Apple Has A Bright Future - Apple Inc. (NASDAQ:AAPL) | Seeking Alpha

Summary

iPhone's maturity

The growth trend clearly reveals the increasing level of iPhone's maturity, and suggests it will be more and more difficult to achieve further growth for Apple's most important product.

The very fact that the current talking point regarding iPhone's growth has centered on India shows just how much the product has matured over time. We are now at a stage where iPhone has 200,000+ POS, 40 SKUs, 7 different price points, and features so advanced that they increasingly over serve its user base. All of this is set in a mature smartphone environment where most of the growth in developed markets has been extracted, the Chinese economy is slowing down (Apple went from 81% sales growth in the year-ago quarter to an 11% decline in Q2 FY2016), and there are questions whether future growth in markets like India can even offset declines elsewhere.

Adding up to bad news, sales of the iPad and Mac are declining, the Apple Watch is only being established in the very young wearables market, and the healthy and growing services business doesn't quite fit AAPL's hardware narrative on Wall Street. Carl Icahn's exit from the stock then only underlines the current situation.

Apple has the right leadership and product strategy

Despite current problems with growth, I have confidence in Apple's leadership, strategy, and product pipeline. I understand it is unnerving when a corporation hits a bump, and tempting to call for an immediate solution and suggest actions like changing the leadership and/or strategy, engaging in large M&As, or being more like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), or Facebook (NASDAQ:FB) which seemingly introduce new products on a monthly basis. However, such thinking conveniently ignores several important facts:

• It has been Tim Cook's executive team and its focused, premium product approach that have led Apple to record sales and profits year after year. The context of the company's current problems points to product maturity, not issues within Apple.

• Apple's new products and services like Apple Watch, Apple Pay, and Apple Music are very successful in their respective categories and in absolute terms, but viewed as lackluster when compared to the blockbuster success of the iPhone - the most successful and profitable technology product of all time.

• The more experimental, broader, and open product development approach of the likes of Google and Amazon is attractive from the media's point of view, however, such a strategy often results in high-profile failures like Google Glass or Amazon Fire Phone. This would not be sustainable for Apple's premium brand and its key component - customer trust. At the end of the day, Apple's narrow product portfolio generates more profit than all FANG companies combined.

• Company's big ramp-up in R&D, hiring talent from the automotive industry, recent large real estate transactions, as well as various leaks strongly hint that Apple is working on a connected electric vehicle. As far as new product categories go, I don't think it can get any better than that.

• Apple's culture and focused product strategy is better suited for smaller acquisitions, targeting talent and technology that fit into the existing product plans.

I don't think that Apple needs a significant change in leadership and strategy.