Is Apple Inc. (AAPL) Destined for a Lost Decade?

Imagine waking up 10 years from now and Apple Inc. (NASDAQ:AAPL) has gone essentially nowhere. All that promise of continued iDomination fell completely short of expectations, and as a result, investors have become disillusioned with where Apple’s is headed next. Welcome to the Apple lost decade.

After all, the company has yet to prove that it can revolutionize entire industries without the contribution of Steve Jobs’ visionary genius. To this very day, Apple is still riding on the coattails of Steve’s vision, and it appears the company is milking that for all it’s worth. For better or worse, Apple shareholders are left reconciling this potentially stark reality, and are also stuck with Tim Cook as captain of the ship. Cook, who has been highly regarded as a top-notch operations man — a great asset for the company’s supply chain, mind you — but is he really the captain of the ship? Does he possess the same sort of vision Steve Jobs had? Unfortunately, the world is still waiting for this answer.

The longer the world waits, the longer Apple Inc. (NASDAQ:AAPL)’s P/E remains compressed relative to the market, which ultimately perpetuates this cycle of under appreciation. Currently, Apple’s P/E is being compressed by more than 40% relative to the market’s current valuation. Does a company with the earnings potential of Apple deserve this sort of treatment? Well, if the company no longer thinks in terms of being revolutionary, investors may be in for another reality check.

Telltale signs
Although Apple Inc. (NASDAQ:AAPL) is expected increase its smartphone volume along with the industry, it isn’t actually expected to gain much in the way of market share. Naturally, Google Inc (NASDAQ:GOOG) Android is expected to maintain its majority share in the coming years. Considering that Android has finally surpassed Apple in terms of smartphone Internet usage, it’s likely only a matter of time until the same thing happens in tablets.

On the tablet front, Android’s market share is expected to surpass Apple’s market share this year, thanks to the rise of low-cost small-screen devices. If we take what happened between Apple and Android in the smartphones and apply it to tablets, it starts with Android’s market share surpassing Apple’s, and ends with a shift in usage share away from Apple. These shifts could create a situation where Apple developers ultimately migrate over to the Android ecosystem. After all, an ecosystem is only as good as its App Store.