Apple's Finite Maturity Problem
I build hardware systems. I understand the development trajectory: the initial products are usually non-optimal but over time they improve. Yes, some companies will get ahead, but over time others will catch up. Then, the system is commoditized: no more major differentiator but price. No one really cares the brand of laptop you use [to an extent], unlike say 20 years ago, when the brands were miles apart on quality. That will happen with smartphones within the next five years.
Apple is a company that differentiates on hardware within exclusive software. What makes Apple so unique is narrowing, and I expect the core feature differences to disappear by 2021, essentially three iPhone evolution. Android devices are very close. You may even argue that we are already there.
JL Warren Capital LLC said shipments will drop to 25 million units in the first quarter of 2018 from 30 million units in the fourth quarter, citing reduced orders at some Apple suppliers. The drop reflects “weak demand because of the iPhone X’s high price point and a lack of interesting innovations,” the New York-based research firm said in note to clients Friday.
Every fashionista passes because it is a trend: spending $1k on a mass market phone will not work if there are good alternatives at $700. The finite hardware maturity improvement will catch up with Apple. Since it cannot claim it has the exclusivity to software innovation with Google Pixel and Samsung Galaxy coming along, not many will spend $1,000 for a phone [sure millions are buying]. The major down-projection of iPhone X sales is a testament that others are rising even as Apple innovates only incrementally.
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