Pay in September is largely responsible for the recent growth of the firm’s market cap. So, is Apple’s company value a good indicator of the firm’s current and future stability?
Apple faces stiff competition from Google and Samsung in the smartphone industry, but Apple has fierce brand loyalty from millions of consumers. Some analysts have forecasted that Apple will sell more than seventy million iPhones in the fourth quarter alone. The new Apple Watch (available in 2015), Apple’s acquisition of Beats by Dre earlier this year, and the mobile payment system Apple Pay are new products that the company is offering in an attempt to diversify its portfolio. More than half of the revenue Apple earns is from sales of the iPhone, which is over twice as expensive as the average smartphone on the market. As a result, competitors like Samsung have eaten away at Apple’s share of the market by offering competitively priced phones that have similar specifications and capabilities. Additionally, Google’s Android is run on 71% of smartphones used today. Apple’s decision to diversify its product line is a risky plan to stay competitive; Google is already far ahead of Apple in terms of having a diverse portfolio of products and services. Apple’s botched roll-out of their map service shows that the company still has a long way to go to become relevant (and successful) in other industries.