When Microsoft became the most valuable company ever in 1999, it was a foreboding omen. From that point on, the company's dominance over computer operating systems diminished. It became more dependent on purchasing innovative companies than on cultivating in-house breakthroughs. Microsoft's stock price, which peaked at nearly $60 in 1999, tumbled to less than half that, then stagnated for a decade.
Apple is now the new Microsoft. With its stock hitting a new high of $665 per share, Apple's market value is nearly $624 billion, eclipsing the prior record of $618.9 billion set by Microsoft at the tail end of 1999. That makes Apple the most valuable company in history.
Microsoft set the mark for world's most valuable company during the dot-com bubble, one reason the company's share price and overall value plunged over the ensuing years. Apple, by contrast, remains strongest in markets that are still growing, such as smartphones and tablet computers. If a genuine economic recovery kicks in, that could lift the overall stock market, and Apple along with it.
In terms of consumer offerings, it's possible that Apple's glory days are fading. Its last big breakthrough, the iPad, came more than two years ago, and there are now a slew of devices that compete with it, cutting into market share and profitability. Apple relies mostly on incremental improvements to sustain the popularity of its other hit product, the iPhone, which is also losing share to competitors. Apple may have some bold new tricks up its sleeve, but if it doesn't, consumers could tire of constant "upgrades" that don't entail much that's really new, except a higher price.
Yet the company co-founded and built into a powerhouse by the late Steve Jobs could easily retain the title for peak market value for as long as Microsoft did, if not longer. For starters, there's no natural limit to how big Apple can become, either through market share gains, new product introductions, or acquisitions. A report earlier this year by investing firm UBS found that five other companies—AT&T, IBM, ExxonMobil, Microsoft, and General Electric—each accounted for a bigger share of the total market value of all the firms in the S&P 500 stock index at some point in the past. And all five of them remained goliaths for far longer than Apple has been so far. So by historical standards, Apple still has room to grow.
It's also hard to see what company could eclipse Apple in market value any time soon. After Apple, the next most valuable company, according to Y Charts, is ExxonMobil, with a market value of just $406 billion—35 percent less than Apple's. After that come Microsoft, Wal-Mart, PetroChina and IBM. The rest of the top 20 are mostly energy or technology giants, or long-established conglomerates such as Johnson & Johnson or Procter & Gamble.
Those are strong companies likely to keep growing, but not at the rapid rates that would be necessary to catch up to Apple. Google, which ranks 11th with a market value of $221 billion, is still growing at Apple-like rates, but at barely one-third of Apple's market value, it's in no position to dethrone Apple, either. And if Apple keeps growing at rates of the last few years, the gaps on the ladder below it will get bigger, not smaller.
A year or two ago, Chinese companies were expected to become some of the fastest-growing in the world, especially as the country began to expand overseas, the way U.S. and European multinationals have over the years. But China itself has hit a growth slowdown, and only three Chinese companies rank in the top 50. Two are energy companies, unlikely to wrest global market share from giants like Exxon or Chevron. The other, China Mobile, could make inroads in developing nations but is unlikely to unseat competitors in rich economies like Europe and the United States.
That seems likely to leave Apple in a class of its own for the foreseeable future. Big conglomerates are less stable than they used to be, with fast-changing technology and global competition able to quickly erode the edge that some huge companies used to enjoy for decades. Size is even a liability for big companies that can't adapt quickly enough. Yet Apple has profited from trends that have threatened other big firms.
It's worth noting, however, that in 1999, when Microsoft became the most valuable company ever, Apple was a boutique outfit worth less than one percent of Microsoft's value. Nobody ever thought Apple would overtake the mighty Microsoft. So maybe today, some future giant is sprouting, unaware that some day it may make history by becoming even bigger than Apple.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.