The Apple pie

Where did Apple's missing market value go?

Mr Market has slashed Apple's market value by $260 billion in six months. Meanwhile, the combined worth of a wide group of smartphone and tablet rivals has added less than half that. If investors think Apple is fading, the competing Android complex could be worth far more - to someone.

The 40 per cent slide in the iPhone and iPad maker's shares since their high last September - cutting Apple's market capitalisation to a mere $400 billion or so - reflects a range of factors including concerns about the company's product pipeline and how it can put its $137 billion cash pile to better use. A big issue, though, is the threat as rivals like Samsung Electronics catch up with Apple's technology, many using Google's Android operating system.

Yet over the same period as Apple's decline these two big competitors (though their businesses go far beyond mobile devices) have seen their market values rise by only about $35 billion each. A broader assembly that might benefit if Apple loses out includes at least another 15 companies like BlackBerry, Nokia, Amazon, Sony, Dell, cellphone groups Verizon Communications and Sprint Nextel - which stand to make more money on Android devices than on Apple's - and even Web names like Facebook and Yahoo.

There are other reasons some of these firms have increased in value since September - Michael Dell's planned buyout of the company he founded, for instance. But take all their gains, ignore the share price decreases at Microsoft, chipmaker Intel and HTC, a Taiwanese handset producer, and they still add up to only around $120 billion of new market value.

One way of interpreting this is that some $140 billion has gone missing from the present value of future smartphone and tablet profits. Of course, investors aren't always rational, and Apple now looks undervalued. Moreover the Android complex can't easily be defined, and less obvious constituents may have gained in value. Then again, Apple's wide profit margins are no secret. Perhaps the message is that companies simply won't make as much as investors thought - because competition will erode profitability. In that case, the missing billions have gone from Mr Market to Joe Consumer.