How Will Apple Inc. (AAPL) Sell 343 Million Devices in 2016?

Fear no cannibal
No one ever said a lower-cost iPhone wouldn’t come at an expense. A low-cost iPhone would likely put continued pressure on Apple’s gross margin and cannibalize the entire iPhone line. Last quarter, the iPad Mini cannibalized the iPad, which ironically ate into Mac sales. However, Apple has always maintained a philosophy to never fear cannibalization because if it did, Apple believes someone else will come along and cannibalize its products. Apple approaches cannibalization as an opportunity, because when someone buys their first Apple product, there’s a good chance they’ll come back for more. In other words, creating a long-term halo effect is far more valuable than the short-term fear of cannibalization.

Hold the line
As long as Apple sustains its market share, unit growth will continue to increase, allowing Apple more opportunities to create new halos for its products. Longer term, Apple’s business model hinges on creating new customers and keeping them for life. If it can continue being successful in this area, I have little doubt that Apple shares will have no choice but to rise again.

The article How Will Apple Sell 343 Million Devices in 2016? originally appeared on Fool.com and is written by Steve Heller.

Fool contributor Steve Heller owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

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