To The Moon

In 2007, the iPhone changed the game and technology forever, and events hit fevered pitch. For more than a decade, once or twice a year, there was a must-see event from Apple that captivated anyone interested in tech devices.

Yesterday, there was an $Apple(AAPL)$ event and I didn’t know it happened until hours later. It was a jarring realization that Apple’s magic seems to be gone.

Devices and The Changing Tech Paradigm

It’s hard to overstate how important the iPhone moment was in 2007. We went from a world where most of the world’s information was available on a desktop to a world of information being in my pocket 24/7.

Only a few devices have changed the world as much as the iPhone. My short list of world-altering technology is:

• The printing press

• The PC

• The Internet

• The iPhone

Each of these technology shifts democratized information further. They each shrunk the world in their own way. And — most importantly for us as investors — they enabled new business models.

Without the iPhone, $Uber(UBER)$ $Airbnb, Inc.(ABNB)$ $Slack Technologies(WORK)$ Instagram, Twitter, and $Block, Inc.(XYZ)$ don’t exist, just to name a few.

But the paradigm shift brought on by the iPhone is fading.

Apple’s Device Decline

For years, Apple was able to increase device revenue by refreshing iPhones, iPads, Macs, and AirPods with a price increase sprinkled in here and there. But those days are over. Since the September 2022 quarter, Apple’s trailing 12-month revenue has been in decline.

What could fix this? New devices?

• Apple Vision Pro: The VR headset that starts at $3,500 and is collecting dust in most owners’ offices.

• Home Pods: Great speakers searching for a use case.

• Apple Intelligence: So bad I turned it off within hours of getting it.

• Apple Car: Never saw the light of day.

The last impactful product Apple introduced was the AirPods in 2016. Their financial success over the last 9 years has been driven by ever larger “services” revenues, like the revenue share with $Alphabet(GOOG)$ $Alphabet(GOOGL)$ , 30% fee on iOS purchases, and iCloud storage fees. That’s not innovation or great growth. It’s taxing a declining ecosystem.

I say this writing on a Mac with an iPhone in my pocket and an AirPod in my ear. Apple’s magic is gone.

Tech Eras All Come To An End

Apple’s evolution isn’t surprising. It happens to every revolutionary product.

You may remember the awe brought on by the original Mac or Windows 95. But by the early 2000s, the PC market was largely commoditized and upgrades were regular, but unimpressive.

We’ve reached that stage with all Apple devices. iPhones used to feel ancient when they were 2 years old. Now, hanging on to one for 3 or 4 years isn’t crazy.

So, with an ending iPhone era that brought so many opportunities to entrepreneurs and investors, it begs the question:

What Tech Paradigm Is Next?

8 years ago, I would have said VR/AR would be the next paradigm. I even started a business with that paradigm shift at the core of our thesis. But that’s proven to be wrong. VR and AR may have their day, but we aren’t “there” yet.

One of the reasons artificial intelligence has gotten so much attention in the tech community is the possibility it will be the next paradigm. But is it? And what would that future look like?

The smartphone may no longer be the center of our technology lives. Glasses or earpieces may play a bigger role.

Humane thought an AI pin was the future. It was a good idea, but didn’t gain any traction before shutting down and selling IP to HP this week.

$Meta Platforms, Inc.(META)$ is putting its AI into glasses that could both see the world and (eventually) provide 3D overlays with augmented reality. Will this be the next tech paradigm shift?

Or are robots the future?

It’s not quite The Jetsons, but it’s close. And lots of players are trying to make humanoid robots a thing.

We don’t know what’s next, but the future likely won’t be dominated by the winners of the past. New companies will emerge. New devices will gain favor.

As an Asymmetric Investor, I’m watching out for the winners of the next paradigm. I’ve placed early bets on autonomous driving, healthcare, and blockchain winners, but there will be more disruption to come as Apple’s control over technology fades.