Apple Inc.: AAPL Is Losing Its High-End Mojo

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It’s becoming a cliché to say something in the line of, “Apple Inc. (AAPL) is going through a rough patch.” I mean, if I were an editor at any financial news publication, I’d strike out anything along that line, thinking, “Who doesn’t know that by now?”

Apple Inc.: AAPL Is Losing Its High-End Mojo

Source: via Apple

And from the look of things in recent years, I want to make a bold statement: “Apple is looking like a more successful version of Yahoo! Inc. (YHOO).”

Don’t get me wrong, I love AAPL and I have talked about reasons why Apple is undervalued at current levels. But let’s face it, Apple has been less innovative since Steve Jobs passed away.

AAPL’s Best Days Over?

Since the death of Jobs, Apple hasn’t launched any new notable product. We’ve only been treated to a series of incremental improvements. Other than that, all we hear is rumors of what could be the next big product.

Here’s why I made the statement about Apple looking like a more successful version of Yahoo. At one time, Yahoo was the poster child of the internet. It was the first place people would go to search. However, without innovating, it quickly lost to Google — now Alphabet Inc (GOOG, GOOGL).

In the same vein, Apple was once everything an innovative company could want to be. But with a famine of innovation since Steve Jobs passed, Apple stock seems to be losing to Silicon Valley competitors including Facebook Inc (FB), Alphabet and Amazon.com, Inc. (AMZN).

It’s not that the current management at Apple is not good. The problem with AAPL is that it has lost its ‘founder factor.’ If you look at all the companies I mentioned above and most other highly innovative companies you know, you’d find that the founders are still actively involved. They’re usually the most important innovation engine. They are the ones who bring the (sometimes seemingly) impossible ideas that can change the world.

Apple just doesn’t have that anymore.

Moves in India Prove Apple Is Losing Innovation

News broke earlier this month that Apple’s plan to sell refurbished iPhones in India is all but off.

Yes, AAPL started selling refurbished iPhones in 2007, when Jobs was still around. However, you won’t even find iPhones on the list of the refurbished products it sells. Moreover, ‘refurbished’, as a word, doesn’t even appear in its annual reports. That means it has been an insignificant thing.

But with AAPL trying to sell refurbished iPhones in India, it looks like refurbished sales will no longer be insignificant.

And that is the ultimate sign that the innovative edge is lost.

We all know Steve Jobs’ company as one that targets the high-end market, and that worked because of first-class innovation. There was no shortage of luxury to sell to the (near) affluent.

If Apple stock were as innovative now as in Steve Jobs’ days, there wouldn’t be a need for such a move as using refurbished iPhones to gain market share in India. And with most emerging markets being like India — their middle class can’t afford new iPhones — I won’t be surprised if Apple is actively targeting growth in those markets through refurbs.

Apple Is Becoming Mass Market

The truth is, if Apple can’t find a way to regain its innovative edge, which makes it easy for it to target the high-end market, it will eventually have to target the mass market for growth.

It is already happening, as we’re seeing with India. But we could see this extend far and wide.

While I believe AAPL is still undervalued and a buy, investors need to stop valuing Apple as if it were still run by Steve Jobs.

As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/aapl-apple-stock-innovation/.

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