Two apples have changed the world. One fell on Newton's head, announcing the truth of physics, entering our lives, and science has since become a ladder for human progress; the other was printed on people's mobile phones by Jobs. The magical user experience makes life more interesting, opening the door to an intelligent world.

As the second article in the "NASDAQ Seven Sisters" series, this article will introduce Apple.

01. The starting point of Apple's story: Innovation, innovation, and more innovation

Jobs was born in San Francisco, California, in 1955 and was adopted. From a young age, he showed a strong interest in electronics and machinery. His adoptive parents were ordinary middle-class citizens, with his father being a mechanical engineer and his mother an accountant. In such a family environment, Jobs was exposed to various electronic devices from a young age and developed a deep interest in them.

In 1976, Jobs co-founded Apple Computer Inc. with Wozniak and Ronald Wayne. Throughout the Jobs era, innovation was always at the core of Apple.

In 1984, Jobs led Apple to introduce the Macintosh, the first personal computer with a graphical user interface, significantly contributing to the popularization of personal computers.

However, due to internal disputes, Jobs left Apple in 1985. Despite setbacks, Jobs did not stop innovating. He founded NeXT Computer, focusing on the higher education and enterprise markets.

In 1997, Jobs returned to Apple, which was on the verge of bankruptcy at the time. Upon his return, he not only led Apple out of its trough but also pioneered new market segments. He introduced revolutionary products such as iTunes, iPod, iPhone, and iPad, opening up new markets for digital music, smartphones, and tablets.

The iPod portable music player, introduced in 2001, led the digital music revolution; the iPhone smartphone, introduced in 2007, changed people's lifestyles; and the iPad ushered in a new era in the tablet market. These products not only made Apple one of the most influential and valuable technology companies globally but also established Jobs' legendary status in the tech industry.

02. Apple's moat: Exciting product strength and exclusive ecosystem

Furthermore, Jobs instilled an innovative mindset in Apple. Apple's long-term moat is primarily built on three pillars: a popular product lineup, loyal fans, and continuous innovation capabilities. Thanks to this moat, Apple enjoys strong pricing power and profitability. iPhones have consistently delighted fans with features they never knew they needed until they saw them.

Apple then built a seamlessly integrated ecosystem that first keeps users firmly engaged, making them more likely to purchase various Apple products. Secondly, if 100 people buy hardware products, 30 of them are likely to continue spending in the App Store on games, productivity tools, etc.

As the user base grows, Apple introduces a series of subscription services (such as Apple Music), generating stable revenue from loyal fans who pay for music, videos, etc. Another key feature of Apple's ecosystem is its closed nature. Compared to the flexibility and openness of Android, iOS has many restrictions, ostensibly to protect user data privacy and security but objectively making it difficult for other smartphone brands to compete.

The exclusivity of Apple's closed system is another core competitiveness – the switching cost moat.

03. Apple's hidden dangers: Post-Jobs era innovation slowdown

One of Apple's challenges is the slowdown in innovation post-Jobs. It is increasingly difficult for manufacturers to impress consumers with routine updates, even for Apple.

The last iPhone that left a stunning first impression was the iPhone X, released seven years ago. It was Apple's first phone with a notch design, amidst the full-screen revolution in the smartphone industry. Since then, iPhone updates have mainly focused on color options and camera arrangements.

Each year's new iPhone brings minor but steady improvements. For example, the iPhone 15 series adopts a Type-C interface and supports USB 3.0 for faster data transfer speeds. Recent iPhone releases have also routinely touted "faster, stronger, and better" A-series and M-series chips.

This is broadly the product iteration philosophy of the Cook era – small but steady improvements. Upon taking over, Cook overturned Jobs' focus on disruptive innovation, instead prioritizing supply chain security in areas like chips and displays, striving for operational excellence.

Cook believes that in a rapidly evolving tech market, overly aggressive or "game-changing" innovations may seem impressive but risk being overlooked if they exceed current market demands.

Cook's business philosophy has transformed Apple's unpredictable "innovation-driven" strategy into a predictable growth model. Under his leadership, Apple's profit margins, cost control, and revenue growth can be reliably forecasted, contributing to its capital market appeal.

However, this incremental innovation approach also provides opportunities for Apple's competitors to catch up.

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