Is Apple (AAPL) Past its Prime?

December 16, 2011 8:52 AM EST
When will Apple start sinking?

We've already seen the meltdown of Nokia (NYSE: NOK) and Research In Motion (Nasdaq: RIMM) - once, both titans of their game.

Nokia took the portable mobile device share after the passing of Motorola's (NYSE: MMI) RAZR series devices broke new ground. Something happened though. Consumers started to get antsy, looking for a new product, just as they had when Motorola's novelty wore off. Apple (Nasdaq: AAPL) answered the call, with it's iPhone, and modifications to the iPad. Then, Nokia began to crumble. After a peak of $42.22 in late 2007, consumers began to switch, and Nokia started its descent. No investor relief came until March 2009, when the stock bottomed in the mid-$8 range.

RIM caught a little gust of wind in 2008, after some weakness in late 2007, peaking at $148.13 in mid-2008. RIM fell harder, dropping over 110 points to $35 in about 6 months.

Now, Apple was up near the $200 mark in 2007 as well, and into 2008 ahead of the financial crisis. Shares then sank to the $70 - $80 range, and then shot up, more than quadrupling over a year-and-a-half to $426.70.

But, how much more does Apple have left? Points for include: hardware quality, design appeal, apps, iTunes, and iCloud. Points against include: perpetually the same design, too much control for developers, expense.

Of the latter, expense doesn't seem to be playing into things too much. Apple folks generally allocate a certain amount of their resources for Apple products. Really, though, how long can Apple stretch out iPhone remakes? To 7, 8, 10, or 20? The iPad 17?

Will people also pay a premium for an Apple TV? For most, a TV is a big commitment, and current models offer 3D viewing, a few pairs of free 3D glasses, Internet already on the TV, and picture anti-retention and balancing technology good enough to run a space shuttle. People can also hook up their MacBook, iPod, iPad and other Apple computers to their TV already, why shell out more for something you already have (or that a $20 to $40 connector would allow you to have)?

Of course, Google's (Nasdaq: GOOG) Android has dominated smartphone OS growth over the last 12 to 18 months. Apple's iOS has also seen impressive growth for being offered only on a limited amount of devices. But the kicker is that Microsoft (Nasdaq: MSFT) and Nokia might be making strong moves in the up-and-coming months.

Why? Well, Nokia is committed to using Microsoft's Windows Phone Mango 7.5. The recent release of Nokia's Lumia 710 and 800 also give it something that Apple doesn't have or at least have a lot of yet...emerging market exposure for a smartphone. At an expected price of $49.99 in the U.S., and probably lower elsewhere, Nokia is getting exposure to the 800-million-plus user base in India.

For it's part, Apple's iPhone is available in China, and working on getting deals with as many carriers as possible. But China, with it's low trademark and copyright restrictions, isn't exactly the primary market to be aiming for now. Remember the near-flawless Apple store knockoffs earlier in 2011? Apple's going to need a lower-priced option available in different markets until consumer buying power increases globally.

Also, on China, a DailyTech article today pretty much pointed out that networks in China cannot "fully" support Apple's iPhone and iPad. China Mobile's (NYSE: CHL) network is TD-SCDMA, which is not as compatible with the iPhone and iPads setup. DailyTech also cites a Reuters article in saying that only about 10 percent of China's some 1 billion subs fully utilize 3G connectivity for Internet browsing and media.

Right now, Apple is a solid investment, no one can doubt that. Shares have constantly defied logic, even in the worst market conditions, as they continued to either stay flat or move higher on the bloodiest of sessions. Apple's massive cash hoard and unbelievable revenue and earnings growth have given investors comfort in these tough times.

At about $381, the stock is realistically only 10 percent to 11 percent off all-time highs. Investors should still be careful, though.

Remember when no one thought RIM or Nokia were untouchable?

Apple is up about 0.4 percent pre-market Friday.

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