Apple spins impressive narrative of success, but are there holes in the story?

Like clockwork Apple announced their quarterly results on Tuesday and Tim Cook spun out his narrative of Apple’s ever-increasing, ever-impressive numbers. And as usual the market responded by largely agreeing that the skies are bright in Apple’s land. Analysts have declared that the high-flying stock is still undervalued, making it feel like there’s an indefinite upside ahead.

But there are some interesting auguries in this latest set of numbers – details from Cook’s narrative that Apple aren’t emphasizing, that make one wonder if that’s really true. What if instead of standing on the precipice of ever larger successes, we are instead standing at Peak Apple right now? And might that actually be a good thing?

There’s no question Apple has had a legendary run over the last decade. From the iMac, to the iPod, to the iPhone … each product transformed the company, and then increasingly the rest of our world. Before Steve Jobs returned to Apple, it was a company on the ropes, with everyone speculating on who it was going to be sold off to. In 1998 Jobs saved Apple with the iMac, and then used that success to introduce the iPod in 2001, which transformed how we used music, and then the iPhone in 2007, which effectively created the mobile space we’re in today.

It’s an incredible run. Apple is the most profitable company on the planet today, and growing at about 30% annually – with numbers like those, who could see anything wrong?

Well, there are signs, if you are interested in looking for them. The numbers this quarter look great, but the number of iPhones sold actually fell short of the street’s projections. That doesn’t sound so terrible, except that for a number of years Apple has beaten the street’s numbers, sometimes by a shockingly large amount. Apple doesn’t usually simply make its numbers – it exceeds them, and when the question is trends, that matters.

Exacerbating this is that Apple has, through success, effectively become a one-product company. iPhone sales dwarf the rest of its offerings, to a distorting degree – the revenue Apple makes from everything that isn’t an iPhone is easily outweighed by that one device.

How Apple chooses to present its numbers tells us something, too. Apple traditionally breaks out its Mac, iPad and iPhone sales. It used to break out the iPod, but it effectively cannibalized that business with the iPhone, and it no longer breaks them out – it made that change last year. It instead created an “Other” category, which is where the Apple Watch currently lives as well – it means we don’t really know how Apple’s chronometer is doing, but if the news was truly fantastic we’d be hearing about it … and very little was said at the last quarterly phone call.

The iPad is a device Apple probably wishes it had an excuse to hide numbers on as well – it has been shrinking year-over-year for quite some time. Apple’s language on the iPad has evolved – once spoken of as the post-PC device that would change the nature of computing forever, now that it has been selling less and less of them this kind of revolutionary rhetoric has vanished. With Macs holding steady as a beloved niche product at around 10% of their income, it’s notable that services, such as the App Store and Apple Pay, made almost as much for Apple as selling Macs did this last quarter.

One of the things that’s hard about judging a technology company is that we’re betting on the dreams of the future – it’s a notoriously hard thing to predict. But one thing we do know is that Apple’s ability to transform our lives has come through deeply innovative devices we didn’t know we needed tied to seamless software. As Apple finds it more profitable to be a gatekeeper taking tolls than it does making Macs, it raises questions about what identity it will have going forward.

We now know the iPad wasn’t the next device that changes everything, and increasingly the Apple Watch looks like a similar product – something nice to have, a signifier of disposable wealth and social status, but not necessary in the way that a phone and a laptop still are. If Apple’s second-largest growth area is services, it reminds one of a different company in an earlier time - much of Microsoft’s empire was built out of services. That’s like not what Apple is today, but when much of the company’s energy is spent chasing an initiative such as Apple Music, which has no real innovation behind it but leverages size and marketing to recreate something that already exists … well, it doesn’t feel like the Apple we’ve known.

Apple was championed by users a decade and more ago because it “just worked”. The problem with trying to measure Peak Apple only by the financial numbers is that a company is far more than its numbers. We’ve relied on Apple to create the devices we didn’t know we wanted and needed. Its valuation is based, in part, on the belief that more of those revolutionary products lie in its future. Its software has to remain easy to use, flexible, powerful, and joyful.

Now could be an excellent time for Apple to get set back on its heels. Historically, the company has never been stronger than when it’s the underdog – it focuses the company, which is precisely what Jobs did when he returned to the company. As Apple stretches into almost every part of our lives, some sign of slowing momentum could actually encourage them to focus rather than accelerate.

Some have criticized Apple’s software in recent years, and if those critics are right, some degree of friction might be what Apple needs to sustain its interest in innovation.

It’s almost been a decade since the iPhone, and the longer that is Apple’s only crown jewel the better the chance they will be disrupted. Someone else eventually will bring something new to the table. It is possible we will look back in a decade and know we couldn’t have seen that this was the moment of Peak Apple because it is always clearer in retrospect when something is past its peak.

Time will tell. It always does.