3 Reasons Why John Gruber Knows Apple Bears Are Wrong
A well-known tech industry commentator offers thoughtful responses to several widely used Apple (NASDAQ:AAPL) bear arguments. On his Daring Fireball blog, John Gruber outlines and refutes three common arguments that analysts with a bearish perspective on Apple stock have used to repeatedly predict the Cupertino-based company’s inevitable decline.
1. ‘Good Enough’ Beats Superior Design
As summarized by Gruber, the first argument states that, “Superior design doesn’t matter in the long run, the mobile market will be commoditized by ‘good enough’ competitors.” As noted by Stratechery’s Ben Thompson, renowned business professor Clayton Christensen seems to subscribe to this view. Christensen believes that Apple’s integrated product approach to its mobile devices is unsustainable since “modular products,” like Apple’s Android-based competitors, will eventually become “good enough” to eat away at Apple’s high-end market share.
Christensen cites the aircraft, software, and medical device industries as examples of where this type of market disruption has previously occurred. However, as noted by Thompson, Apple’s mobile devices are not primarily purchased by businesses that have a strong cost-benefit interest. Instead, Apple is selling its devices to “irrational” consumers that are willing to pay a premium for a superior user experience. Although Christensen’s theory works well in markets where businesses make most of the buying decisions, it doesn’t apply to markets driven by consumers who are see value in ‘fashion, style, and design.”