What Happens if Apple Succeeds with Its Automotive Ambitions?

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Apple CashIconic investor, Carl Icahn, made waves recently when he said that Apple (NASDAQ:AAPL) could easily be worth $1.2 trillion. This projection of course got a lot of laughs, shocked a lot of people, and raised a lot of eyebrows. Many critics dismissed it readily as another pie-in-the-sky projection by an obviously interested investor. Who wouldn’t want the stocks they own to be worth much more than their current value?

Well, it looks like Carl Icahn might be crazy like a fox. The idea of Apple being worth $1.2 trillion is actually crazy if Apple is going to get to that valuation point based solely on iPhone sales. Considering sales trends in the global market for mobile phones, that’s not going to happen. Why? The global market for smartphones and tablets is quickly becoming a race to the bottom. It’s all about providing hardware that enables people to access content online. The future of smartphones and mobile computing is all about the cloud: Whoever controls the cloud and its content wins. That’s the future.

Does this mean that the iPhone will go away anytime soon? Of course not. There will always be people that would buy a shiny piece of metal and plastic that has that cute, little Apple logo on the back. In the same way people buy Mac computers now in a market dominated by cheap Windows computers, there will always be iPhones in the future. However, iPhones won’t dominate the market.

The real future for Apple is a completely different market category. I’m sorry to say, but the smart watch is not it. Wearable wireless technology, again, is a race to the bottom. Chinese manufacturers can quickly crank out very cheap smart watches, smart wrist pads, smart headbands, smart jackets—you name it. The real battlefield would be something bigger and more profound. This is precisely why it makes sense for Apple to look into revolutionizing the electric car industry. If it’s able to solve the key problems that are preventing the electric car from becoming commercially popular, Apple can become a $1.2 trillion-company. Considering its talent infrastructure and its past performance, it would be unwise to bet against Apple at this time

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