What if no one comes to Apple’s next party?

There’s little doubt in the media that the next major iPhone update — expected in September — will be a blockbuster.

Reports speculate that it will have a sharper display, a glass housing, wireless charging. Some observers even expect it will use 3D facial recognition instead of, or in addition to, the fingerprint scanner. But regardless of which new features ultimately appear on the next model, consumer surveys indicate that Apple iPhone owners are loyal and have been patiently waiting for this iteration to upgrade from their current phone.

That’s great news for Apple; the company’s fortunes depend on how many iPhones it sells and how much profit it makes from them. The iPhone is, by far, the company’s mission-critical product. Apple breaks down its products into five categories: iPhone, iPad, Mac, services and “other products.” Phone sales were almost five times larger than their next largest segment, services, and close to 11 times the sales of “other products.” 

We love our Macs, Apple Watches and iTunes accounts, but Apple’s financial results are firmly linked to the iPhone. So far that’s worked out beautifully. Apple’s value in the stock market was higher than ExxonMobil’s, McDonald’s, Disney’s, General Electric’s, and General Motors’ — combined. Congratulations to all the investors who benefited from Apple’s run up.

My family is in Apple’s ecosystem. We have two iPhones, a Mac, an Apple TV and an iPad. I appreciate its products as much as anyone else.

But even though analysts and pundits predicting its death for years and been wrong, Apple’s stock price raises a few red flags. Demand cannot grow forever, even for snappy new iPhones. Over time, demand for any product fades or, at best, stabilizes. Think about it; if this weren’t true, eventually everyone would buy only one product and we still wouldn’t be satisfied. We don’t need to be theoretical, though. All we need to do is look at sales of Apple’s iPad, which have fallen by 12 percent compared to a year ago due to competition and a mature market. Most of the people who want tablets already own them and what they have is good enough for their needs. They don’t feel any urgency to upgrade.

A mature tablet market isn’t as threatening to Apple as a saturated iPhone market, because iPad sales are only slightly more than a tenth of iPhone sales. But iPhone is a maturing product line, too. Handset sales grew only 1 percent compared to a year ago.

Yes, many iPhone owners are holding out for the new iPhone, and I expect it’s going to be a monster seller, but what will demand be for more distant upgrades? In the past, customers reliably bought new phones every year or 18 months. But now the shift to a lower monthly service fee and new phone releases is moving out to 24 months. It's become more of a utility bill, like cable.

The company has grown stable enough for Warren Buffett to invest in a truckload of Apple stock and to sell previous tech behemoth IBM. The declaration of a dividend policy and growing cash position may lead to more acquisitions than innovations in the future. 

Take a look at Ringling College's Lifetime Learning curriculum for a class to learn more about the features of these handy devices. They have forever changed how we communicate. If you have any follow-up questions, feel free to email from your iPhone.

Evan Guido heads a wealth management team in Sarasota focused on retirement planning. He is a director in the Private Wealth Management Division at Robert W. Baird & Co. Apple has rewarded our investors tremendously over the years.