Many iconic long-term investors such as Warren Buffett have made a name for themselves by choosing companies with durable competitive advantages which have outperformed for long periods of time, particularly those operating in industries with high barriers to entry, or a large moat, preventing new entrants from taking over market share or disrupting business as usual for such firms.
In the curious case of Apple Inc. (NASDAQ:AAPL), now one of Buffett’s largest holdings, one might be interested in understanding why the "Oracle of Omaha" has made such a large investment in the largest company in the U.S., given the intensity of competition within the smartphone and electronic devices sectors as well as the relatively global game Apple is playing with some pretty demonstrative foes.
The brand value and customer loyalty Apple provides investors with is indeed a small moat in and of itself; Apple customers are among the most loyal in this space, and this is a trend which is unlikely to be bucked for some time. Where the real value lies, however, for investors looking for a "moat" with Apple is in switching costs related to the company’s iOS platform of products.
The company has done an excellent job of creating a product ecosystem in which Apple products rely on each other and/or work better within an iOS world, providing consumers (and, hence, investors) with a reason to stay entirely Apple.
Invest wisely, my friends.
Tech Insider
