Apple is clearly at the top of its game at the moment, but the problem with being on top is that all roads lead down. Both Microsoft and Google's performance in the stock market has been pretty flat for the last half of the decade and you kind of wonder if part of their problem is being excessively focused on each other. But that flat performance might actually be preferred over what may happen in the short term at Apple.
Let's focus on Apple for a moment and speculate on what is coming.
Apple: Buy NVIDIA to Get a CEO
Apple is massively successful when compared to both Google and Microsoft over the last several years but it has some rocky roads in its near-term future. The biggest is the anticipated departure of its CEO and the inability to locate anyone inside or outside of the company who could do a comparable job. Given that Apple's board could protect an inside candidate and that Tim Cook, were he that candidate, is already likely being recruited anyway (any company that got him would likely see their valuation spike), this has led many of us to look outside the company and connect Apple's growing financial war chest to a company purchase that would include the acquisition of a CEO. This may seem like a stretch, except that is kind of what AOL did when it bought the Huffington Post: It got what looks to be its next CEO. Still think this is a stretch? Okay, how did Apple get Steve Jobs back? It bought NeXT.
Think about it, what sitting CEO could run Apple?
So the company that comes to mind is NVIDIA and its CEO, Jensen Haung. The transition would close a technology gap that both companies have with Android and Windows Phone 7-based products on graphics performance, but, most importantly, they would acquire a CEO who is likely the closest to Jobs in terms of skillset. He has run a company successfully for a long period of time in a highly competitive environment. He conveys the kind of energy on stage that is rare with a CEO, and he gets NVIDIA to repeatedly do what others thought was impossible. For instance, from nowhere at CES, the Tegra 2 platform popped up on virtually every product that came close to challenging an Apple product and was in the best of show offering this year. He isn't a perfect match by any stretch and the Mac faithful would take some convincing, but, of all of the sitting CEOs, he is the closest and NVIDIA could give Apple the technology it needs to defend what it has built.
I should add that I've been in a number of think-tank meetings on who Apple's next CEO is likely to be and, outside of Tim Cook, the most common name across all of them has been NVIDIA's CEO Jensen Haung. I don't think I'm stepping out on that big of a limb here, but he wouldn't leave the company he built.
Oh, and one final thing: If Apple is planning to move from x86 to ARM at some future point for the Mac side, which seems likely given its direction on other products, NVIDIA would be best able to make that happen. If this were the board's succession plan, it couldn't disclose it for fear of killing the deal or having someone else snap up NVIDIA to block this move.
iPad: PC or Netbook, Gas Prices and Canaries in Coal Mines
The iPad, as popular as it is, is a redundant product. It isn't a single-task wonder like the Kindle or original Palm, and it isn't a full replacement for your cell phone or laptop, yet. It remains unlikely that we will carry three multifunction devices. Even two seems unlikely over a sustained period. At some point, the products will have to converge and we saw that happen rather rapidly with netbooks.
The new iPad 2 is a nice improvement over the first-generation iPad, but where the most common term surrounding the first iPad seemed to be "magical," the most common term surrounding the iPad 2 seems to be "incremental." We tend to get excited about magical, not so much about incremental, and while I think Apple will likely sell out of iPads this month, sustained sales may be ellusive, not because of any tablet competitor-because I have yet to see a compelling one-but because people increasingly see it as a redundancy they don't need.
The trigger could be rising gas prices, which are quickly squeezing discretionary spending before the launch of this product. A lot of folks live month-to-month and, particularly if they have a laptop or the last iPad, are likely to put off buying another now that the money they have to spend has been dramatically reduced. A lot of Apple products could fall into this category and the impact will undoubtedly hit more companies than just Apple. But Apple could be the canary in this coal mine because the product is so visible.
While a price reduction typically would be the response, given the cause, I'm not convinced that will work in this case and Apple could find it difficult to move product, unless gas prices correct in 30 to 60 days after it starts selling and the initial demand has waned. This also falls on top of the iPhone 5 launch, which may have similar problems.
What I'm suggesting here is while both Microsoft and Google are flat, their revenue is not tied to events and the stability they have demonstrated over the last five years could well be an advantage in the face of dramatic change at Apple or a collapse of consumer spending. Android sales at Google are immaterial and Microsoft is largely sustained by corporate spending, which changes very slowly. It may very well be that what defines the differences between all three firms are things that none of their executives have any real control over. Something interesting to think about this week.