Apple’s Revenue May Grow 50% Through 2012 on Mobile Boom

Apple Inc. (AAPL) can keep posting sales growth of more than 50 percent in the next two years as a mobile applications boom fuels demand for devices such as the iPad, said the chief executive officer of Forrester Research Inc. (FORR)

George Colony, who founded Cambridge, Massachusetts-based Forrester in 1983, outlined his predictions in an interview at Bloomberg’s headquarters in New York.

Apple sold almost 15 million iPads in its debut year and more than 90 million iPhones in its four-year lifespan. Demand for the devices has spawned a market for downloadable apps that let users shop, work, play games and handle other tasks on the go. That in turn keeps customers buying Apple’s products, and puts the company on course for higher revenue than International Business Machines Corp. (IBM) and Hewlett-Packard Co. (HPQ), Colony said.

“They’ll be bigger than IBM next year, and they’ll be bigger than HP the year after that,” Colony said, citing Apple’s 52 percent sales growth last year. At current growth rates “they’re going to be a $200 billion revenue company,” he said.

Hewlett-Packard had sales of $126 billion in the year that ended in October and IBM’s revenue was $99.9 billion last year, making them the largest technology companies, respectively, by sales. Apple ranks No. 1 by market capitalization.

Photographer: Peter Foley/Bloomberg

The Apple Inc. logo is displayed at the company's store on Broadway in New York. Close

The Apple Inc. logo is displayed at the company's store on Broadway in New York.

Close
Open
Photographer: Peter Foley/Bloomberg

The Apple Inc. logo is displayed at the company's store on Broadway in New York.

Apple, based in Cupertino, California, rose $5.78 to $344.97 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has added 7 percent this year.

App Internet

Apple’s sales may climb 54 percent to $100.3 billion this fiscal year, which ends in September, the average prediction of analysts surveyed by Bloomberg. Growth may slow to 18 percent the following year.

Forrester, which advises executives and issues technology forecasts, has more than 2,500 customers and generated $250.7 million in sales last year.

As more consumers and businesses access entertainment, productivity tools and other services by way of apps -- creating what Colony calls an “app Internet” -- the less likely they are to rely on the traditional Web, he said.

Device makers aren’t the only companies that are poised to benefit from the trend. Building and managing such applications will create a $35 billion market opportunity, he said. Startups and corporations alike are experimenting with them, he said. Hilton Worldwide Inc. is working on software that will let visitors open a hotel door with an iPhone.

Companies that help manage the apps with services, such as Indian-based Tata Consultancy Services Ltd. (TCS) and Infosys Technologies Ltd. (INFY), also stand to gain.

‘New Stuff’

The challenge for Apple may be navigating the industry when founder Steve Jobs leaves the company. Jobs has battled a rare form of cancer and since January has been on medical leave, his third in the past seven years. The company has probably built a product pipeline to last it three to four years after Jobs leaves, Colony said.

“Remember, every two years they have to fill that store with new stuff,” he said of Apple’s retail outlet. “Without Steve Jobs as the CEO, I think it will be much harder for them to do that. That would be a massive, massive hit to the valuation.”

Several companies aren’t moving quickly enough to keep up with the new applications, he said. Facebook Inc. has been slow to update its iPhone app and build an iPad app, “risking massive disaster,” Colony said.

‘Too Web-Centric’

Google Inc. (GOOG)’s sales are too dependent on online advertising, Colony said.

“If you’re too Web-centric right now, you’re in trouble,” he said. “Google’s business model is completely based on you going to the Web and clicking on a link and seeing an ad impression. In the app Internet world, all of that goes away.”

Todd Wilder, a spokesman for Apple, declined to comment. Jill Hazelbaker, a spokeswoman for Google, and Malorie Lucich, a spokeswoman for Facebook, didn’t return e-mail inquiries seeking comment.

Google, which is putting co-founder Larry Page back in charge as CEO next month, may face another problem, Colony said. It risks going down the same path as Yahoo! Inc.

“When it comes to Larry Page I have two words for you,” Colony said. “Jerry Yang.”

Yahoo co-founder Yang took the reins as CEO in 2007. His efforts to reverse a sales-growth slowdown faltered as the recession crimped demand for online ads. He stepped down in 2009 after botching takeover talks with Microsoft Corp. (MSFT) and failing to broker an online advertising agreement with Google.

To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.