George Colony isn't very popular with diehard fans of Apple Inc. (Nasdaq: AAPL) right now. Many in the electronics industry refuse to agree with Colony's long-term prognosis for the company, but you have to give the Forrester Research Inc. CEO credit for taking an unpopular stance on the world's most successful technology company.
In a blog posted on Forrester's home page on April 25, Colony laid out the business and sociological reasons why he believes Apple will "coast, and then decelerate" over the next "24 to 48 months." This rather negative opinion, published only one day after Apple announced record profits and sales, has sparked a lot of debate on the Web. On Tuesday, Apple reported a 94 percent increase in March-quarter net profit (to $11.6 billion from $6 billion) and revenue of $39.2 billion, compared with $24.7 billion in the year-ago quarter.
Just to be clear, I agree with Colony's conclusion. In fact, if there are any areas where I don't exactly see eye-to-eye with the Forrester boss, it would be that Jobs's death isn't the only trigger that I believe would result in slower growth for Apple eventually. Neither of us is saying Apple will decline or stop growing, but the current pace of expansion is not sustainable.
Apple's revenue more than doubled to $108 billion at the end of fiscal 2011 from $37.5 billion in fiscal 2008. The company's current growth rate, if maintained, will push Apple's annual revenue pass the $200 billion mark by fiscal 2013 or even earlier. Where will it go from here? I know many people in the industry believe Apple is infallible, but even if Jobs was alive, the company was bound to hit a wall eventually.
Forrester's Colony focused in his blog on how the departure of a charismatic leader often results in the slow decline of the organization. Jobs, the Forester analyst said, was at the core of almost everything that Apple had done in the last 10 years. Without him and the passion he ignited both within and outside the company, the enterprise was bound to slowly begin to lose momentum.
"In charismatic organizations, the magical leader must be succeeded by another charismatic -- the emotional connection of all employees and (in the case of Apple) customers demand it," Colony said.
He expanded further:
When Steve Jobs departed, he took three things with him: 1) singular charismatic leadership that bound the company together and elicited extraordinary performance from its people; 2) the ability to take big risks, and 3) an unparalleled ability to envision and design products. Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation.
Do you agree with Colony? If you take a look at the comments on Colony's post, there are some thoughtful, high-level, and interesting viewpoints. Joe Wilcox of Betanews also makes a compelling argument. I encourage you to share your own opinions on the message board below.