Like clockwork, the Apple (NASDAQ: AAPL) Fall event happened. 

And thus arrived the iPhone 13, Watch Series 7, an all-new iPad mini, and revitalized Fitness+ application. The new Watch has 20% more surface area and some other nifty features. The iPad mini was due for a refresh for a long time, and I thought that was perhaps the event’s highlight. So what about the iPhone? After so many iterations of the iPhone, is it now close to the end of the iPhone journey? 

It might feel so if we think about the incremental feature additions when we compare the iPhone 13 with last year’s iPhone 12 or the one the year before. I know each of these devices has new hardware that’s making it even more capable. There are new features, too, although the list of “must-have” features seems thin, even to a diehard fan like yours truly. 

In this context, an Apple shareholder might feel a bit despondent. But, but, but … I think there’s no reason to be sad and every reason to cheer. Let me explain. 

Our mental model is always to compare this year’s model with last year’s version. However, Apple is not looking to sell the iPhone 13 to last year’s iPhone 12 buyers; instead, the target is those with much older devices like the iPhone 6 through 10. And while Apple works really hard to make the older devices work really well with new iOS updates, eventually, the device will be limited by the hardware’s capabilities. Still, Apple works overtime on this front because it knows that a positive consumer experience results in repeat purchases. 

And all of this works out because Apple’s iPhone user base is well over 1 Billion. Assuming even a replacement cycle of, say, 4 years, Apple has the potential to sell well over 250 million units of the iPhone 13. Add some Android switchers, and boom, we have got somewhere in the vicinity of 270 to 280 million units. As the iPhone replacement cycle elongates, Apple is working hard to increase its base. Hence the strategy is around a range of devices at varying price points.

In many ways, Apple’s hardware business is almost as recurring as many software services! And boring updates are definitely a necessity in this upgrade motion. So, yes, sometimes “dull” updates can be meaningful drivers of economic success!

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