For technology investors, companies like Apple Inc. (NASDAQ:AAPL) which lead the sector (and technically, the world) in valuation are often the first to be analyzed by investors looking to build a long-term stable base. Apple is one of the companies I remain very bullish on, but is one which has encountered a significant amount of doubt among many who question the ability of the technology giant to continue its unparalleled track record of growth and innovation in a highly competitive space.
The company’s iOS operating system and product ecosystem is one of the biggest pieces of the durable competitive advantage for Apple. The company’s ecosystem of Apple products has allowed for a world-class set of products which Apple has found creative ways of innovating around. Switching costs to move from Apple products elsewhere create what many consider to be a reasonably robust moat.
That being said, Apple remains reliant on hardware sales and its ability to continue to charge its customers a premium for such goods. The upgrades required have increased in scale and scope, begging the question for the company’s innovation department – when will phones and other hardware segments peak in terms of product innovation?
Ancillary products such as AirPods and HomePod provide additional revenue streams for the company while improving the company’s network effect and increasing switching costs for consumers looking for new and innovative ways of using Apple hardware products.
All told, Apple remains a leader in innovation in many technology segments, and will need to continue to pick new segments to innovate and grow in. The company’s team appears to be able and ready to do so, and I remain confidently on board.
Invest wisely, my friends.
Tech Insider
