As Apple turns 40 years old, it has some more troubles ahead

What’s next? Illustration: David Simonds/Observer
What’s next? Illustration: David Simonds/Observer

Does Apple have another 40 years ahead of it, now that it has 40 behind it? As the world’s most valuable public company hit its anniversary last week, it’s the obvious question, in a world where the pace of technological change, enabled by globalisation and the internet, is faster than ever. And the public pressures, from the row with the FBI over unlocking the San Bernardino killer’s iPhone to its tax avoidance through Ireland, aren’t shrinking either.

You only need look at Sony, the famed Japanese company that turns 70 in May (it was founded just after the second world war, in 1946), for an example of how things can go wrong. By its 40th birthday, Sony had invented the Walkman, the compact disc and the Trinitron TV. But the digital world, and then the death of founder Akio Morita, confounded it: despite the success of the PlayStation, it is a shadow of its former self, cutting jobs and struggling to find a space in which it can lead.

The death of Steve Jobs in 2011 was held to be as significant as Morita’s. Five years on, the evidence may not be obvious – but it’s there.

The first is the biggest: the iPhone. The smartphone, as a category, is unique: a computing and communications device that has a potential market of every person on earth. It has only reached about 2.5 billion people so far, but there is an obvious saturation point, even if it is a decade or so away. And analysis suggests that iPhone shipments have already plateaued.

Then, in 2010, the iPad seemed like the next big thing in computing, but in its six-year life it has gone from bang to whimper – twice as quickly as did the iPod, launched in 2001. But at least tablets sell well: the Apple Watch shows no sign of being a hit to compare with either of those, much less the iPhone.

The problem, then, is what Apple does next. Creating a portfolio of products people really want is harder than it sounds. There are well-supported rumours of a car, at some time in the future. So is Apple’s ambition to become the new General Motors? As with the phones and the tablets and the watch, one can only wonder what small slice of the world will be able to afford an Apple car, especially as there have been competitors at all sorts of prices for more than a century.

Cars might also seem old hat in a few years, given the rise of virtual reality systems which overwhelm the senses with new experiences, and artificial intelligence which can outplay the best humans. Maybe travel itself will become outdated. Microsoft (41 years old on Monday) Google (just 18) and Samsung Electronics (47, descended from the even older Samsung) are all making the running here, while Apple seems still to be sitting on the sidelines.

Apple’s power with customers lies principally in its brand, but its executives must avoid the countless dead ends that technology throws up (anyone for 3D TV?) in favour of the deeper streams that can sustain it. Beyond that, it must also stay relevant: Microsoft was once top of the pile, but the rise of the iPhone and Google’s Android left it flat-footed, and it has taken nearly a decade to start finding its way again. If Apple were to miss out on the next wave, whatever that might be, its brand would be tarnished. After that, it’s a long way down.

Chief executive Tim Cook does at least have the reassurance that there are more than 500 million people in the world using upwards of a billion Apple devices. That’s a big audience. The challenge is keeping the show entertaining enough to retain them.

The Aramco float gets stranger and stranger

Get ready for the world’s biggest – and strangest – flotation. Saudi Arabia is to sell shares in its state oil company and its deputy crown prince is prepared to talk dates, which implies seriousness. The public offering will happen next year or maybe in 2018, Mohammed bin Salman said on Friday.

This is part of a hugely ambitious restructuring of the Saudi economy in which the central feature is the establishment of a sovereign wealth fund that will seek to buy non-oil assets. Put a rough value of $2tn on Saudi Aramco – the company’s claimed oil reserves, after all, make Exxon’s look small – and this fund would put equivalent Norwegian or Singaporean versions in the shade. In theory, the Saudis could buy several of the world’s biggest companies, or vast swaths of property in western capitals, and still have spare change.

In practice, life will not be so simple. The Saudis will initially be selling “less than 5%” of Aramco, which is hardly a rushed exit from oil. And, if the state continues to own 95%-plus, whose interests come first? Aramco, remember, accounts for more than half Saudi Arabia’s GDP and it has become entwined in the state’s vast social security programme.

More share sales could follow. But it is hard to believe Saudi Arabia would ever be happy to give up management control of the company, which is what is required if Aramco is ever to be just another investment within the new sovereign wealth fund. The regime, surely, would still want to use its oil to wield political power in its rivalry with Iran.

That is the strange part of the float: investors, in effect, are being offered the chance to be back-seat passengers in a company that, to a large degree, will continue to be an arm of the Saudi state. Wait to see if the flotation documents include fully audited details of the oil and reserves, which have always been kept under close wraps. Only if full disclosure is offered is it really a new world.

Living wage isn’t a step forward for those who miss out

There has been plenty of fanfare around the national living wage. George Osborne went to Asda to highlight what the new £7.20 hourly pay floor means for millions of workers around the UK. It is Britain’s biggest pay rise by the number of people affected and has rightly been welcomed as a step to tackling working poverty, particularly among low-paying industries like retail and restaurants.

But spare a thought for those who will not see their pay packets grow this month. Only over-25s get the new national living wage. So for younger workers Osborne’s new wage merely widens the pay gap between young and old. And while it’s fashionable to demonise big business, the new pay sinners are more likely to be middle-class employers of dogwalkers, babysitters and gardeners. Millions of workers paid cash-in-hand in Britain’s shadow economy also risk missing out.

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