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I have to confess. I always hated Apple (NASDAQ:AAPL), primarily because they always treat their customers as children who need to be protected from themselves. I like to poke around. If I screw up in the process, it's my damn machine and my screw-up ok?

But I'm equally open and enthusiastic in my admiration of Steve Jobs' vision and ingenuity in user interface. From the original Mac to NextStep to iThingies, Mr. Jobs simply, consistently got it. He knew what customers wanted and liked before customers knew themselves. The conversation goes like this:

Customer: I want this and I like this. Mr. Jobs: No, you don't. You want this and like this. Customer, after a trip to the hospital re-attaching the jaw: iHoly! iCow! iWow (and so forth)... Customer, after finally catching the breath: Yes, this is exactly what I want and like. How many arms and legs can I pay for the privilege of owning this piece of pure awesomeness? No, I insist on at least both.

This is leadership and vision in their most direct and inspiring form. And it is in stark contrast to Bill Gates, for example, who has never shown any technological leading vision but instead always followed. He just followed better than anybody else, so well that he often beat the innovator.

Mr. Jobs was one of a kind. Mr. Jobs is irreplaceable.

But herein also lies Apple's tragedy. Public companies are supposed to have replaceable managers. Most do. Some apparently try too hard to show this. Even GE has survived quite well without Jack Welch. But Apple cannot survive without Steve Jobs. He had always been out there, five years ahead, guiding the company. Without such a visionary leader, how can Apple rightfully claim any premium over any other technology company?

Granted, many people in Apple have made huge contributions to its success. Mr. Jobs didn't design the cool iPod packaging nor write the multi-touch GUI. But throughout Apple's history, all of its technology has been either out there or readily achievable. Nobody, but nobody, except Mr. Jobs had been able to put everything together and make something awesome, something so cool it becomes lame in a year or two, and do it with such astounding consistency. Is it possible for Apple to find Jobs II? Of course, everything is possible. But considering the open nature of the technology field over the past 30 years, sudden emergence of a Jobs II at Apple would be a true black swan event.

Should the Jobs Premium have been discounted since his retirement in late August? Not necessarily. One could reasonably hope/imagine that he would still provide the visionary guidance as long as he's around, with or without the title. With the love for iThingies so deep and wide, one would expect such hope to be strong and persistent.

Even after the sad passing of Mr. Jobs, such hope could still persist for some time. But until a Jobs II proves him/herself at Apple, the company is destined to lose its Jobs Premium and gradually fade into the crowd of also-run technology companies.

And that would be the ultimate testimony for Mr. Jobs' irreplaceable value.

I'm not saying AAPL will necessarily go down. But its premium over competitors will likely disappear over time. So a pair trade of short AAPL and long some competitor (the choice may have to be somewhat subjective since currently there's no full-scale competitor) is probably better than outright short AAPL.

Source: Short Apple's Jobs Premium