Last week, Meta (the renamed Facebook) lost $231 billion in market cap on news its user base hadn’t grown for the first time in its 18-year history.
It isn’t an altogether uncommon occurrence. Across products and industries, customer numbers do go up and down. Rarely, though, does it lead to the kind of precipitous fall that we saw in the case of Meta. There were several reasons for the sudden drop. A change in the privacy policies by Apple was cited by Facebook as one of the biggest reasons for its worries. Analysts also pointed to Facebook’s bare cupboard of new products with the much-hyped metaverse still in the realm of vision and planning.
No such problems surround Apple which, at the same time, posted healthy profits on hefty sales growth. Even though analysts have been declaring for years now that the company’s assembly line of revolutionary new products has slowed down and it isn’t producing new winners with the same speed that it did under the late Steve Jobs, Apple has continued its inexorable march in the markets.
Its seemingly impregnable position vis-a-vis Facebook’s many woes points to its dominant position in a product segment that defines our world in the same way that the automobile did in the US of the 1940s to the 1980s. The mobile phone today is the centerpiece of our world. It has a small or big role in almost everything we do, much as the automobile did in the US of the 20th century when it shaped American society. From the time the first cars hit the roads in the 1920s, they became an integral part in the life of the typical American, conferring personal freedom and mobility on its owners and thereby profoundly influencing the country’s culture. It is no surprise that every one of the Baby Boomers and the Generation X has a story about their first cars which also made them the pivot around which scores of books, movies and television shows were built.
What’s more, cars spawned an entire ecosystem comprising extensive highways, motels that sprung up around these and towns like Detroit that grew in prosperity and population as vast automobile manufacturing centres. The dependence on a car-based transport system created five distinct though interlinked trends - the automotive industry with its extensive supply chain, the physical infrastructure catering to cars, an urban living pattern with mushrooming suburbs that extended farther out, a parallel public transportation system and finally a popular culture in which the car was a significant actor.
Even a cursory look shows how the cellphone has supplanted the car in each of these.
Much like cars, when they first drove up on the streets of America and were seen as a nuisance with limited value, cell phones too were once viewed as nothing more than an exclusive telephone service for the uber rich. And yet we live today in a world where the cell phone is a ubiquitous necessity, an integral part of our lives. Cars reduced distances while creating opportunities for essentials and leisure. By contrast, the mobile has virtually eliminated distance with the new video calling features even compensating quite substantially for the visual separation. If the car spelt the end of horse-drawn buggies, the cellphone has upended industries well beyond its own. Cameras, maps, watches and music are just some of the areas which changed forever once the first mobile phones rang.
And it is not done yet. Apple is set to transform iPhones into contactless credit card readers and payment processors later this year. Just think of how another business will change as and when that happens.
The very indispensability of the cell phone is the reason why Apple may well lose a few percentage points of market share from time to time, but so long as it keeps building more applications and features around its iOS platform, it will own the world even as Meta struggles to create a brand new one.
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