Motley Fool Australia

Motley Fool Australia

Since 1993, millions of investors have trusted The Motley Fool for simple, down-to-earth investing research.

Where would we be without Apple?

John Lennon never sang about imagining a world without Apple (Nasdaq: AAPL) — or even Apple Records — but it’s easy if you try.

Researchers and analysts are doing the math for you. Barclays Capital analyst Barry Knapp recently reported that if you back Apple out of the S&P 500, year-over-year earnings growth for this year’s first calendar quarter would be flat.

Ned Davis Research’s Dan Sanborn came to an even more grim conclusion. Back Apple out of the S&P 500, and earnings growth drops from 7.8% to a mere 2.7%.

Despite the discrepancies, it’s getting popular to carve Apple out of the picture.

Comparing Apple to oranges
Morgan Housel took a closer look at Apple’s influence on the S&P 500. He concludes that while Apple, at 4% of the popular market metric, is substantial, it’s a small fry compared to the companies grabbing the pole position at some of the market gauges around the world.

Today I’m going to take the public’s fascination with offering up statistics in regular and “ex-Apple” form in a different direction.

What if Apple didn’t exist?

I’m not talking about rehashing the either-or metric scenario that has been bludgeoned to death by Wall Street’s brainiest statisticians. Let’s pretend that Apple doesn’t exist — or, at least, isn’t the great tastemaker it is today.

It’s a wonderful iLife
The fatal fallacy many analysts make in breaking out “ex-Apple” statistics is that other companies would be just as miserable without the class of Cupertino leading the way.

That’s not right.

Apple is a magnificent company, and there are clearly certain companies that wouldn’t be where they are today if it weren’t for Apple’s popularity. Would ZAGG (Nasdaq: ZAGG) even be around if its protective covers for iPads, iPhones, and iPod touch devices weren’t necessary? Would portable consumer electronics even be as popular outside of corporate customers if Apple hadn’t shaken things up on this side of the millennium?

Yet many stagnant or slow-growing tech bellwethers would probably be in a better place.

Let’s start with Research In Motion (Nasdaq: RIMM) . Erase the iPhone, and where is the BlackBerry? RIM would probably be in a much better place these days, with its co-CEOs — because they wouldn’t have been canned a few months ago — laughing all the way to the bank. Sure, Google‘s (Nasdaq: GOOG) Android’s development predates the iPhone, so RIM would have a pesky open-source competitor appealing to global handset makers. However, the very nature of the apps-driven ecosystem wouldn’t be as popular. Touchscreens would be less popular than devices with physical keyboards! Android would be nibbling away at RIM’s market share in smartphones, but it wouldn’t be nearly enough to heave RIM from the top of the hill.

Microsoft (Nasdaq: MSFT) is another company that would be doing a lot better in an Apple-less world. The tablet craze would probably never have taken off without the iPad. Consumers weren’t even sure if they needed a tablet when Apple introduced the original iPad two years ago. With tablets as merely a niche product — if that — and smartphones more of a corporate email and productivity gadget still elbowing its way into the consumer space, there would be no stall in laptop and desktop sales. Folks would keep buying PCs, with netbooks possibly serving the role of tablets, but Microsoft would be selling a whole lot more Windows operating systems and Office productivity suites.

Apple sold more than 15 million iPads during the holiday quarter. What if they were largely Windows-fueled netbooks? Apple sold 37 million iPhones in its fiscal first quarter. What if most of those handsets were BlackBerrys instead?

The end result is that most of the $128 billion collected in revenue last year by Apple would probably have been collected by somebody else.

There’s nothing wrong with ingesting all of the analyst and research comments about the big difference Apple is making. It’s enlightening. It’s a great icebreaker. However, at the end of the day, don’t assume that the rest of the market would be Nil City in terms of growth sans Apple.

We’d live in a slightly less innovative world, but a few of the names that we see as laggards today could be darlings.

If you’re looking for income from your shares, look no further than “Secure Your Future with 3 Rock-Solid Dividend Stocks”. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).

The One ASX Pick You MUST Add to Your Portfolio

Top Motley Fool analysts just identified their #1 ASX pick for 2014, a small-cap stock that could be poised for big gains (and offers a fat, fully franked dividend!).

Discover all the details now, including the name and code, in this FREE investment report, "The Motley Fool’s Top Stock for 2014."

See all posts by Motley Fool Staff
The Motley Fool