The simple truth is that more and more Smartphone buyers are choosing legacy models, like the iPhone 4s, versus paying the premium for the iPhone 5, And while this does drive down ASP’s and profits, the fact that consumers are choosing a old model of the iPhone over a new model Android, say much for Apple’s brand appeal.
And then there’s the iPad mini. There’s no doubt that this product had a negative impact on sales of the ten-incher, “hurting” profits and ASP’s at the same time. I’ll let Tim Cook answer that one. From All things D:
“ ‘I see cannibalization as a huge opportunity for us,’ Cook said Wednesday. ‘Our core philosophy is to never fear cannibalization. If we don’t do it, someone else will. We know that iPhone has cannibalized some of our iPod business…’ “
Think about that last part for a second before we go on: Can you imagine Steve Jobs shelving the iPhone because of the dominant position of the iPod in 2006? Cook continues:
We know that iPad will cannibalize some Macs. But that’s not a concern. On iPad in particular, we have the mother of all opportunities because the Windows market is much, much larger than the Mac market. It is clear that it is already cannibalizing some. I still believe the tablet market will be larger than the PC market at some point. You can see by the growth in tablets and pressure on PCs that those lines are beginning to converge.”
Foolish bottom line: Apple will kill it’s darlings, and it doesn’t get any more important than that
That’s it. The only reason that you need to own Apple forever.
You could fill a phone book with the names of companies and products that were killed by a competitive disruptor. And in many cases, the company that was disrupted and destroyed died in a valiant effort to protect it’s legacy business, even in the face of consumer demand shifting away.
Eventually, any great product or idea will get pushed to the side, disrupted and destroyed by something better, and Apple will happy do it to itself. After all, as Tim Cook said, if Apple won’t, the competition will. And my money is on Apple doing it either before the competition, or better.
The article The Only Reason You Need to Own Apple Forever originally appeared on Fool.com is written by Jason Hall.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.