Apple is going to go into a huge decline here. Iphone in 2019 is like PC industry in 2009.

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by panchilly


Smart phones are about 10 years behind desktop computers in terms of performance. Remember the first iphone in 2007? It was ~300mhz which was the speed of a pentium2 top-of-the-line desktop computer in 1997. If you look at the numbers you will find that this pattern roughly holds across many variables (memory capacity, gpu performance, cpu performance, etc.) . The first 1ghz CPUs arrived in 2000. First 1ghz smart phone? 2010.

1997->2007 was a period of rapid increases in desktop and laptop capability. Because of the huge speed gains, people rushed to upgrade every 2-3 years triggering huge sales and a boom for many companies like Dell, HP, etc. replacement cycles were very short in this time period. In 1997 it might have been as low as 2 years! This hugely inflated sales numbers.

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2007 and 2008 were turning point years for desktop computers. It was clear then that the pace of improvement had slowed way down.

Over time the replacement cycle steadily increased. This really became noticeable in the late 00’s around 2009-2010. Computer capability simply was not getting that much better every year by then so replacement cycles skyrocketed. People started holding on to desktops and laptops for 5+ years. This caused the industry to go into decline in 2011 and only recently came out of that.

I believe 2017 and 2018 were turning point years for smart phones. My personal phone (an iphone) was built in 2017 and I really have no plans to upgrade near term. How much better is the new one over a 2017 model? 20%? Is that worth $1000? I used to upgrade my phone yearly.

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I think the 10 year difference will hold here. Replacement cycles are going to start skyrocketing and the industry will go into decline for a while just as the PC industry did.

Buying apple here is like buying DELL or HP back in 2009 but without the upside of selling to the corporate and server markets. Dell at least could sell servers to the booming web services economy. Apple is purely consumer.

I suspect Apple is trying to stave off this decline by jacking up prices which they have done in the past year. This might back fire triggering an even faster spike in replacement cycles.

Apple could easily fall another 50% from where we are today. Steer the hell away from this name.


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