Understanding Apple Inc. (AAPL) used to be easy. Customers upgraded to the newest iPhone every two years and Apple remained a growth company. That meant each quarter they sold more than expected and the stock price kept rising. This world made sense, in an Apple sort of way. Suddenly things have changed. So what can we expect moving forward?

Apple is still a winner, but it is becoming a different kind of company. It used to be a growth-oriented company. They innovated and created new categories, which grew like wildfire and which they led in for years. Think iPod, iPhone and iPad.

Apple will compete with Google (GOOG) Android the same way Apple competed with Microsoft (MSFT) over recent decades. Microsoft had a larger market share, but Apple customers loved them. Microsoft was for the thinker and Apple was for the more creative type. I think we will see this same competitive nature unfold going forward as well.

Today Apple is transitioning. They are now becoming less of an innovator and more of a product replacement firm. What does that mean? For one that means they are no longer introducing breakthrough new products and creating new categories.

Product replacement firms can also be very popular and successful, but their day is spent making the next better version of existing technologies and keeping customers happy. Think SONY WalkMan from the 1990’s. It’s more about getting happy customers to buy the newest version every year or two rather than creating an entirely new category. With Apple that means a solid, but not a growth-oriented company.

That could change once again, of course. Apple could become a growth-oriented company again, and likely will at some point. However we have not really seen any sign of anything new lately.

So I think for now, the Apple investor will change from a more rapid growth oriented investor to a slower growth replacement oriented investor. Slower growth and less risk.

With all that said, understanding Apple going forward is key. However that is not easy. That is never easy with Apple. There are changed that are reshaping the wireless space in general, the smartphone space, Apple and maybe other handset makers as well.

Let me give you a few examples. Apple has changed from a company that focuses on innovation and change, to one that focuses on product replacement.

This quarter that meant sales of iPhones were weaker than expected. So what does that mean?

The average customer buys a new iPhone every two years. If that remained true deciding next steps would be easier. Of course that is not remaining true. 

On one hand that could mean if product replacement was weak this year, next year should be strong, right?

On the other hand, customers did not all buy their first iPhone’s during the same year. So the two-year upgrade wave should be more consistent year-to-year, right? Also, after customers realized the really new and innovative iPhone only comes every two years may have upgraded to the new version one year and then upgrade every two years, right?

That would mean every other year would be a bigger year. But that has not been the case, has it?

Just as we are struggling to understand the new spin on this Apple investment, carriers like AT&T ($T), Verizon (VZ) , Sprint (S) and T-Mobile (TMUS) have recently introduced their new early upgrade plans.

This means customers no longer have to wait two years to upgrade. Some may upgrade after a year or six months.

So if that’s the case, how the hell are we supposed to have any idea what is going on?

Oh, one more question.

Is this new problem just an Apple iPhone problem or is it a larger industry-wide smartphone problem? Is this going to be limited to Apple or will others like Google Android, Samsung Galaxy, Microsoft Nokia and others join in?

These questions are what we must answer before deciding the best next steps. The days of Apple as a growth company are over, for now anyway. That means a different type of return and a different type of investor.

Apple in my opinion is still a winner, however it is a very different stock and company now compared with a few short years ago when they were the leader and innovator.