If you take a look at the per­for­mance of Apple of late, it’s not pret­ty. Check the one year chart on Mar­ket­Watch, and you’ll see that — after climb­ing to a 52-week high of $705.07/share — it has come back to the price that it was about a year ago, a lit­tle more than $450.00/share. Does this mean that the com­pa­ny whose stock in 2013 was to hit $1,000.00/share (said many!) is in the trash heap? Hard­ly. Yet, there is now gen­er­al agree­ment that Apple needs to refresh its prod­uct line. It needs a win­ner to replace the yawn that even its iPhone 5 has become.

At the start of this year, Entre­pre­neur pro­ject­ed that Apple’s next might just be the rumoured “iWatch”. But the sto­ry here is not that Apple needs to aug­ment its iPhone line. Entre­pre­neur says that Apple should con­sid­er replac­ing its iPhone:

Apple is report­ed­ly explor­ing devel­op­ment of a watch-like prod­uct. Some might scoff at the idea of Apple build­ing a watch. After all, who needs watch­es when you have a smart­phone. Fur­ther, Apple is a com­pa­ny with $200 bil­lion in annu­al rev­enue. A $100 watch which will sell in lim­it­ed quan­ti­ty is bare­ly going to move the nee­dle.

While all of those are fair points, they’re miss­ing a much big­ger pic­ture. There is a line of think­ing that the smart­phone era will per­ish almost as quick­ly as it began.

This is no mod­est pro­pos­al. Apple sold a record 47.8 mil­lion iPhones in the Decem­ber quar­ter. Replac­ing, then exceed­ing, that much rev­enue would be an enor­mous chal­lenge. But I like Entrepreneur’s think­ing. Argu­ing that some­one will, soon­er or lat­er, find a bet­ter way to do all the things that a smart­phone now does — only in a small­er, per­haps wear­able for­mat — the idea is that Apple would be smart to man­age the demise of its iPhone line rather than to allow a com­peti­tor to do it. Says Entre­pre­neur: “For Apple, an iWatch could be a way to test the wear­able com­put­er mar­ket, says [ana­lyst] Gene Mun­ster at Piper Jaf­fray. He says, ‘We believe that longer term (over the next 10+ years), wear­able com­put­ers could even­tu­al­ly replace the iPhone and smart­phones in gen­er­al.”Smartphone with plant

In 1942, an eco­nom­ics thinker named Joseph Schum­peter talked about the con­cept of cre­ative destruc­tion:

The fun­da­men­tal impulse that sets and keeps the cap­i­tal­ist engine in motion comes from the new con­sumers, goods, the new meth­ods of pro­duc­tion or trans­porta­tion, the new mar­kets, the new forms of indus­tri­al orga­ni­za­tion that cap­i­tal­ist enter­prise cre­ates.”

Apple, to date, has been out­stand­ing on cre­at­ing the next wave of per­son­al tech­nol­o­gy. And my bet is that, start­ing in 2013, the com­pa­ny will stand or fall depend­ing on whether it can ful­ly grasp (and cap­i­talise on) the think­ing of an Aus­tri­an econ­o­mist who was born in the late 1800s.

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