Editor’s note: This article was first published in March 2013. Its market data is as of March 2013, including Apple’s share price falling since December 2012 and a market capitalisation of just over $399 billion. Its product forecasts, such as the rumoured iWatch and Google Glass, are also from 2013; Apple’s smartwatch launched as Apple Watch in 2015.
Since December 2012, Apple’s shares have fallen as sharply as Google’s have risen. If we look at the chart, the two stocks have followed the same pattern, but as a mirror image, in other words in opposite directions. Curiously, Google and Apple are two companies that apparently don’t compete with each other, since Google’s core business is advertising, while Apple’s is hardware.
Even so, you could say they have found a common battleground in smartphones. Depending on which experts you ask, some would tell you that the manufacturer Samsung, with the Android operating system (Google), has already overtaken Apple in quality.
All the same, the opposite trends in the two companies’ share prices make no sense if we look at the fundamentals, since both should keep following the same parallel upward path they have followed until now.
Apple is the most valuable company in the world by market capitalisation, or rather second only to ExxonMobil at the moment, which regained first place after Apple’s shares fell. Only six months ago, the question was how long it would take Apple to become the first company in history with a market capitalisation of $1 trillion. What is clear is that Apple is worth more than $399 billion (its current market capitalisation).
It’s true that Apple’s latest results fell short of what the market expected (though they came very close), and that there are some doubts about the company’s ability to keep dazzling the market. But Apple has always been a company that grows in the face of adversity.
If the market has punished stagnating sales in developed countries, it may not have priced in Apple’s entry into emerging markets or its new products.
A new battleground for the giants
Google and Apple will probably fight each other for the market in other kinds of devices, such as the iWatch (Apple) and Google Glass (Google), a market that could be far more profitable for Apple than iPhones or tablets. Both products could reach the market this year, 2013.
And let’s not forget that both companies are said to be interested in getting into the car business. In Apple’s case, the iCar may turn out to be nothing more than a rumour, one that caught Steve Jobs’s interest in his day. In Google’s case, there is the self-driving car, although for now it is still a long way off, since the car can’t yet recognise the signals of a traffic officer, roadworks or changes in road signs.
Both companies will give us a great deal to talk about in the coming years, and their share prices will probably end up converging again. Still, it’s worth remembering that part of the punishment Apple has taken comes from the loss of credibility since the legendary Steve Jobs is no longer there.
Featured image: Steve Jurvetson, CC BY 2.0, via Flickr.
