Back when I was in business school, the PC manufacturers were go-go football stocks. Bull market, dude.

There was Dell, Hewlett-Packard, Compaq, and Gateway, which used to sell its computers in a Holstein cow-pattern box. Apple was making Macs but had a much smaller market share than it does today.

Business mags like Fortune and Forbes fawned over Michael Dell—how he had achieved this “mass customization” ideal in his manufacturing process.

You could pick out what kind of processor you wanted, what kind of hard drive, what kind of monitor, plus a few other options, and your tailor-made computer showed up at your doorstep in four to five days.

Eventually, though, commoditization replaced customization, PC margins went to zero, and that was the end of that.

Today, it’s hard to imagine the PC business any other way. Nobody puts a lot of thought into what kind of PC they are going to get. They’re all the same. Now people call their PC a “box” and the PC manufacturers “box-makers.” Like, there is no value added at all.

Dell went private. HP and Compaq merged, defensively. Gateway is gone. The idea that PCs were ever a growth business for anyone is crazy… right?

And yet we have these smartphones now, extremely powerful devices that are essentially miniature computers.

If You Own Apple Stock Today…

Innovation in the smartphone business has been very rapid, though it has slowed down in recent years, and the latest changes have been incremental. Apple’s 40% margins aren’t sustainable.

On the other hand, Apple has managed to keep its margins persistently high in every product line, from iPods to iMacs to iPhones—partly because of superior design, partly because of superior marketing. They have turned the phone into a status symbol.

If you own Apple stock, you are betting that: