There's no question that Apple's (AAPL 0.50%) iPhone has changed the world. The device, which was the first touchscreen-based smartphone, ushered in the mobile computing era. At this point, it's responsible for well more than $1 trillion in revenue for Apple -- and with high margins.
From a business perspective, the iPhone is one of the most successful products in history, and 16 years later, it still underpins Apple's tech empire today. The smartphone is bolstered by complementary devices like AirPods and the Apple Watch, as well as its services business, which has driven much of the company's profit growth in recent years.
To give a sense of how transformative the iPhone has been for Apple, the chart below shows how the stock has done since its iconic smartphone was released.
With a return of 3,830%, if you had invested $10,000 in Apple on June 29, 2007, you would now have $383,000, With dividends reinvested, that figure would improve to $469,000. That's a life-changing result from one investment, and Apple's gain since the debut of the iPhone offers a number of lessons for investors.
Breakthrough products can produce transformative returns
It would have been hard to know how successful the iPhone would go on to be when it was first released, but there were some clues.
The device that preceded it -- the iPod -- was also a breakthrough product in music, becoming the de facto MP3 player. As a result, Apple's new phone was highly anticipated. Once it came out, users largely raved about it at the time. It was evident that the iPhone was something new, combining much of the utility of a computer with the portability and convenience of a cellphone. Additionally, there was plenty of hype heading into its release.
Predicting its future revenue and profits would have been impossible, but some of the signs of its success seem clear in retrospect. As an investor, it can be easy to overthink things, but sometimes the seemingly obvious choice is the right one. If you see a product that looks like it could be a big success, investing in the parent company could be a winning move.
Image source: Getty Images.
New products don't immediately move the needle
It would take a few years for the tech stock to consistently move higher following the release of the iPhone, which was partly due to the impact of the financial crisis and the stock market crash. However, it would also take years for the iPhone to become Apple's biggest product and therefore move the needle on the bottom line.
In other words, to invest in Apple successfully back then, you needed to have the foresight to see how impactful the iPhone could be, but also the patience to wait out the volatility as the device gained momentum.
Can the Vision Pro do it again?
Apple is set to have another big product release -- arguably its biggest since the iPhone -- early next year when the Vision Pro goes on sale. The Mac maker introduced its new spatial computing headset back in June at its developer conference. It will sport a price tag of $3,500.
At this point, it's unclear how the Vision Pro will fare with the general public, because no one has tried the device yet. However, it does have the potential to kick off the next generation of computing, similar to how the iPhone heralded the start of the mobile computing era.
The major difference between Apple today and Apple in 2007, when the iPhone came out, is its size. Today, the company has a market capitalization of nearly $3 trillion, while it was just a fraction of that size in 2007 at roughly $100 billion.
That means it will be much more difficult for a single product to have the kind of impact that the iPhone did. However, investors will want to pay attention to the early response to the Vision Pro since the new device certainly has the potential to move the stock. It just won't turn $10,000 into $383,000 the way that the iPhone did.
