The winter holiday season is supposed to be a festive one, especially for those in the consumer retail sector. With millions of Americans eager to spend their hard-earned money, this is the best time for companies to get things right. So it’s a bitter pill to swallow that Apple Inc. (NASDAQ:AAPL) got a lump of coal in its stockings. Despite its status as one of the most trusted and popular brands, AAPL stock is taking a lot of heat for its core products.
According to Forbes, multiple users are complaining about the current generation iPhone 7 Plus.
Specifically, the in-phone camera is laced with bugs, resulting either in repairs at one of Apple’s “Genius bars,” or outright replacements. The problem also brings up ugly and recent memories of previous iPhone iterations suddenly shutting down despite significant battery power remaining.
Another issue that AAPL stock must face is the iWatch. Although there’s nothing wrong with it per say, it was criticized early on as an example of the company’s hubris. With its limited battery life and intra-proprietary charging cables, the iWatch is a glorified pain in the rear. Furthermore, Apple stock challengers — namely, Samsung (OTCMKTS:SSNLF) — offer a cheaper and arguably better alternative.
AAPL Slapped By the Supreme Court
But the biggest storm for Apple stock has got to be the recent decision handed down by the Supreme Court. According to InvestorPlace contributor Aaron Levitt’s excellent analysis, Samsung was initially found to be violating Apple’s design patent for the iPhone, which includes rounded corners and bezel framing. But the court’s unanimous decision essentially declared that patent-violating companies are only responsible for turning over profits made from the specific violations.
That potentially places AAPL stock in a precarious situation. Without the ability to differentiate themselves aesthetically, the technology firm is forced to give up a key marketing advantage. As Levitt notes, “Apple’s products aren’t the most high-tech or powerful (sorry, they’re not), but they are some of the best-designed out there.”
Because of the implications for the broader retail sector, Nike Inc (NYSE:NKE) and Tiffany & Co. (NYSE:TIF) sided with Apple. They have good reason to. Design is really the only element that quantifiably distinguishes these organizations from their respective competitors. Otherwise, a shoe is just a shoe, and a necklace is just a necklace.
Understandably, many investors and analysts have concerns with Apple stock. Although the overwhelming consensus for the tech giant is bullish, the inability to protect intellectual assets hurts big time. From what the Supreme Court has ruled, there’s really no point in going full-bore with research and development. Shrewd companies can bake in the legal penalties and outright copy Apple’s latest aesthetic innovations, knowing that their liabilities have a limit.
At that point, AAPL stock is at serious risk. According to conventional wisdom, innovation would simply cease. If a company can’t make money through its exclusive creativity, it will do so through other means. There might even be a stare down among rivals to see who would deliver the next advancement, only to later be copied.
Apple Stock Is Still in a Class of Its Own
While all these fears are justified, we have to keep in mind that Apple stock has never been a conventional investment.
This is a brand that has created a reputation for breaking the rules. Its unique brand of marketing resonates with people. Due to its solid foundation, buyers will continue to flock to Apple products, and Wall Street will continue lavishing praise upon AAPL stock.
You can’t argue with results. During this year’s record-breaking Singles Day shopping event by Alibaba Group Holding Ltd (NYSE:BABA), Apple was the most popular U.S. brand, beating out names like Nike and Skechers USA Inc (NYSE:SKX). It’s not easy for American firms to break into the Chinese markets, yet AAPL does it with ease.
But the one trump card that AAPL stock carries is this — they’re Apple and the others are not. The central irony is that while AAPL is making a huge fuss about design protections, there’s no one element that truly defines the organization. As an example, Sony Corp (ADR) (NYSE:SNE) for years has rallied its troops under various iterations of a “One Sony” synergy. In sharp contrast, AAPL stock doesn’t need the prefix.
The beauty of the Apple infrastructure is that everything is organically connected. While execution has at times not met the high standards the company has set for itself, this is a problem not unique to AAPL stock. And no matter what happens, Apple will always be synonymous with the smart device.
No legal judgment, not even from the highest court, can take that away from AAPL.
As of this writing, Josh Enomoto owned shares of SNE.