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<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/economics-a-to-z" title="" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Economics A-Z</a></li>
<li class="even last" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/markets-data" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Markets & data</a></li>
</ul></li><li class="even" style="margin:0px;padding:5px 0px;border:0px;font-size:11px;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;background-repeat:initial initial">
<a href="http://www.economist.com/science-technology" style="margin:0px;padding:0px 12px;border-width:0px 0px 0px 1px;border-left-style:solid;border-left-color:rgb(255,255,255);font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(255,255,255);text-decoration:none;background-repeat:initial initial">Science & technology</a><ul class="subnav" style="margin:0px;padding:1px 0px 0px;border:0px;font-size:10.857142448425293px;vertical-align:baseline;background-color:rgb(255,255,255);list-style:none;width:188px;background-repeat:initial initial">
<li class="first" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/science-technology" title="" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">All Science & technology</a></li>
<li class="even last" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/technology-quarterly" title="Technology Quarterly" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Technology Quarterly</a></li>
</ul></li><li class="" style="margin:0px;padding:5px 0px;border:0px;font-size:11px;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;background-repeat:initial initial">
<a href="http://www.economist.com/culture" style="margin:0px;padding:0px 12px;border-width:0px 0px 0px 1px;border-left-style:solid;border-left-color:rgb(255,255,255);font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(255,255,255);text-decoration:none;background-repeat:initial initial">Culture</a><ul class="subnav" style="margin:0px;padding:1px 0px 0px;border:0px;font-size:10.857142448425293px;vertical-align:baseline;background-color:rgb(255,255,255);list-style:none;width:188px;background-repeat:initial initial">
<li class="first" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/culture" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">All Culture</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://moreintelligentlife.com/" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">More Intelligent Life</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/styleguide/introduction" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Style guide</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/economist-quiz" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">The Economist Quiz</a></li>
<li class="last" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/topics/book-reviews" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Book reviews</a></li>
</ul></li><li class=" two-col even" style="margin:0px;padding:5px 0px;border:0px;font-size:11px;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;background-repeat:initial initial">
<a href="http://www.economist.com/blogs" style="margin:0px;padding:0px 12px;border-width:0px 0px 0px 1px;border-left-style:solid;border-left-color:rgb(255,255,255);font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(255,255,255);text-decoration:none;background-repeat:initial initial">Blogs</a><ul class="subnav" style="margin:0px;padding:1px 0px 0px;border:0px;font-size:10.857142448425293px;vertical-align:baseline;background-color:rgb(255,255,255);list-style:none;width:376px;background-repeat:initial initial">
<li class="first" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs" title="" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Latest blog posts</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/feastandfamine" title="Demography and development" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Feast and famine</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/analects" title="China" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Analects</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/freeexchange" title="Economics" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Free exchange</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/americasview" title="The Americas" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Americas view</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/gametheory" title="Sports" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Game theory</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/babbage" title="Science and technology" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Babbage</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/graphicdetail" title="Charts, maps and infographics" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Graphic detail</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/banyan" title="Asia" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Banyan</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/gulliver" title="Business travel" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Gulliver</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/baobab" title="Africa" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Baobab</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/johnson" title="Language" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Johnson</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/blighty" title="Britain" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Blighty</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/lexington" title="American politics" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Lexington's notebook</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/buttonwood" title="Financial markets" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Buttonwood's notebook</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/newsbook" title="News analysis" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Newsbook</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/theworldin2013" title="The World in 2013" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Cassandra</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/pomegranate" title="The Middle East" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Pomegranate</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/charlemagne" title="European politics" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Charlemagne</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/prospero" title="Books, arts and culture" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Prospero</a></li>
<li style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/democracyinamerica" title="American politics" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Democracy in America</a></li>
<li class="even" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/schumpeter" title="Business and management" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Schumpeter</a></li>
<li class="last" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
<a href="http://www.economist.com/blogs/easternapproaches" title="Ex-communist Europe" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Eastern approaches</a></li>
</ul></li><li class="" style="margin:0px;padding:5px 0px;border:0px;font-size:11px;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;background-repeat:initial initial">
<a href="http://www.economist.com/debate" style="margin:0px;padding:0px 12px;border-width:0px 0px 0px 1px;border-left-style:solid;border-left-color:rgb(255,255,255);font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(255,255,255);text-decoration:none;background-repeat:initial initial">Debate</a><ul class="subnav" style="margin:0px;padding:1px 0px 0px;border:0px;font-size:10.857142448425293px;vertical-align:baseline;background-color:rgb(255,255,255);list-style:none;width:188px;background-repeat:initial initial">
<li class="first" style="margin:0px 4px 1px;padding:0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(230,236,238);font-size:1.3rem;vertical-align:baseline;background-color:transparent;list-style:none;line-height:1.6rem;display:block;float:left;width:180px;background-repeat:initial initial">
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<a href="http://www.economist.com/content/politics-this-week" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Politics this week</a></li>
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<a href="http://www.economist.com/content/business-this-week" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">Business this week</a></li>
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<a href="http://www.economist.com/printedition/kallery" style="margin:0px 0px 1px;padding:5px 10px;border:0px;font-size:12px;vertical-align:baseline;background-color:transparent;color:rgb(74,74,74);text-decoration:none;display:block;background-repeat:initial initial">KAL's cartoon</a></li>
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<h2 class="fly-title" style="margin:0px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem;color:rgb(227,18,11)">Information technology</h2><h3 class="headline" style="margin:0px 0px 3rem;padding:0px;border:0px;font-size:3.4rem;vertical-align:baseline;line-height:4rem;font-weight:normal;font-family:Georgia,serif">
Has Apple peaked?</h3><h1 class="rubric" style="margin:0px;padding:0px;border:0px;font-size:14.285714149475098px;vertical-align:baseline;line-height:2rem;color:rgb(91,91,91)">The world’s most valuable firm may be past its prime</h1>
Jan 26th 2013 | <span class="location" style="margin:0px;padding:0px;border:0px;font-size:1.2rem;vertical-align:baseline;line-height:1.6rem">SAN FRANCISCO </span>|<a href="http://www.economist.com/printedition/2013-01-26" class="source" style="margin:0px;padding:0px 3px;border:0px;font-size:1.2rem;vertical-align:baseline;color:rgb(123,123,115);text-decoration:none;line-height:1.6rem">From the print edition</a><div id="block-ec_components-share_inline_header" class="block block-ec_components" style="margin:0px;padding:0px;border:0px;font-size:14.285714149475098px;vertical-align:baseline">
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</p><div class="content-image-full" style="margin:0px 0px 10px 15px;padding:5px 0px 0px;border:0px;font-size:14.285714149475098px;vertical-align:baseline;float:right;clear:both"><img src="http://media.economist.com/sites/default/files/imagecache/full-width/images/print-edition/20130126_WBP004_1.jpg" alt="" title="" width="595" height="335" style="border: 0px; margin: 0px; padding: 0px; font-size: 14.285714149475098px; vertical-align: baseline; display: block; "></div>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">TECH blogs are abuzz. Pundits are busy pumping out predictions. The company that makes the new device that is attracting so much attention is teasing reporters by being coy about its innovative features. Apple’s product launches are always like this. But this time the fuss is not about an Apple product: it is about Samsung’s latest Galaxy smartphone, which is likely to be launched in March.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">Stiffer competition in smartphones and tablets from the likes of Samsung has spooked investors in Apple. They got another fright on January 23rd when the firm revealed that its latest quarterly profit of $13 billion was flat because of higher manufacturing costs. That triggered a rout in after-hours trading: at one point some $57 billion was wiped off Apple’s market capitalisation, roughly the equivalent of the entire value of Ford, a carmaker.</p>
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In this section</div><ul class="expanded-list white-palette typog-list-exp related-items" style="margin:0px;padding:0px;border:0px;font-size:14.285714149475098px;vertical-align:baseline;list-style:none"><li class="0 first" style="margin:0px;padding:0px;border:0px;font-size:1.3rem;vertical-align:baseline;list-style:none;line-height:1.6rem">
<span class="current-article " style="margin:0px;padding:5px 0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(240,240,240);font-size:13.142857551574707px;vertical-align:baseline;display:block;font-weight:bold">Has Apple peaked?</span></li>
<li class="1" style="margin:0px;padding:0px;border:0px;font-size:1.3rem;vertical-align:baseline;list-style:none;line-height:1.6rem"><a href="http://www.economist.com/news/business/21570759-next-tech-battleground-may-be-your-wrist-watch-space" style="margin:0px;padding:5px 0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(240,240,240);font-size:13.142857551574707px;vertical-align:baseline;color:rgb(74,74,74);text-decoration:none;overflow:hidden;display:block">Watch this space</a></li>
<li class="2" style="margin:0px;padding:0px;border:0px;font-size:1.3rem;vertical-align:baseline;list-style:none;line-height:1.6rem"><a href="http://www.economist.com/news/business/21570756-will-obamacare-spur-firms-drop-workers-health-cover-insured-and-unsure" style="margin:0px;padding:5px 0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(240,240,240);font-size:13.142857551574707px;vertical-align:baseline;color:rgb(74,74,74);text-decoration:none;overflow:hidden;display:block">The insured and the unsure</a></li>
<li class="3" style="margin:0px;padding:0px;border:0px;font-size:1.3rem;vertical-align:baseline;list-style:none;line-height:1.6rem"><a href="http://www.economist.com/news/business/21570763-how-profit-firm-fosters-protest-profit-purpose" style="margin:0px;padding:5px 0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(240,240,240);font-size:13.142857551574707px;vertical-align:baseline;color:rgb(74,74,74);text-decoration:none;overflow:hidden;display:block">Profit with Purpose</a></li>
<li class="4" style="margin:0px;padding:0px;border:0px;font-size:1.3rem;vertical-align:baseline;list-style:none;line-height:1.6rem"><a href="http://www.economist.com/news/business/21570754-read-and-win-million" style="margin:0px;padding:5px 0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(240,240,240);font-size:13.142857551574707px;vertical-align:baseline;color:rgb(74,74,74);text-decoration:none;overflow:hidden;display:block">Read this and win million$!!!</a></li>
<li class="5" style="margin:0px;padding:0px;border:0px;font-size:1.3rem;vertical-align:baseline;list-style:none;line-height:1.6rem"><a href="http://www.economist.com/news/business/21570745-why-top-posts-are-changing-hands-new-heads-new-cycle" style="margin:0px;padding:5px 0px;border-width:0px 0px 1px;border-bottom-style:solid;border-bottom-color:rgb(240,240,240);font-size:13.142857551574707px;vertical-align:baseline;color:rgb(74,74,74);text-decoration:none;overflow:hidden;display:block">New heads for a new cycle</a></li>
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</ul><p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">Apple’s shares have been mauled by bears many times before (see chart 1), but they have always recovered. The big question on many investors’ minds is whether the firm can rebound again. Two things have whetted the bears’ appetites.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">First, Steve Jobs, Apple’s founder and creative genius, is dead. The iPhones and iPads he sired still generate gargantuan profits. But his successor, Tim Cook, has yet to prove himself capable of bringing new breakthrough products to market. Second, Apple’s fantastic profit margins—38.6% on sales of $55 billion—attract competitors like sweetshops attract six-year-olds.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">The company’s fans pooh-pooh the idea that Apple has peaked. The firm’s price-earnings ratio—11.6 at close of business on January 23rd—is not much different from Microsoft’s (see chart 2). That makes Apple’s shares look relatively sexy. Unlike Microsoft, which depends heavily on the ailing personal-computer business, Apple concentrates on sectors that are growing fast, such as smartphones and tablets. Only one of 60 analysts tracked by Bloomberg had a “sell” recommendation on Apple before this week’s stockmarket fallout.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem"></p><div class="content-image-full" style="margin:0px 0px 10px 15px;padding:5px 0px 0px;border:0px;font-size:14.285714149475098px;vertical-align:baseline;float:right;clear:both">
<img src="http://media.economist.com/sites/default/files/imagecache/full-width/images/print-edition/20130126_WBC803_0.png" alt="" title="" width="595" height="278" style="border: 0px; margin: 0px; padding: 0px; font-size: 14.285714149475098px; vertical-align: baseline; display: block; "></div>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">A drizzle of negative news had already dampened investors’ ardour before this week’s earnings announcement. Apple bungled the introduction of its new mapping app, and there were rumours of cuts in component orders for the iPhone 5. But iBulls still expect sunshine this year: news of new gizmos that Apple has created and new markets it is set to disrupt.</p>
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<img src="http://media.economist.com/sites/default/files/imagecache/290-width/images/print-edition/20130126_WBC835_0.png" alt="" title="" width="290" height="281" style="border: 0px; margin: 0px; padding: 0px; font-size: 14.285714149475098px; vertical-align: baseline; display: block; "></div>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">One of those gadgets is likely to be a much cheaper iPhone aimed at emerging markets. In China, where some men have reportedly been dumped for failing to buy their girlfriends iPhone 5s, Apple sold 2m of its top-of-the-range devices over its launch weekend last month. However, most Chinese shoppers can’t afford the things. Barclays, an investment bank, reckons Apple could produce an iPhone for less than $150 to broaden its appeal.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">The firm has played down reports of a cheaper iPhone, but Apple-watchers expect an announcement this year. Slimmer profit margins in China and India may be worth it to woo millions of new buyers. Apple is said to be close to a distribution agreement with China Mobile, a carrier with a hefty 700m subscribers. News of a deal may boost Apple’s shares.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">Yet the best way for the company to prove it is not past its prime would be for it to disrupt another big market. Since Jobs’s death in 2011 Apple has concentrated on sprucing up its existing products. Now investors want to see it conjure up entirely new ones. All eyes are on television (though Apple is also exploring the potential of other markets, such as wearable computing: see <a href="http://www.economist.com/news/business/21570759-next-tech-battleground-may-be-your-wrist-watch-space" style="margin:0px;padding:0px;border:0px;font-size:14.857142448425293px;vertical-align:baseline;color:rgb(74,74,74);text-decoration:none">article</a>). Mr Cook says television is an area of “intense interest”. He told interviewers that when he switches on the TV in his living room, he feels like he has “gone backwards in time by 20 or 30 years.” This fuels expectations that Apple will launch an iTV later this year.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">Sceptics point out that plenty of elegant, wafer-thin screens are already on sale. Moreover, Apple’s existing set-top box, which lets users play content from iTunes, Netflix and other services on their TVs, has not been a stunning success. But this misses the—so to speak—bigger picture. The iTV, which may be controlled via gestures and voice commands as well as via iPads and iPhones, could be a digital hub for the home. It would let people check whether their washing machine has finished its cycle while they gossip on Facebook and watch their favourite soap. Peter Misek of Jefferies, an investment bank, says sales of it should also boost purchases of iPads and other Apple gear, as more people get sucked into the firm’s “ecosystem” of linked devices and software.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">But the iTV is no surefire blockbuster. For one thing, persuading cable and broadcast outfits to make programming available over the internet on demand will be tricky. They have already seen how such a model crushed music companies. For another, iTVs are likely to be pretty expensive, limiting their mass-market appeal.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">Apple will also, as usual, face stiff competition from Samsung. The South Korean firm is one of several that already sell smart TVs. Indeed, Samsung seems to be churning out more and more groundbreaking devices while Apple has produced only incremental innovations of late. Apple’s court battles with Samsung over smartphone patents have reinforced the impression that it is on the defensive.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem"></p><div class="content-image-float" style="margin:0px 0px 10px 15px;padding:5px 0px 0px;border:0px;font-size:14.285714149475098px;vertical-align:baseline;float:right;clear:both">
<img src="http://media.economist.com/sites/default/files/imagecache/290-width/images/print-edition/20130126_WBC834_0.png" alt="" title="" width="290" height="317" style="border: 0px; margin: 0px; padding: 0px; font-size: 14.285714149475098px; vertical-align: baseline; display: block; "></div>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">However, Horace Dediu of Asymco, a research firm, says it would be a mistake to think Apple is resting on its laurels. He notes that its capital expenditure has soared in recent quarters, reaching levels typically seen at firms with huge manufacturing operations, such as Intel (see chart 3). Some of this money is going into data centres to support cloud services like iTunes. But Mr Dediu reckons much of it is being spent on dedicated production equipment at suppliers. This could give Apple an edge in producing new gadgets.</p>
<p style="margin:0px 0px 15px;padding:0px;border:0px;font-size:1.5rem;vertical-align:baseline;line-height:2.3rem">Yet even if it produces a cheaper iPhone, pushes deep into China and wows the world with a smart TV, its shares will not reconquer last year’s peak. Competition is now tougher in its core markets. Rivals will not let it disrupt new ones so easily. Apple may dip into its $137 billion cash lake to boost its share price by paying fatter dividends or buying back more stock. That would delight some investors, but others would see it as a tacit admission that the firm’s great innovation engine has stalled. Apple won’t crumble, but it has peaked.</p>
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