James Surowiecki: Will Apple Keep Thriving?

Not long ago, Apple was almost universally venerated. It was the most profitable tech company in the world, and commentators predicted that it might be the first trillion-dollar company in U.S. history. What a difference a few months make. Since September, the stock has tumbled thirty-five per cent, losing more than two hundred billion dollars from its market cap. January’s earnings report disappointed investors, and analysts are cutting earnings estimates. Now there’s a deluge of forecasts stating that Apple is “in big trouble,” “losing its cool,” and just plain “doomed.” And it’s not only pundits: the activist hedge-fund manager David Einhorn has capitalized on the crisis by pushing the company to hand over its giant cash reserves to shareholders.

So why the sudden fall from grace? There were a few missteps: a tepid launch for the iPhone 5, followed by the Maps fiasco. And Steve Jobs’s absence is obviously preying on people’s minds. But there’s a more concrete reason: Apple’s competitors are finally doing a better job of making the kinds of phones that customers want. The most notable of these is an oversized phone dubbed “the phablet”—Samsung’s Galaxy Note is the leader in the category…

Keep reading: James Surowiecki: Will Apple Keep Thriving? : The New Yorker.