Apple Stock: The Next 10 Years of Apple iPhone

Apple StockIs There an iPhone in 2027?

During the last decade, Apple Inc. (NASDAQ:AAPL) became the most valuable company in the world. AAPL was already a juggernaut at that time, but its release of the “iPhone” took Apple stock price to untold heights. It confounded expectations, growing more than eight times in value during the previous 10 years. Now with the iPhone 8 release date around the corner, investors are wondering what will happen to Apple stock in the next 10 years.

For instance, will smartphones even exist in 2027? Some people think not. Some people think the future belongs to the “Amazon Echo”–not the next Apple iPhone.

Who can blame them? The MIT Technology Review declared voice-controlled speakers a “breakthrough technology” that is “here to stay.” (Source: “In 2016, AI Home Assistants Won Our Hearts,” MIT Technology Review, December 20, 2016.)

Plus, analysts believe that the number of active voice-controlled devices will double this year. If that weren’t bad enough, Amazon is utterly crushing the competition. It controls 70% of the market).

According to the New Scientist, 100,000 people say “good morning” to Amazon’s voice-control device every day. It is becoming part of daily life. (Source: “How we fell in love with our voice-activated home assistants,” New Scientist, December 14, 2016.)

Why, though? Smartphones are beloved. People stare at their smartphones constantly. What would convince people to give up their smartphones?

Simple: Talking is more natural than typing.

As a species, we started talking before we graduated to writing. The same is true for individuals. I’ve never seen a young kid type out the words “Mom” or “Dad” on a tablet. But I have seen a child say “Mom” and “Dad.” That’s because speech is deeply wired in all of us.

With that in mind, it seems perfectly rational that iPhones are only a stopover on the road to “talking computers.” It’s also rational to assume that Amazon can win this market. The proof is in the numbers.

Amazon’s only competition is Alphabet Inc (NASDAQ:GOOG), and they can only muster 23.8% market share. So let’s do the math:

“Talking Computer” Market Share

Amazon.com, Inc. ~70%
Google (owned by Alphabet Inc) ~24%
Other ~6%

In other words, Apple is not even in Amazon’s rearview mirror. It doesn’t register at all, which is particularly dangerous because Amazon and Google are not BlackBerry Ltd (NASDAQ:BBRY) (formerly Research in Motion). They won’t be caught unawares. They won’t go down without a fight.

iPhone History: How Apple Destroyed BlackBerry

Nevertheless, I wouldn’t say that Apple stock is doomed. It has one of the strongest brands on the planet, a rabid user base, and $215.0 billion in the bank. Plus it is at the top of the business food chain for a reason. You don’t get there without claiming a few scalps.

Also Read:

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Who Will Win in the Battle of Apple vs Microsoft

Since Apple’s most famous conquest is obviously BlackBerry, let’s recount that little tragedy.

Blackberry was the most famous smartphone maker in the world. More than 50% of smartphones sold in the world had its name on the front. Users were addicted to their little keyboards and airtight security. It made them a hit among the corporate class.

But in 2007, Steve Jobs went on stage to unveil the iPhone. He showed us a device that now seems obvious.

OF COURSE phones should be able to play music, videos, and apps. OF COURSE it should be beautifully designed. Of couse, of course, of course.

Except it wasn’t obvious to anyone at the time.

No one imagined that one device could do so many things. Even Mike Lazaridis, a co-founder of Research in Motion (RIM)iPhone, wondered, “How did they do that?” (Source: “BlackBerry’s Famous Last Words At 2007 iPhone Launch: ‘We’ll Be Fine’,” Forbes, May 26, 2015.)

Things only got worse from there. The other co-founder of RIM, Jim Balsillie, decided those iPhone sales were non-threatening. After all, iPhones had terrible battery life, poor security, and a god-awful keyboard. Until it didn’t, of course.

But by then it was too late.

Apple was gobbling up market share left and right. Meanwhile, RIM was scrambling to catch up as its share price plunged from $124.00 to $9.90. The contrast is amazing.

BBRY_AAPL stock chart

Chart Courtesy of StockCharts.com

The AAPL stock price shoots straight up and to the right after the iPhone is released. Meanwhile, the BBRY stock price plunges down and to the right. You can’t really put it in plainer terms than that, other than by saying the iPhone put BlackBerry in a body bag.

But what lesson do we take away from that?

Does it mean that AAPL stock is the horse you should back for the next 10 years? Or does it mean that no company is safe from disruption, regardless of how dominant they appear at the moment?

I think it is the latter. Nobody is safe, not even Apple stock in the next 10 years.

What’s Next for the iPhone?

That being said, let’s come back to 2017. Apple sold 50.76 million iPhones in the first three months of the year. In the first three months!

Better still, iPhone sales are poised for another surge.

You see, China is coming of age, and more wealth in the Middle Kingdom translates to more consumers buying American products. Some of that new money is bound to find its way into Apple’s pockets because iPhones are a status symbol in China.

(Then again iPhones are a status symbol everywhere.)

Officially, I put my 2027 Apple price prediction between $350 and $450. If that sounds high to you, understand that I didn’t pull these numbers from thin air.

I did a quick calculation based on 10% growth per year. That’s not a ludicrous assumption, yet it puts AAPL stock squarely within the estimate I laid out.

Compounding those returns over a decade shows that Apple can still multiply your wealth. It has an enormous cash pile and loyal followers. I’ve seen worse companies achieve more than 10% annual growth with fewer assets. So don’t pretend like it’s far-fetched that Apple stock can reach $450.

That is a conservative number. AAPL stock can breach that threshold in five years if things go its way. The company can theoretically improve Siri and release a competitive device in the voice-controlled market. Or it can become a TV network. Or it can get big on driverless cars.

The options are limitless for Apple, because it has a virtually unlimited amount of money. I remain more bullish on AMZN and GOOG, but make no mistake, I’m still bullish on the next 10 years of Apple stock price.