Alphabet ready to takeover the title of largest listed company

Three months ago I penned two articles (Who's the Apple of the markets eye? and Does Apple run a risk of falling behind the curve?) that detailed the demise of Apple as the world's largest listed company following reports that sales growth wasn't inspiring investors and fears had risen in the market that perhaps the tech giant of the noughties wasn't in the same comfortable position it had gotten use to after surpassing Exxon Mobil in 2011.

Much of the blame can be shouldered on management's failure to adequately invest in R&D that has led the company into a dry season in terms of new product offerings that hasn't maintained the same allure that drew consumers to previous gadgets launched in yesteryear.

The company reported its first ever quarterly drop in iPhone sales since first introducing the generational changing device to the world in 2007, alluding to the fact that the smartphone market was oversaturated and remaining bleak about the outlook for the second quarter of this year. Management also went on to say that it had concentrated on boosting investment in R&D after falling short for a number of years hoping their fortunes could be turned around with new products.

Analyst have marked a trend that's emerged in recent months that would suggest that the production of gadgets no longer holds staying power with aesthetics but rather the functionality in terms of operating systems and ease of use when it comes to the end user. This is evident in companies such as Alphabet (formerly called Google) and Facebook performing stronger than the broader market in the past few months.  

Apple falls below $90 as iPhone worries fester https://t.co/UgT6gGu6gV pic.twitter.com/1EU5LdCrnu

— Reuters Science News (@ReutersScience) May 13, 2016

More importantly though is the situation where Alphabet Inc. is on the cusps of knocking Apple off its perch at a time where the latter is facing headwinds that could blow it off course. An advantage Alphabet has over Apple is the technological innovation it prides itself in by investing considerable time and money in finding solutions to the most elementary problems with the assistance of computing technology.

And as much as most research and development of new ideas don't often find their way onto the market, the benefit of having a pool of products and services being churned out constantly gives Alphabet the edge over its competitors by supplying them with the latest technology at the speed of management's decision to commit long term to it, something Apple has lacked over the years.

We won't know officially when Alphabet will be classified as the world's largest listed company until its spent enough time above Apple, having experienced a brief spell earlier in the year only to suddenly fall out of bed. However with the strength in the trend backing Alphabet and sentiment changing against Apple one does get the feeling that Alphabet has the upperhand here and more likely to exceed previous records set by the latter in terms of market capitalisation.

As for Apple, it needs to go back to the drawing board and rethink the way it sees its business and how best to mould it around the changing environment by taking advantage of consumers evolving nature. I don't have any doubt that Apple won't feature in the future of technology simply because its built itself enough reputation to stand out amongst its competitors that it would be impossible for them not to lead the sector in the path of the most stylish expression of the latest gadgets but what will define them as the world's biggest listed company if they wanted to keep that title would come down to its ability to produce a perpetual money making machine, a feat that judging by the past is yet to be found.