Apple - spot the crumble Apple's profits are headed for zero. It is certain to happen sometime between now and the day the Milky Way galaxy collapses into a black hole. Knowing what will happen, and when it will happen, it cannot hurt to speculate about how. The most remarkable feature of Apple, from a managerial point of view, is how it has controlled its products" life cycles. Take the iPod. In 2001 the first model arrived, for $400. Today you can buy a smaller one with fewer features and less than half the memory - for an eighth of the price. Equally important, you can buy one with a huge variety of added features and 13 times the memory for the same $400. The result of the precision updating and repricing: while average iPod unit prices stepped down sharply in its early years and with the introduction of the iPhone in 2007, they have been remarkably stable since, at about $160. Macintosh computers, which have not faced a cannibalising internal rival like the iPhone, sold for an average of $1,462 in 2002. Today, thanks to ever-better features, they fetch only about 10 per cent less, in defiance of collapsing prices for computer power. What allows Apple to defend its pricing while simultaneously growing volumes is a remarkable combination of quality and hype. We can take it for granted that Apple's advantage will not last forever. Nothing remarkable does. The question is what the change will look like when it comes. Apple will not discount its top-of-the-line products to protect market share. That would threaten its brand. It would be better off keeping market share by offering second-tier products, with features unusually close to the top-tier, at what are, for Apple, unusually aggressive prices. This will hurt margins, but protect unit volumes and leave the high-end market safe - at first. The change could, in other words, look just a little bit like the introduction of the iPad Mini.