Last week, on its yearly Worldwide Developer Conference, Apple finally presented an entirely new device – the Apple Vision Pro. It was the first new product presentation since 2016, when Apple introduced the wireless AirPods. Others say since 2015 (Apple Watch), as the AirPods are “only an accessory” and unusable solely on their own. No matter since when, the question to answer is: Will the Apple Vision Pro propel Apple’s stock into new dimensions? Or is there maybe even an unconventional way to benefit from this new product as an investor?
Summary and key takeaways from today’s Weekly
– From time to time, you hear news that a first-version, factory-sealed iPhone was sold for a new record price. Also old Macs (from the 1970s or 1980s) sometimes change hands for unbelievable sums.
– The key is that Apple is not just a hardware company, but a platform company.
– Those devices that changed the world in one form or the other (even if they are barely useable today), have the chance to be lucrative multi-bagger investments. I can imagine the new Apple Vision Pro to do the same.
Note: I myself am a convinced user of several (not all!) Apple products. After having used Windows (starting with MS-DOS and Win98) plus Linux as computer OS’s, Dell, HP, Lenovo and Acer as computer hardware and at least two of each Nokia, Samsung as well as BlackBerry cell- and smartphones, I have found my place in Apple’s universe. Hence, I may be biased as a fan (not fanboy!).
There it was.
The most eagerly awaited new product launch since the Apple Watch eight years ago in 2015 – as most voices say, “finally”. It has been rumored and highly expected for years, having put pressure on Apple (ISIN: US0378331005, Ticker: AAPL) for years to come out with “the next big thing” – despite still having grown, at least until the recent economic slowdown.
The Cupertino-based company was criticized for being a laggard, but now finally delivered a potentially life-changing device – but, did they deliver?
With a jaw-dropping US-price of 3,499 USD (likely more than 4,000 EUR inclusive of all taxes), it is rather unlikely to become the “next iPhone” – still the by far biggest sales generator for Apple. At least not from the scratch.
Among the first reactions were some like no-one will buy these “electronic diving goggles”. I can remember similar statements when the AirPods were released, having been ridiculed as being tooth-brush heads put into the ears. Today, you see several people a day wearing a pair in their ears. And you immediately recognize them, especially compared to other brands.
I can also remember the same having been said about the Apple Watch. No one would wear them. Today, Apple sells more Apple Watches than the entire Swiss watch industry. The same with the iPad. Who needs such a thing when there are computers and smartphones? To be honest, for me iPads don’t have a useful everyday value, either, but they’re undoubtedly successfully sold computer hardware.
The first thoughts as to the stock of Apple were of course, whether this new product would be able to deliver meaningful revenue growth to the entire company? Or would it cannibalize some of the existing computer hardware? Maybe it could also become a flop or stay only a niche-product due to its seemingly lofty price?
Or it could be already baked into the stock as it sits at a fresh new all-time high above 180 USD at the time of writing this Weekly. Having a lofty earnings multiple of 30x is no walk in the park, either, is it? More growth is already priced in, that’s safe to say.
All the above may be true or not.
But it has led me to look at it from a completely different angle. Maybe it could be wise(r) to buy such a pair of goggles as a long-term buy and hold investment? I mean in physical form and leaving it factory-sealed in its box?
Well, you certainly have heard of the first iPhone – originally sealed – having been sold a few months ago at an auction for an unbelievable price of more than 60k USD! Unbelievable, because you would have achieved 2x the return on your investment compared to the stock of Apple!
In today’s Weekly, we are going to have a look back at some lucrative buy and hold investments of physical Apple products. Maybe history doesn’t repeat, but it could rhyme with the Apple Vision Pro?
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Apple’s stock: Not the only successful investment
Everyone knows that Apple’s stock was a once in lifetime success story.
Despite not being entirely the most successful stock investment of the last 25 years (see my article: Have you missed the best stock of the last 25 years? Here’s a second chance! – see here), there is no question that a buy and hold investment a quarter-century ago – although highly risky and speculative at the time, as Apple was on the verge of bankruptcy – would have been life changing.
Below, you see the stock of Apple.
Marked is the introduction of the first iPhone during the MacWorld in January 2007 (presented on 9 January 2007, started to sell in June 2007 in the US, however, Apple’s stock was already 30% higher by then):
A simple, back-the-envelope calculation:
From 3.38 USD to 183.79 USD is a price return of 5,337% or a 54-bagger.
On top come dividends, slightly more than a split-adjusted 7 USD per share since 2007 or already more than 2x the initial investment (dividends restarted in 2012 after a pause since 1995, see Apple’s dividend history here).
Anyway, lucrative by any means for those who bought and held.
But what about the first iPhone?
I mean, if you bought the very-first iPhone and let it factory-sealed until today? Maybe you have heard of a recent auction, where such an iPhone was sold for a mouth-watering 63,356 USD in the first quarter of this year?
It cannot be compared 100%, as the first iPhone back then could not have been bought on an isolated basis, requiring a carrier contract, bringing additional costs.
But, as presented, the smartphone did cost 399 USD for the 4 GB model (that was the internal storage, not the RAM!), respectively 499 USD for the 8 GB model. Using the 499 USD for our calculation, we arrive at a price return of even 125,95% – the 100-bagger everyone hopes to achieve once in his / her life.
Not bad for a device that would be nearly useless today, isn’t it?
It had features like – of course – the touchscreen, one 2MP rear-camera, 4 or 8 GB of internal storage, a nice 2G connection (try to open a website today with that), Bluetooth 2.0, WiFi 802.11g (would be 3.0, today), no App Store (only what was pre-installed) and it couldn’t even take videos (being limited by software)!
However, collectors are seemingly ready to pay wonderful prices.
Or in other words: Had you bought the original iPhone back then, you could have made – hypothetically – double the return compared to Apple’s stock. The 100-bagger everyone wants to have.
The interesting story of the owner: Karen Green, a business woman, already had enough phones and carrier contracts, so she put it in her drawer and left it there. In 2019, during a TV show, the phone was estimated to have a selling price of around 5,000 USD.
Even bought at this price, it would have been more than a ten-bagger.
Was this just luck?
Prior, there were already auctions achieving prices of 35,000 USD or 40,000 USD. But this here is insane. Please note, that it is only with the very first iPhone. At least I could not find any comparable success stories of the succeeding models. Not even a sale of a factory-sealed 3G iPhone (the second gen).
Maybe the iPhone 4S from 2011 will one day be a good pick as it is the last iPhone Steve Jobs presented before he died a few months later? Who knows…
But what about other Apple products? There are indeed more such precedents.
I did a search for the first iPad (introduced in 2010) that was by no means as comparable a success story as the iPhone. The starting price was 499 USD.
My search engine didn’t give me any useful results. On eBay, there is just one active offer from Australia, however, not for a 50x price or so compared to what it did initially cost – just a nearly 3x:
Also, if we search for sold items on eBay, there is just one result:
A 5-bagger, okay. Not quite. This is the most expensive 3G model with max storage and not the base model. However, a nice 3x profit or so, nonetheless.
Maybe in 5 to 10 years will there be higher prices? I am not so sure. To be honest, I even doubt that for the foreseeable future there will be 10- or even 20-baggers seen in sold first gen iPads.
Although having even a way better market position in its niche / sector (market share of 35%, prior also close to 50%; see here) than the iPhone (around 20% market share), it hasn’t been such a life-changing product like the iPhone.
Rather more like an add-on.
So, let’s have a look at older devices.
Take for example older Mac computers – chunky machines that are not able to do anything substantial measured by today’s standards. Here is an auction from 2013:
Or just one year later:
There have also been more recent examples, as the above are already a decade old:
As far as I can tell, the 2014 auction (905,000 USD) has so far been the record for an Apple computer.
Why do people pay such prices?
It has nothing to do with what these machines are able to do (or not). It is nostalgia, computer history and the search for uncommon devices that are limited in quantity.
I find it hard to argue with logic at this point. Collectors sometimes also discover certain items only later. Take for example a Porsche 996. It was a car laughed at as being ugly and having lost the true soul and spirit of Porsche.
In Germany, it was mocked up as having lights that look like “fried eggs”.
As the older models became too expensive, suddenly this “failure” became a target for collectors. If you’re interested, then have a look for such one in a good condition for an affordable price.
No one knows what will be a great collector’s item years in advance.
This brings us to the Apple Vision Pro – will it be a collector’s item?
A look at the Apple Vision Pro as an investment
Just from the beginning: I don’t know and cannot know for sure, whether this will be a multi-bagger investment if bought and left factory-sealed. It may work out or not, there are valid reasons for both outcomes.
At least, I think it won’t be a loss, as a few years later there will likely be some hardcore fan-collector willing to pay at least the original price, maybe plus inflation. Apple’s die-hard fans are not to be underestimated. But there are a few good hints that this could indeed be a more lucrative investment than for example the first iPad.
And also than Apple’s stock as I realistically lack the imagination to see another ten-bagger (inflation-adjusted, who knows what money will be worth next decade…).
Why shouldn’t the Apple Vision Pro be sold for 35,000 USD sometime in the 2030s? Or for 50,000 USD in the 2040s? 100,000 USD in the 2050s?
This is just a guess, but in the following I am trying to explain why this could well be the case. I think it is crucial to understand what this devise is for. And that it is not just going to be “another devise”.
Apple is not just a hardware or devise-making company!
Many fail to understand this, even until today. Instead, Apple leverages the disciplines of hardware, electronics, software and services into a platform to form various computing variations:
- The Macintosh in 1984 brought the era of graphical user interfaces (GUIs). It did cost even 6,000 USD back then on an inflation-adjusted basis.
- The iPod at the beginning of the 2000s brought the era of digital music that “fits into your pocket”.
- The iPhone in 2007 brought the era of mobile computing (touchscreen, app ecosystem) and also popularized the point and shoot camera you are always having with you.
- The iPad in 2010, the Apple Watch in 2015 and the AirPods in 2016 all also brought new use cases and consumer patterns.
And all had in common that they were laughed at in the beginning.
While other competitor’s goggle-devices are mostly build for fun and gaming, the Apple Vision Pro seems to not only be way more sophisticating from a technical perspective (and optically more elegant), but I can even imagine it creating a whole new niche, respectively a whole new market segment.
And this is likely the goal. Let me explain.
“Spatial computing” or also “3D computing” are the key phrases you should warm up for (even if you’re not going to be a user of the first hour).
The Apple Vision Pro is likely not “just another VR / AR headset” on a standalone basis. It could well be the beginning of a new era of computing – to understand Apple, you have to think in platforms, not single devices.
It is estimated that Apple invested 15 bn. USD in the research and development of this product. I also read that just the bill of materials (costs of the single parts) brings costs of 1,500–2,000 USD per device. Inclusive of production and logistics, there is a chance, due to the lack of scale, that maybe the total cost per device reaches 3,000 USD, not offering any meaningful margin (by Apple’s standards).
Apple itself said on the presentation that it filed 5,000 patents to protect this new technology.
Are these typical hallmarks of “just another device”?
The – at the moment – funny-looking goggle (until more and more wear and use it) will feature a three-dimensional user interface, blending the reality in front of and around you with virtual elements on an own, newly created operating system.
See the screenshots for a first impression (if interested, also go to the linked Apple page for more shots and also videos).
I also found Rene Ritchie’s discussion with his guest interesting (see here).
Steering will be via the user’s eyes movement (eye tracking), hand gestures and / or voice commands. Compared to competitors, there won’t be any controllers or “joysticks” needed, as if you were still in a game – purely natural hand-gestures, enabling the user’s hands to be free all the time, certainly allowing for a more comfortable, but also more flexible use.
But the Vision Pro can also be connected to a Mac (think of strengthening the ecosystem) and controlled via the wireless mouse, keyboard and / or trackpad, creating a nearly unlimited visual workspace.
As with all Apple products, I expect a seamless integration and interaction with its other devices. A smooth and intuitive user experience is at the forefront of all products.
An add-on to the platform – not simply another devise.
There were also shown more free-time features like watching movies on a virtual, size-adjustable cinema-like screen right in front of you. Also FaceTime video-calls with big holograms or watching huge panorama photos directly in front of you.
And so on.
And it looks freaky-nerdy. But have you – honestly – thought 20 years ago that some day people would be stumbling around like zombies, looking down onto their screens with headphones in their ears instead of looking what’s in front of them? Isn’t this already a prelude to “being in a world of one’s own”?
I think the problem is, this looks and sounds a bit strange today.
There will also definitely be problems, issues and negatives that Apple was (understandably) not too hot to talk about – or to present them in this way. For example, first testers reported that the device is rather front-weighted, meaning it could cause neck problems, if used for a longer period of time.
Another question is: Will this be socially isolating, even dystopian? The latter can also be said about the internet and smartphones. Think of people sitting in a restaurant and looking at their screens. For me, this won’t be a goggle-exclusive “feature”.
Also, the battery life of 2 hours is not long, despite its high efficiency for the work-intensive processes this machine has to handle. The chips inside digest signals eight times faster than the blink of an eye on screens that have a multiple-times higher resolution than a 4K screen – for each eye.
In the end, we will have to wait and see until this devise comes out early next year. First real-world tests will be made. And Apple has time until then to fine-tune one or the other point.
Also, there will be lots of skepticism and fun-making about it. I am sure this will be the case, as was prior, too. My guess is, the Apple Vision Pro will first get traction in the enterprise world for professional work (virtual working environments). As soon as a lower-priced version arrives, I think then also a wider private-usage is possible.
There will also have to be made some improvements in weight, comfort, maybe also adding more features.
Keep in mind that the first iPhone was also not a hit for the broad masses, straight from the beginning. It was even criticized for lacking a physical keyboard. By the way, the first iPhone was said to be too expensive. Today, people are happy to fetch new iPhone Pros for up to nearly 1,600 USD (pre-tax; for the maxed-out 1 TB model).
It may well be the beginning of a new era, as soon as this mix of shock and doubt is overcome.
I don’t realistically think that Apple’s stock has the potential to multiply several times.
They are really big already and even a double would already be a great success, especially when you consider their valuation.
But chances can be found elsewhere.
If you’re interested in a potential multi-bagger stock, you should consider my latest report for my Premium PLUS members. The company is founder-led, has a decent net cash position on its balance sheet and a strong brand in a lucrative growing niche-market, it even created itself.
There are some temporary issues at the moment, but therein lies the chance.
From time to time, you hear news that a first-version, factory-sealed iPhone was sold for a new record price. Also old Macs (from the 1970s or 1980s) sometimes change hands for unbelievable sums.
The key is that Apple is not just a hardware company, but a platform company.
Those devices that changed the world in one form or the other (even if they are barely useable today), have the chance to be lucrative multi-bagger investments. I can imagine the new Apple Vision Pro to do the same.
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