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Apple Inc (AAPL): Quick Upgrade, or New Consumers?

Apple Inc (NASDAQ:AAPL) has lately been accelerating its launch schedules for new devices and updated versions of current devices, putting out a device, then an updated version about six months later, then a full upgrade about another six months later. That has been happening with iPhones, and there are rumors that this same schedule may apply with iPads and iPad Minis.

Apple Inc. (AAPL), Inc. (AMZN), Barnes & Noble Inc. (BKS)

But one Apple Inc (NASDAQ:AAPL) “fanboy” – a German venture capitalist – wrote a piece describing his rationale for not buying the new iPad Mini (which, by the way, only had partly to do with his already possessing an iPad), which does kind of lead to a new discussion topic – for all the investment Apple Inc (AAPL) makes in new devices, does it pay off in the long run with the fan base, or is it designed to reach new customers?

At the heart of this article is the basis of the discussion involving Apple Inc (AAPL) and its accelerated production schedules. The writer of this piece essentially said that while he likes the iPad Mini a lot, he is passing on this first edition and will wait for the next iteration because he expects improved technology and features. So for Apple, there is this debate – do you ramp up production investment costs every four to five months with the purpose to developing consistent sales of loyal customers who want the latest and greatest all the time, or do you do this in hopes of getting customers who would otherwise skip generations, like this writer?

As this writer may be demonstrating, Apple Inc (NASDAQ:AAPL) spends a lot of capital with every new product launch, and it might be sacrificing some sales with every launch because some customers (or potential customers) stay on the sidelines and skip generations of devices. But do the total sales over a two-cycle production calendar (say, the iPhone 4 and 4S cycle, for example) present better numbers than a single-cycle schedule? Does the two-cycle schedule suppress loyal customer sales and promote enough new customers to offset any suppression?

What do you think? If you were CEO of Apple Inc (NASDAQ:AAPL) and were in the position to make the call, which way would you go? Which way would affect profits more, in your view? How would you see this cycle if you were an investor like billionaire Julian Robertson of Tiger Management? We’d like your comments!

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