On corporate growth cycles and Apple

Recently, Apple has been emphasizing the non-iPhone parts of their business more. Analysts, like the excellent Stratechery, are suggesting that this means that Apple has recognized that the iPhone is done growing as a product, and is entering a new phase of its’ life cycle as a cash cow for the company.

A few years ago, I wrote about the underlying assumption that Apple must continue growing as a company, despite being one of the largest companies in the world, or that their lack of growth is due to losing ‘coolness’.

Of course, we can see more clearly now that it’s because the iPhone was finally available in every country, and the smartphone market as a whole has reached a mature phase. Therefore, growth has slowed.

This is interesting from a larger perspective. More specifically, it is interesting that Apple has figured out that the iPhone part of their business needs to fund the growth phases of other parts of their company. Any MBA b-school strategy course will talk about the need to identify the correct time to pivot between strategies for a product as that product matures. And there are many, many case studies that are shared that show the effect of not switching products, or failing to recognize the change in business cycles (Kodak, Blockbuster, etc!).

Apple is to be applauded for being aware of this shift. When you are drinking the Kool-aid within a company and industry, it can be very difficult to see clearly. This would be especially true for Apple, which has enjoyed a decade of consistent extreme growth of iPhone (and iPod before that!) sales. It would be easy for them to pretend that the iPhone should continue to get most of their focus and creative energies despite being in a mature market, and ignore growing a new product or reinventing one of their other products.

I still think that the underlying assumption that Apple needs to continue growing is faulty. Not growing would hurt their stock price, yes. However, the company certainly isn’t at risk of going bankrupt or having to have dramatic layoffs or restructurings if they choose to be a slightly-smaller-but-still-very-successful company. Does Apple really want to be the world’s largest company and continue growing? Is that something that’s really in Apple’s DNA, that’s their vision and mission? I would hope they’re more interested in their mission and less interested in growth-and-stock-price at all costs.