Apple 2012: Smooth sailing, for the most part, with a strong wind

SAN FRANCISCO ― Apple Inc. coasts into 2012 with a strong wind in its sails, a clutch of envelope-pushing products in its hold, a record share price, and a steady hand at the tiller.

But its very success ― with the market-leading iPad and the voice-enabled iPhone 4S ― is luring cheaper rivals to the surface.

Google Inc’s. Android, launched a few years ago and taking aim squarely at the high-end iOS, continues to attract cellphone makers. Amazon.com Inc’s. Kindle Fire, half the cost of the iPad, is expected to have chipped away at the lower end of the tablet market.

Finally, though many on Wall Street, betting that an iTV and 4G iPhones and iPads will again pack its stores, continue to bank on a share-price climb to as high as $700, some begin to question the sustainability of Apple’s torrid growth pace.

Apple tacked on $43 billion to its top line in fiscal 2011, lifting it to $108.25 billion ― a 65 percent increase from the previous year.

Barry Jaruzelski, a consumer hardware business expert and partner at consulting firm Booz & Co., said to sustain that is effectively to conjure a Fortune 500 company out of thin air ― year after year.

“You become a victim of your own success,” he said. “Can you grow the existing products that much, or can you create a new category that creates $10 billion to $20 billion? That is the challenge.”

When Apple reports earnings Jan. 24, many investors for the first time might be watching for chinks in the armor, especially given Apple’s first miss since 2004 for the October quarter.

“The risk is the sustainability of what they have been doing,” said ISI Group analyst Brian Marshall. “They have put up a huge number and the question is can they continue to penetrate with their current existing product portfolio at these price levels?”

The fear is that the number of people who can afford an iPad or an iPhone is dwindling, he added.