With just a quick glance at recent headlines it would be easy to conclude that Apple Inc. (NASDAQ:AAPL) is headed for trouble.
Rival Google Inc. (NASDAQ:GOOG, NASDAQ:GOOGL) is taking dead aim at Apple on one of the most exciting technology fronts, and now AAPL found a little egg on its face after a major glitch in the iPhone was discovered, forcing the company to update the smartphone’s software.
The Apple stock price, however, is hardly headed off a cliff. Indeed, current owners of AAPL stock have a great number of things that bode well for the near and not-so-near future.
Here are the top three reasons for continues bullishness (and bear in mind these are coming from a guy who can’t stand the “Apple can do no wrong” cult following AAPL has cultivated).
1. Apple continues to be mimicked rather than out-innovated.
Calling a spade a spade, this week’s unveiling of the newest version Google Wallet (now called Android Pay) could slow the growth Apple was enjoying with its Apple Pay, which launched in October of last year to mostly rave reviews.
The new Android-powered service performs similarly, with one upgrade — it handles loyalty/reward programs, whereas the current AAPL payment product doesn’t. When you throw in the fact that Android powers more smartphones than the Apple OS does, AAPL stock investors have reason for concern.
Still, the fact that Google upped the ante on mobile payments underscores a much more important idea regarding Apple products and services: Apple is the target other companies are aiming for, which can only mean it’s the leader/innovator to beat. Consumers notice who’s first and who’s not first to the party, and innately, these consumers remain impressed by companies that lead rather than follow.
2. Unable to beat them, competitors continue to join them.
For a long time, there were two computer markets: PCs and Macs. Macs, or Macintosh computers, were made by Apple for Apple software, and purposefully excluded outsiders’ hardware and software. PCs, conversely, were ultimately an International Business Machines Corp. (NYSE:IBM) invention cultivated by Microsoft Corporation (NASDAQ:MSFT) by encouraging other players to build hardware and design software to spread usage. At one point, the two worlds were certain they’d never meet, and that was fine by both.
While this mindset kept Apple in the distant background for a long time, the quality and popularity of Apple products has finally forced the PC world to play ball, so to speak.
Though the two companies had already been collaborating, the relationship between IBM and AAPL deepened this week when it was announced IBM would be buying Macs for in-house use by staffers who wanted to make the switch.
3. Apple continues to successfully cross boundaries.
While other companies have danced around the idea, Apple looks like it’s going to be the first outfit to successfully deliver broadcast network television programming (ABC, CBS, FOX, etc.) via the internet. Apple announced its intentions in March, and will reportedly launch the slimmed-down — and, for most consumers, less-expensive –– cable TV service this fall.
How did the company pull off this game-changing achievement? After all, the broadcast networks had shied away from the idea in the past. But the networks would rather work with AAPL than against it, and they likely knew it was only a matter of time before Apple merged broadcast and IPTV.
The thing is, this isn’t the first time or the last time Apple has crossed boundaries to create a whole new category of product. Remember the iPhone? When it debuted in 2007, there was no mainstream, consumer-oriented smartphone on the market. (Yes, there was the BlackBerry, but that was primarily used by businesspeople, and even then not a must-have device the way the iPhone is now.)
With a history of breakthrough innovations, we can reasonably expect more of the same in the future.
Bottom Line for AAPL Stock
In other words, investors who truly worried about a falling Apple stock price need not worry too much about recent developments from its competitors, or worry about another security gaffe with its iPhone. Although the company doesn’t actually have any sort of moat, it has such a wide lead in so many ways and in so many categories, its peers are still years behind it.
Throw in the fact that Apple has such strong brand loyalty — 87%, as measured by Kantar — it’s difficult to even imagine its competition closing some of that gap.
And again, this is from an observer who has no particular love for Apple products or AAPL stock.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.