Warren Buffett praises iPhone as an 'extraordinary product'

AppleInsider

Berkshire Hathaway CEO Warren Buffett believes Apple offers a highly desirable product in the iPhone, one that consumers would give up a second car to keep.

Warren Buffett [Berkshire Hathaway]

Warren Buffett has repeatedly praised Apple and its products, and as the CEO of Berkshire Hathaway, has invested to match. Shortly after Apple's Q2 2023 results release, Buffett has offered more detail on why Apple is doing well.

Speaking on Saturday, Buffett admitted "I don't understand [the iPhone] at all, but I do understand consumer behavior," reports Yahoo Finance. While investing in Apple since 2016, it wasn't until 2020 that Buffett started using an iPhone.

On understanding that behavior, Buffett compared the iPhone to a much more valuable item: a spare vehicle.

"Apple is in a position with consumers, where they're paying maybe $1,500 bucks, or whatever it may be, for a phone," Buffett offered. "And the same people pay $35,000 for having a second car."

"[When] they have to give up a second car or give up their iPhone, they'd give up their second car," the Sage of Omaha insisted.

The claim echoes a similar comment made in April, in that if an iPhone owner was offered $10,000 in exchange for their iPhone and never to buy another, they're "not going to take it."

Calling the iPhone an "extraordinary product," Buffett says that Berkshire Hathaway doesn't "have anything like that that we own 100% of, but we're very, very happy to have 5.6%, or whatever it may by, and we're delighted every 10th of a percent that it goes up."

On the topic of diversification, and how Apple stock represents nearly 40% of Berkshire Hathaway's equity holdings, vice chairman of the firm Charlie Munger rails against the idea in modern university education that "vast diversification is absolutely mandatory in investing in common stocks."

Declaring it to be "an insane idea," Munger insists. "It's not that easy to have a vast plethora of good opportunities that are easily identified. And if you've only got three, I'd rather it be my best ideas instead of my worst."

At the end of 2022, Berkshire Hathaway's holdings in Apple were valued at $116.31 billion. Its second most valuable holding was Bank of America, at $33.45 billion.

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genovelle

JP234 said:

So sayeth the Oracle of Omaha. And he's right. You pay $30-40K for a car that does one thing. You pay $1K for a device that does more things than you can count or even remember, many of them essential of important to your daily life.

It's the bargain of the millennium. And enough people know that, consciously or not, that Apple Inc. is a cash machine, and will remain so for the foreseeable future, regardless of global events, market fluctuations or technology advances (the iPhone will be at the forefront there).

I agree ☝🏾. I hadn’t considered it like this, but Apple’s secret weapon is solving problems people don’t know they have in stealth mode and having the iphone in their pocket facilitate it effortlessly. Once they own two current devices and experience the seamless integration, they can’t go back. If they do for some reason their absence will be short lived v

chasm

I’m not entirely sure everyone would give up their second vehicle in all cases, but the 92-year-old Buffett is remarkably canny for a Luddite (he doesn’t use a smartphone at all), and absolutely right about the 10 grand — given the condition that if I accepted the cash I could never again buy an iPhone, I would absolutely refuse that money. It is that valuable to me in my daily life, and that’s probably true for most typical users as well.

Madbum

JP234 said:

genovelle said:

JP234 said:

So sayeth the Oracle of Omaha. And he's right. You pay $30-40K for a car that does one thing. You pay $1K for a device that does more things than you can count or even remember, many of them essential of important to your daily life.

It's the bargain of the millennium. And enough people know that, consciously or not, that Apple Inc. is a cash machine, and will remain so for the foreseeable future, regardless of global events, market fluctuations or technology advances (the iPhone will be at the forefront there).

I agree ☝🏾. I hadn’t considered it like this, but Apple’s secret weapon is solving problems people don’t know they have in stealth mode and having the iphone in their pocket facilitate it effortlessly. Once they own two current devices and experience the seamless integration, they can’t go back. If they do for some reason their absence will be short lived v

That secret weapon of which you speak was the essence of Steve Job's genius. You saw it the first time he showed the world the iPod. 10,000 tunes in your pocket, with little white earbuds that became status symbols. No need to lug a bag bull of CDs & a Walkman on a fanny pack anymore. A revolution and an evolution, indeed!

Yes and no. What you describe is certainly impactful but I don’t know how much jobs was involved in creating this stick eco system current Apple has done.

the latest savings account is just another example 

waveparticle

Such a wise old man! The iPhone is invaluable!

badmonk

and I agree with his comments about the nonsense of diversification, better to invest in three good ideas than have no good ideas and just spread money over the market at large.