If the history of high tech teaches investors one lesson, it is that the king is doomed. Not only that, but the competitor that brings him down will be one whose threat went unrecognized, and who could have been bought for a song.
That is the story of the rise of Microsoft (MSFT, quote) and Google (GOOG, quote). IBM (IBM, quote) could have bought the future from Microsoft. Google could have been had by any number of tech giants when it was just a better search engine.
Sooner or later, this will be the story of Apple (AAPL, quote) too. The wizards of Cupertino are on top now, but someone will come along who “thinks different” and destroys their business model.
Apple can defend itself with acquisitions, but those have a poor track record in technology. Most fail. One of the best things that ever happened to Microsoft was Yahoo (YHOO, quote) rejecting its $41 billion purchase offer. (It was also Yahoo’s most costly mistake; their market cap is now $19.75 billion.) The most likely scenario is that Apple will pay through the nose for a bust while letting its nascent rival escape.
So where will the attack come from? You can never discount Silicon Valley, but China is the most likely origin. The Chinese economy is large enough and sheltered enough for an Apple-killer to grow. Chinese production facilities are so efficient that Apple itself relies on them. All that’s needed is for China to capture the spark of creativity that has driven the American economy for decades.
The winter of Apple may be years away, but it is coming. And the shareholders of Nokia (NOK, quote) and Research In Motion (RIMM, quote) can attest to how quickly the king can lose his throne.