Warren Buffett, one of the most famous investors ever, has long admired Apple AAPL and thinks it’s one of the best companies in the world. He once made a bold claim that perfectly illustrates how much people love their iPhones.
In 2023, Buffett told CNBC’s Squawk Box, "If you're an Apple user and somebody offers you $10,000, but the only proviso is they'll take away your iPhone and you'll never be able to buy another, you're not going to take it." He believes people value their iPhones so much that even $10,000 wouldn't convince them to give them up forever.
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Apple's Unmatched Loyalty
Buffett says Apple is special because it creates products that people truly enjoy. The iPhone is not just a phone – it's an experience many users see as part of their daily lives. Even though there are other phones with cool features – like better cameras, folding screens or advanced AI – none give the same smooth and simple experience as iPhones.
It's not just the usability. Owning an iPhone makes people feel connected to a larger community. Giving up an iPhone, as Buffett suggested, means stepping out of a social circle and giving up the ecosystem that so many users find irreplaceable.
On the other hand, he said, "If they tell you if you buy another Ford Motor car, they'll give you $10,000 not to do that, you'll take the $10,000 and buy a Chevy instead."
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A Changing Landscape
Despite Apple's stronghold on customer loyalty, the company has faced recent challenges. In 2024, iPhone sales in China dropped by 17%, marking the biggest annual sales drop Apple has seen in the country. It even lost its market leadership to local competitors like Huawei and Vivo. The broader Chinese smartphone market grew 4% during the same period, showing Apple's struggle to keep up with innovative, domestically produced alternatives.
Apple offered rare discounts on its iPhone 16 models in China to fight back. However, competition from foldable and AI-powered phones made by other brands continues to challenge Apple.
Buffett's Evolving Strategy
Interestingly, Buffett's actions regarding Apple have raised eyebrows. Berkshire Hathaway, the investment firm he leads, recently reduced its Apple stake by 25%, leaving it with 300 million shares. While Apple still accounts for 26% of Berkshire's portfolio, the sale reflects Buffett's commitment to his value investing principles – he's always looking for quality investments at a fair price.
This sale helped Berkshire build up $325 billion in cash, the most it's ever had. Some experts think Buffett is preparing for a possible market downturn or making things easier for the next leader of Berkshire Hathaway.
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