The vast purchasing power of Apple’s cash. And what it tells us all about the future.
As I wrote yesterday, Apple’s dominance looks set to continue well past the trillion dollar mark, primarily because it has a piggy bank stuffed with $250 billion in cash.
My theory is that in order to stay in front it won’t innovate wildly. It will continue to do what it does best, delivering first class hardware that keeps one step ahead of consumer demand, whilst deploying cash to purchase companies that keep it many steps ahead of its competitors, like the acquisition of Lattice last quarter.
What’s interesting is that cash.
It’s that enormous cash reserve that gives it enormous power.
This power makes Apple not only the richest company on earth. It also makes it the world’s most powerful VC.
If it wants to remove a competitor, it will buy that competitor.
If it wants to expand its business, it will buy that expansion.
If it wants to test a market, it will buy that market.
Of course, companies have had this power before, but never before has a company had power like this to such an extent. Without divesting anything, Apple could, in theory, buy a majority stake in Facebook. Today.
Is that a good thought? Or a bad one? It’s certainly a complicated one.
We’ll only start to find out when Apple starts writing cheques. Lattice cost $200m. Watch when Apple buys a company for a billion or two. Then, that’ll be really interesting. That will show us where they’re heading as a company but, more importantly, it will point where we’re all heading in technology.
So, for now, watch the money and take note when Apple breaks open its piggy bank.
What Apple is acquiring will look something like the not-too-distant future.