Question: Will Apple TV and the iPad Mini propel AAPL to $1,000 per share?

Bear's Response
As the fall approaches, fanatics for anything and everything Apple (Nasdaq:AAPL) can hardly contain their excitement over the reported releases of the next generation of Apple products. A number of sources peg late September as the period in which the company will unveil the newest version of its popular iPhone franchise via the iPhone 5. Others are suggesting that Apple will take it even further and release iTV, which is thought to revolutionize the way that consumers watch television.

At this point, Apple enthusiasts will happily snap up any related products that restrict use to Apple's tightly controlled ecosystem of hardware, software and outside app development community. There is even talk that a "mini" version of the iPad tablet is in the works. All of that is fine and dandy but that doesn't mean Apple's stock price will reach $1,000 anytime soon.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

There is little denying Apple's success in inventing or simply improving tech gadgets that consumers had little idea that they ever needed. To date, few rivals have been able to supplant Apple's incredible success in the music, mobile phone and tablet arenas. The only competitor to come close in the smartphone market is Korean conglomerate Samsung, though it was recently embarrassed in a court ruling that said it had to pay Apple $1 billion in damages for infringing on Apple's patents. However, there is huge potential downside in its business model.

SEE: Apple Vs. Samsung: Q&A With Scott Freeze

The key concern with continued rosy predictions is the rapidness in which the technology industry evolves and shifts. The best examples of how an industry highflyer turns into a has-been stems from Apple's main rivals. Foremost, Nokia (NYSE:NOK) controlled close to half of the global cell phone market just a few years ago. Its share has fallen precipitously and has dipped below 20% so far in 2012. Its share of the smartphone market, which is seen as the only cell phone market that still matters, is now in the single digits.

SEE: 3 Ways To Indirectly Invest In Apple

Motorola controlled more than 20% of the market back in 2006 but was recently snapped up by Google (Nasdaq:GOOG), primarily because of its fall from industry grace. Research in Motion's (Nasda:RIMM) Blackberry devices are fighting for survival and could be snapped up by Microsoft (Nasdaq:MSFT), or another player similar to it or Google that would like to maintain major influence on the software side of the market. Dell (Nasdaq:DELL) and Hewlett-Packard (NYSE:HPQ) are fighting against a potential major consumer shift away from computers to more convenient tablets and smartphones.

Apple fans will try to suggest that the concerns of its major rivals are due in good part to Apple's stunning success. This is definitely an argument, but also speaks to how quickly competition can turn the industry on its head in just a couple of years. Additionally, the former Motorola dominance was supplanted by Nokia, which was only recently taken over by Apple. In the case of Apple, I have a feeling everyone is getting ahead of themselves.

SEE: How To Trade The Smartphone Craze

The Bottom Line
Already, there are plenty of tablet and smartphone offerings that basically perform the same tasks as Apple devices for a couple hundred dollars less. These products could cut Apple's profit margins drastically, and could also start to favor Nokia and other rivals with large international distribution networks. It may take time, but there is a high likelihood that Apple's industry dominance will not last forever.

At the time of writing, Ryan C. Fuhrmann was long shares of Microsoft and HP but did not own shares in any other company mentioned in this article.

Don't forget to read the Bull Side of this debate and weigh in with your opinion below.

Related Articles
  1. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  2. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  3. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  4. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  5. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  6. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  7. Professionals

    How to Protect Your Portfolio from a Market Crash

    Although market crashes are usually bad news for your portfolio, there are several ways to minimize losses or even profit outright from market movement.
  8. Stock Analysis

    What Will HP's Split Do to Its Stock?

    Read about Hewlett-Packard Enterprises, a new spinoff company from Hewlett-Packard. Understand how the two companies will focus on different markets.
  9. Investing Basics

    Learn How to Trade Semiconductor Stocks in 4 Steps

    The enormously diverse semiconductor industry requires market players looking for exposure have specialized knowledge.
  10. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!