Found in 2 comments on Hacker News
btilly · 2012-11-16 · Original thread
I would personally not buy their stock any time soon.

I keep meaning to write a blog entry on this. To understand my reasoning it helps to be familiar with The Innovator's Dilemma (see for the book). The basic assumption of that book (backed up with many examples in industries from ship technology to hard drives to backhoes) is that any technology that has a well-established value proposition will tend to show exponential improvement on that value proposition over time. Users needs also follow an exponential curve, but it tends to be slower than the technology improvement curve. (A lot slower.) Therefore if you have 2 technologies competing for that market, eventually the cheap crappy one will be good enough, and after that point hits it wins. The premium technology will always show great revenue curves even once their low-end users start switching, but those curves hide a great oncoming disaster.

In every market that Apple is in, it is the premium product. It has competitors. And its competitors have a pretty good sense of the value proposition that they need to deliver. Therefore every market line for Apple is doomed. They show no signs of having new ones to wow us with, so Apple has a world of hurt coming.

But, you may ask, why did they not have this problem historically? My answer is because Steve Jobs' genius lay in constantly finding and delivering new value propositions. He found and defined markets for pretty computers, light laptops, smartphones, and so on. The whole Innovator's Dilemma argument depends on competing on a known value proposition, and Jobs never sat still long enough for his competitors to do that.

Of course Jobs is now gone, and there is no sign that Apple has anyone who has that talent.

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