One of the hottest stocks in this market right now is Apple Inc. Reaching all time highs this week at $295, this stock has seen incredible trading volume and is now in uncharted territories. Over the last five years AAPL has been one of the top performing stocks in the Nasdaq 100 index, up almost 600% since October 1, 2005. With a market cap of approximately $258 Billion, this powerhouse stock has significant influence over the Nasdaq as well as the overall market. AAPL has an average trading volume of just under 21 million shares per day. At a price of $282 per share, this equates to approximately $6 Billion of AAPL stock traded on a daily basis.
For the better part of the last decade, AAPL has continued to produce a constant stream of innovative products and service; most notably with the iPod and the following evolution of the digital music industry. From music to media, and PC’s to TV, Apple continues to wow customers with cutting edge technology.
However, over the course of the past year, it seems that Apple’s competitors have finally to fight back. The iPhone for instance is a product that upon its release, was years ahead of anything that could be produced by other like companies. Since its release, the iPhone has been the envy of the cellular marketplace. The past year has seen equally impressive developments from others in the industry. While not experiencing the level of growth seen by Apple and their iPhone, Research in Motion continues to hold a significant piece of market share. In more direct competition with the touch screen application based iPhone, HTC, Motorola and other providers have built equally impressive devices based on the Android platform. Many tech reviews are now favouring some of these Android based smart phones and recommending them as superior products to the once untouchable iPhone.
Apple’s next big launch was the unveiling of the iPad. A touch screen tablet PC built using the same style infrastructure as the iPhone was the first offering of its kind. Selling even better than the market forecast, the iPad played a significant for in driving its stock to these record levels, which brings us to the present. One of the problems now faced by AAPL is its sustainability in maintaining the monopolistic hold in the specialty markets. While the iPad is undoubtedly the most superior tablet device available in stores today, there are a number of challengers quickly entering the market. For the diehard Blackberry users RIMM is scheduled to launch the Blackberry Playbook in the second quarter of 2011. Built to automatically sync with blackberry devices, this product could provide an attractive alternative to commercial consumers who still prefer RIMM products with Windows compatibility. Beyond the obvious compatibility issues, this new 7 in. tablet from RIMM will also be equipped with HDMI ports and built in front and rear cameras. Across the Pacific, Samsung is in the final stage of developing what could be an even more impressive piece of technology. Built on the Android platform, the Galaxy Tab will feature a 1 GHz Hummingbird Processor, 7 hours of working battery life, and a high resolution display.
Looking into the future, Apple’s most recent release is Apple TV, a new concept that has not gone unnoticed by Google. GOOG has been working on partnerships with many large manufacturers to get their Android platform built into the architecture of many new HDTV’s. Considering the depth of Google’s reach and their influence on the digital marketplace, this will be a serious hurdle for Apple to overcome if it is to have any chance of dominating the television market in the same manner it has done so with digital music.
With respect to investing in AAPL and in light of their success, one overriding factor still looms over the shareholders – the CEO. Since Steve Jobs has come BACK on board to save Apple, he has single-handedly transformed a once struggling company into a multimedia powerhouse, much the same way he did with Pixar. With just over $280 billion in investor money on the line it is a monumental risk to have such dependence on the continued leadership of one man. The tech industry overall remains one of the best plays around; however, Steve Jobs will not be at the helm forever. The day will come when the iBoss will eventually step down.
Tom Busby is the CEO of the Diversified Trading Institute, where he teaches his students his trading techniques.
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