Big Apple v Big Oil

By M.G. | SAN FRANCISCO

BY ANY standards it is a remarkable achievement. In the space of 14 years, Apple has transformed itself from a computer firm on the brink of bankruptcy into a stockmarket superstar. During trading on August 9th its market capitalisation even surpassed that of Exxon Mobil for a time, though by the end of the day the oil giant had reasserted its position as America's biggest publicly quoted firm with a closing value of $348 billion compared with Apple's $347 billion. It may not be long before the tech giant is hogging the top slot.

Apple's stellar rise is a testament to the growing influence of the digital world in the global economy. Oil remains a vital raw material, but bits and bytes have become one too. Apple's ascension is also a sign of changing times in the technology industry. On its way to the top of the valuation stakes, the company, which focuses primarily on consumer technology, has leap-frogged more business-oriented tech giants such as Microsoft and IBM.

It has been able to do so thanks to a new, global breed of consumer who loves to snap up the latest gizmos displayed in the firm's alluring stores. Every few months, Apple stages the technology equivalent of a fashion show, where Steve Jobs, its iconic boss, teasingly unveils the latest collection of iPhones and iPads. (The next version of the iPhone is eagerly expected in the autumn.) True, Apple's relative success is partly due to a dip in the oil price, which has pummeled Exxon's shares, and to the volatility that swept through stockmarkets this week. But it is also due to investors' confidence in Apple's business model: last month the firm revealed that in its latest quarter its profit more than doubled, to $7.3 billion, while its revenues rose 82%, to $28.6 billion.

The only big cloud on the horizon concerns the health of Mr Jobs, who has been on a medical leave of absence since January—though he has retained his chief-executive responsibilities and has appeared at several official events. Many investors are betting the firm will continue to pump out fat profits even if the creative genius behind many of its biggest successes ultimately has to hand over the helm. Exxon has been warned.

Read on: Slicing an Apple: A fair proportion of the iPhone's innards come from Apple's archrival, Samsung