Meta’s Mark Zuckerberg Critiques Apple’s Innovation Strategy

Meta Platforms’ CEO Mark Zuckerberg expressed concerns about Apple (NASDAQ: AAPL) in a recent interview with Joe Rogan, criticizing the tech giant for its stagnant innovation over the years.

Zuckerberg’s critique has some merit. Apple has been making only incremental improvements to its iPhones and iPads, lacking the groundbreaking innovations that once defined the company.

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Under CEO Tim Cook, Apple presents a different face compared to its founding era under Steve Jobs. Despite the shift, the company has soared in value, surpassing $3 trillion and potentially nearing a $4 trillion market cap. However, this growth hasn’t come without hurdles.

Recent Struggles with Innovation

While Apple hasn’t introduced transformative products akin to the original iPhone, this doesn’t mean innovation is simple. Developing groundbreaking technology requires substantial investment in research and development, often without guaranteed returns.

Apple’s plans to create an electric car, a decade-long pursuit, were ultimately shelved last year. Additionally, reports indicate that production of the Vision Pro headsets has been paused due to weak demand. Although Apple is reportedly considering more affordable mixed-reality options, the Vision Pro’s starting price of $3,499 may limit consumer interest.

Despite the innovation challenges, Apple enjoys a vast customer base with 2.2 billion active devices worldwide. While new product introductions could enhance its position, Apple’s growth is not strictly dependent on them.

Long-Term Strategic Focus on Services

The high price tags of Apple’s devices often deter consumers from upgrading frequently; improvements like enhanced camera and battery life may not justify such expenses. Thus, Apple’s long-term growth might hinge on its ability to expand its services segment.

In its latest fiscal year ending September 28, 2024, product sales dipped over 1%, totaling nearly $295 billion—but services revenue surged by 13%, exceeding $96 billion. Growth in services will likely be easier to achieve; users may prefer subscribing to AI capabilities for $20 monthly over purchasing entirely new devices.

Though using the latest AI might necessitate new devices, focusing on services can be a sustainable growth model for Apple, helping boost profit margins without solely relying on product innovation.

Is Apple Still Worth Your Investment?

Though not the high-flying growth stock it once was, Apple’s stability and predictability are appealing. Rather than hastily incorporating the latest AI features, the company is now taking its time, carefully directing its investments to maximize returns.

With a hefty market capitalization of $3.5 trillion, Apple remains a strong long-term investment for those looking to hold onto their stocks for years. The firm boasts a loyal user base and robust annual profits and cash flow—indicating continued growth potential. While shorter-term returns may be limited, long-term investors may find value with Apple’s stock.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook, is on The Motley Fool’s board. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Meta Platforms. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not reflect the opinions of Nasdaq, Inc.