Will Apple Ever Have a Wide Moat?
Though the narrow-moat stock has a positive moat trend, we're skeptical that it can carve out a wide moat.
Apple has a sterling brand, strong product pipeline, and ample opportunity to gain share in many end markets. However, short product life cycles and intense competition will prevent the firm from carving out a wide economic moat, in our view.
Today, we assign Apple a narrow economic moat, thanks to switching costs related to the iOS platform. Current iOS users may be more reluctant to stray outside the Apple ecosystem for future purchases. Much of Apple's exponential growth in recent years has been the result of building the first truly revolutionary smartphone--the iPhone--that integrated hardware and software, as well as a robust app store and ecosystem that attracted new users to the platform. Although Apple's first-mover advantage and "easy growth" from new smartphone users is over, the company should retain its existing premium customer base and could still attract some Android users over time.
Brian Colello does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.