[aetherson]

The idea that Apple is going to "pivot" is fatuous.

Are they working on some non-phone products that they hope will be big? I'm sure they are.

Could they conceivably find that one of those products achieves massive traction and overshadows the iPhone (especially as the market for smartphones cools)? Sure, though I'd bet against it actually playing out like that.

Is Apple making a big planned play to radically deemphasize smartphone sales in a desperate gamble to become a car company? Of course they aren't.

Even if the smartphone market's high-water mark was 2015, Apple has a hugely successful, almost grotesquely profitable product that will -- assuming they don't do something absurd like pivot away from it -- be the source of incredible value for at least a decade and probably much more. On the back of the iPhone, Apple has grown to a market cap that -- even after recent losses, and despite a weirdly low P/E -- is massively higher than the combined market caps of the top five auto companies.

[cageface]

There are no guarantees that the iPhone will generate anything like the profits of the last several years indefinitely. There are a number of strong headwinds including the end of carrier subsidies, market saturation, a weak global economy, increasingly mature competition at much lower price points etc. I don't think they're in crisis but they do have a real problem on their hands.

Of course they have a lot of room to slash margins to compete so I'm not too pessimistic but the iPhone was really a once in a generation kind of product and I think they've taken most of the easy profits off the table already.

[aetherson]

Nothing is indefinite. And, basically, I agree with you. If 2015 wasn't the high water mark of the smartphone market, then some near-future year will be.

But smartphones are also clearly not going to crash and burn. Even if people don't replace them like clockwork every year or two years, there is going to be a healthy market for iPhones for a long, long time. There are still people without smartphones, there are still large markets with low Apple penetration, and they have an enormous install base and developer support -- and, as you say, positively absurd profits to cut into eventually.

Does Apple dream of another product that will be as big as the iPhone, but is yet in its infancy, with its growth ahead of it instead of behind? Well, of course they do. How could they not? Will they launch new products? Of course they will. Might one of them be a car? It might. If the stars align for Apple again, might we in ten years say that they are not the iPhone company, but rather the X company? Yes, that is possible.

But:

1. There is no possibility that Apple is planning to pivot in any meaningful sense of the word. "Pivot" does not mean "launch a new product and hope it takes off." Pivoting is simply not something that the most valuable company in the world does in the face of some cooling of demand. Pivoting is what desperate start-ups do.

2. If the leaders of Apple are basically cool-headed people who do not entirely buy some kind of superheroic mythology of what Apple is capable of, they are probably aware that the iPhone was a literally singularly successful product in the history of, like, the world, and that the odds that lightning will strike twice and they will have another product that successful or even more successful are lower than the odds of lightning literally striking the same person twice. It is possible that Steve Jobs was not a basically cool-headed person. I think that Apple's current leadership is.

3. And specifically, the product that makes us forget the iPhone just straight up can't be a car. There is just no demand for a car that can support an Apple-in-2015 type valuation, especially at iPhone-like profit margins, double-especially in a world in which autonomous cars makes any meaningful jump in the utilization of each car. And PS: approximately 0% of Apple's current employee base would be useful in Apple-as-a-car-company.

[petra]

I partially agree with your thesis, but:

>> There is just no demand for a car that can support an Apple-in-2015 type valuation

Assuming transportation is on demand and automated, the revenues of that industry will far eclipse the phone industry revenues. Add that with the fact that automated cars are really hard, brand might mean life and death(in the mind of people) and moving people in shared vehicles on-demand has pretty strong network effects - there's a possibility for a bigger business than the iPhone.

But from that to Apple winning that business ? that a low probability bet, so maybe pivot is the wrong word. But Apple can allow itself to try that bet, money is of almost no concern to them