Please ensure Javascript is enabled for purposes of website accessibility

As Apple Turns 40, Do Its Best Days Lie Ahead?

By Andrew Tonner - Apr 3, 2016 at 7:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As it gradually settles into middle age, Apple will need to remember its younger self in order to continue driving ever-greater value for shareholders.

As it nears its 40th anniversary, is there a more perfectly American company than Apple (AAPL 2.54%)?

Though endlessly debatable, Apple (AAPL 2.54%) is arguably the seminal American company, embodying the best and, at times, worst traits of our modern business culture.

Rising from the stereotypical humble beginnings, Apple's meteoric rise, fall from grace, and subsequent resurrection act are the stuff of business legend. Today, the company, its brand, and its products arguably loom larger than any other company in the world. And as the company noted with the following video at its recent product event, Apple has accomplished all this in a mere 40 years.

Source: Apple via YouTube.

So as Apple officially reaches middle age on April 1, let's take a brief moment to review where the company has come from, and, far more importantly, what Apple will need to do to continue its winning ways over its next 40 years.

Here's to the crazy ones
By now, the history of Apple is the stuff of lore; well-known but still deserving of review. Founded by Steve Jobs and Steve Wozniak on April 1, 1976, the firm's inception perfectly coincided with the coming explosion of the personal computer industry. By 1980, Apple had grown to $117 million in revenue and filed for an initial public offering (IPO).

The 1980s began with Apple notching several of its most memorable accomplishments, yet also sowed the seeds for the company's subsequent, near-fatal decline. The introduction of the Macintosh computer pushed the entire PC industry into a new era of accessibility, while Apple's famously Orwellian 1984 advertisement has been heralded by many as one of, if not, the single greatest advertisement ever.  

Internal strife, specifically the well-documented power struggle between co-founder Steve Jobs and then-CEO John Sculley, led to a series of failed product offerings from Apple that weighed on the firm's finances and public standing. Weak leadership and faulty product strategies through the mid-'90s left Apple on the verge of bankruptcy, the precise point at which co-founder Steve Jobs returned in early 1997. The ensuing white knight performance from Jobs returned the company to profitability and created the foundation for Apple's unprecedented string of hit products that define the firm's modern era -- iMac, iTunes, iPod, iPhone, iPad, and most recently the Apple Watch.

For all its successes though, Apple has also courted its fair share of controversy over the years, perhaps most notably in regard to what many view as Apple's complicity with the appalling labor conditions at its Chinese product assembly partner Foxconn. The company has also stoked public and regulatory ire for, among many items, fixing the price of ebooks and avoiding paying billions in corporate taxes. Like its successes, the list of Apple's transgressions, both the definite and the subjective, stand as too long for a single article.

Despite its myriad flaws, Apple's successes have catapulted the firm to its current rank as the most valuable company in the world. It has sold nearly 1.6 billion total devices, and its installed base stands at over 1 billion active computers, smartphones, tablets, MP3 players, and smartwatches. One share of Apple stock purchased at its IPO price of $22 would have since increased in value by a seemingly preposterous 21,240% before dividends.

A harder road ahead
Looking to the future, only a fool, with a lower case f, would expect similarly spectacular results from Apple. At the same time though, Apple still enjoys several legitimate opportunities to continue to impact the wider world while also producing compelling returns for its investors. However, success is by no means a given.

Source: Apple

Aside from the nascent smartwatch market, the rest of Apple's core markets are either deep in the throes of, or gradually gliding toward, maturity. This by no means implies Apple cannot continue to find novel ways to increase its presence in the smartphone, tablet, and PC markets, while enjoying a moderate potential lift from Apple Watch adoption. If anything, Apple's recent addition of the iPhone SE or last year's debut of the larger-screened iPad Pro demonstrate a commitment on the firm's part to continue to adapt its current products to each possible pocket within their respective spaces. However, barring margin-crimping price decreases, Apple will need to introduce completely new products into sizable markets in order to further expand its sales and user bases.

Thankfully, Apple appears to be diligently laboring toward this end. Citing sources within the company, a number of respected media outlets have reported that Apple's electric vehicle project, code named Project Titan, remains quietly in development. Though far from certain, a number of publications cite its target launch date as 2019. Additional opportunities for Apple's continued product expansion lie in the smart home, an area I'm particularly bullish on, as well as augmented reality and much more.

As it settles into middle age, Apple is a different, more mature company. Like many graying 40-somethings, it may well never recapture the sublime magic of its youth, especially given the added constraint that comes with its massive scale today. Continuing to grow will require Apple to stay mindful of the traits that propelled it to the dizzying heights where it finds itself today. That won't be easy. Few companies have been able to perpetually stave off the deadly stasis that often accompanies such size. Though if Apple can do so, the rest should in theory take care of itself. Here's to another 40.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$149.24 (2.54%) $3.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.