Is Apple the New Kodak?

For over a decade, Apple has been synonymous with innovation. Its products have transformed industries, from the iPhone to the iPad, setting benchmarks for design and user experience. However, Apple now appears to be falling victim to inertia, much like Kodak did before its downfall. Could Apple, the former king of innovation, be heading down the same path?

Cognitive Inertia: A Risk of Repetition

Apple’s biggest obstacle might be cognitive inertia—the inability to change its thinking. Since the release of the iPhone X, Apple has stuck to the same design template. The latest iPhone 16 is no exception, featuring only minor tweaks, such as the addition of a single button and a slightly larger size. Despite these small improvements, the core design remains unchanged, making Apple's once-groundbreaking technology seem repetitive.

Steve Jobs once famously said, “Innovation distinguishes between a leader and a follower,” but Apple’s current strategy of focusing on refining old ideas rather than creating new ones feels more like following than leading. This is reminiscent of Kodak, which, despite inventing the digital camera, clung to its film business and failed to adapt to the digital revolution.

Product Inertia: The Vision Pro Misstep

Apple’s issues extend to product inertia—the failure to disrupt its own offerings before competitors do. A glaring example of this is the highly expensive Vision Pro, a virtual reality device introduced with much fanfare but largely absent from the public eye today. Vision Pro, marketed as the future of immersive experiences, has failed to resonate with consumers due to its prohibitive price tag, echoing Kodak’s inability to capitalize on the digital camera market it pioneered.

Vision Pro’s stumble raises questions about Apple's ability to maintain its innovative edge in the fast-evolving tech landscape. Is this Apple’s Kodak moment—a company unwilling to fully embrace the disruptive technologies of the future?

Market Inertia: Warren Buffett's Selloff

Perhaps the most telling sign of Apple’s vulnerability is Warren Buffett’s recent decision to significantly downsize his Apple holdings. Starting in the first quarter of 2024, Buffett sold 510 million Apple shares, which represented almost half of Berkshire Hathaway's Apple stake, in one of the most publicized selloffs by a famous investor in recent memory. This move reduced Berkshire’s stake from 905 million shares at the end of 2023 to about 400 million shares, lowering the value from $135.4 billion to $84.2 billion

Warren Buffett sells nearly half of Berkshire’s stake in Apple

Buffett has long praised Apple, calling it a "better business" than even his cherished Coca-Cola and American Express holdings. However, this massive selloff may indicate a growing concern about Apple's long-term prospects.

As Buffett himself famously said, “Only when the tide goes out do you discover who’s been swimming naked.” In this case, Apple’s over-reliance on incremental improvements could expose vulnerabilities as the market moves forward.

Learning from Kodak, BlackBerry, and Blockbuster

Apple’s trajectory shares unsettling parallels with companies like Kodak, BlackBerry, and Blockbuster, all of which failed to adapt to changing technologies. Kodak, despite inventing the digital camera, refused to pivot away from its profitable film business, while BlackBerry dismissed the importance of touchscreens in favor of its signature keyboard design. Similarly, Blockbuster underestimated the rise of streaming services, ultimately losing out to Netflix.

Apple’s focus on small, incremental improvements instead of true innovation could lead it down a similar path. Charles Darwin once said, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Apple must decide whether it will be the innovator of the future or cling to its past successes, much like Kodak did.

The Future of Innovation: Who Will Disrupt Apple?

Apple’s trillion-dollar valuation suggests strength, but the future is never certain. The tech landscape is rapidly evolving, and companies that rest on their laurels risk being overtaken by more agile competitors. Just as Apple once disrupted the smartphone market, someone else may be poised to disrupt Apple.

As Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.” Apple must return to its roots of creating products that people didn’t even know they wanted. Focusing on incremental improvements like those seen in the iPhone 16 won’t be enough to maintain its dominance.

Conclusion: Apple at a Crossroads

Apple’s reliance on small updates, such as those seen in the iPhone 16, and the failure of products like the Vision Pro are warning signs of potential decline. Coupled with Warren Buffett’s decision to downsize his immense holdings, it’s clear that even Apple’s most loyal supporters may have concerns about its future.

While Apple remains financially strong, history shows that companies who fail to innovate eventually fall. Apple must now choose between embracing the future or becoming a relic of the past, much like Kodak—a once-great innovator that couldn’t keep up with the changing world.

“In the business world, the rearview mirror is always clearer than the windshield.” Apple would do well to focus on the road ahead, not the one behind.