Apple's Curse of Success

Oddly enough, time, it's own success, the inescapable logic of public company valuation and the firm's ability to churn out products it can convince people they have to own, are going to cause Apple problems, despite the launch of version four of its iPhone, the iAd network or the iPad.

Apple likely will execute well enough on all those fronts. Still, as it keeps getting bigger, friction is going to increase. The simple fact for any large company is that growth is hard to sustain because of the law of large numbers: Apple simply has to climb a bigger wall every quarter as its market capitalization and sales revenue grows, quarter over quarter.

Also, as every equity analyst has said, or thought, Steve Jobs, a singularly important executive in the technology business, will not live forever. No matter how capable his successors, he has proven to be an unusually effective chief executive, not for his management prowess but for his driving vision. Most companies produce products. Apple creates emotional needs.

So Apple will start to become the victim of its own success. No company can create an endless string of hit products quarter-after-quarter and year-after-year, though it is hard to argue with what Apple has achieved since 2001. The iPod began the streak.

But then Apple discovered iTunes was something more than a distribution system for music, leading to the App Store and the mobile apps trend. The iPhone arguably changed not only mobile phone design but the business ecosystem. The iPad might be the start of another wholly-new mass market. And Apple seems destined to be a player in mobile advertising as well.

Keep in mind that Apple shares were selling for about $8 in 2001. They are up around $250 or so today.

Nor will even these challenges prevent Apple from bidding to be among the dominant firms of the coming mobile computing era. It has a shot at such success. But success, for a firm that is getting to be as large as Apple, increasingly gets difficult, no matter how visionary it is.

The targets keep getting bigger. And, at some point, reversion to the mean will occur. Some future executive will start to worry about the numbers too much, become shy about destroying existing product lines in favor of new and untested product lines. Apple will lose that "magical" quality Jobs talks about so much.