As I write this opening sentence, I am puffing on a heet stick inside my IQOS device tucked away in rural Michigan. I, unfortunately had been a smoker since the way too early age of 14 (now 36)... 21 years!! God that's embarrassing. I've been filling my lungs with tar, nicotine and millions of other unholy toxins, puff after puff.

I have an addictive personality and nicotine has me firmly in its iron grip. I had promised myself I would quit smoking at age 35. Due to my rampant hypochondria, I had read paper after paper that if you quit by 35 you have a good chance at avoiding smoking's usual fate.

Well, my birthday came around last year and the only thing that was new with me, was the brand new pack of Marlboro's in my pocket... That is, until I happened upon a well known e-commerce site to find a new craze sweeping across Japan and Korea, IQOS from Philip Morris International, Inc. (NYSE:PM ).

Philip Morris is a well known company so my intro to them will be short and sweet. They produce cigarettes, internationally, ex-USA and lots of them! They are the second largest producer in the world behind only Imperial Tobacco Group. They produce such brands as Parliament & Marlboro along with countless others.

Source: https://www.statista.com/statistics/259204/leading-10-tobacco-companies-worldwide-based-on-net-sales/

Philip Morris has long been a darling to investors prior to the spin off of Altria (MO) in 2008. The company has been printing money consistently decade after decade, providing unreal returns and steady earnings growth... not to mention management's shrewd acquisitions of Kraft & Miller. Had you purchased Philip Morris's stock in the '60s or '70s, you are now likely a millionaire.

Philip Morris's business model has been nothing short of amazing! The product they sell is super, ridiculously, unrelentingly addictive, which forces customers to place it higher on the need chain than just about everything else no matter rich or poor.

If you have ever witnessed a brand new Bentley pull into a party store at 11pm on 8 mile rd in Detroit for a pack of smokes, you can understand the power of the addiction.

Add to this the opinion that frankly they make the best product (or at least the best marketing). In the USA and across the world Marlboro's are the gold standard and can garner a hefty premium to competitors!

So they can make a product for pennies on the dollar, sell them at a premium price and the customers are chemically compelled to return to purchase more and more with little concern for price. Uh, what's a classy, intelligent way to say no brianer!!

However, they do have just a slight flaw in the business model that I would like to address... 443,000 people die each year in the USA alone according to the CDC from smoking-related health issues!!

And Philip Morris knows it!

The public is pissed, and rightfully so. Tobacco has taken an estimated 20 million lives since 1964, according to the CDC. This has caused countless families to say goodbye to loved ones well before they should.

In response to this outcry, and likely to the prospects of a tobacco-free future, the company has undertaken the once radical stance that it no longer wants to sell cigarettes, as it embarks on the first leg of what it hopes will be a smoke-free future, not tobacco-free.

At first glance it may appear to be a clever marketing ploy to improve its image, however this transition is truly happening.

Source: Philip Morris International | Homepage

IQOS has taken Japan and Korea by storm, garnering a huge following, allowing the company to gain market share at an unheard of pace in the tobacco industry.

With more platforms on the way, Philip Morris looks to expand on its already considerable lead in non-combustible tobacco products.

This transition, as with all, comes with a cost... This cost is twofold: Margins are going to suffer, likely badly in the near future as IQOS does not have the scale to compete with the ridiculous margins of normal cigarettes. In addition the new production / marketing to get to the finish line will be costly, and the next few years look to be margin light and revenue heavy.

A silver lining to this is, being the leader in reduced risk products will allow them to steal market share from others with less advanced platforms. As has been seen in Japan, people appear to prefer not dying whilst still getting the nicotine their brains have been wired to require.

So, is IQOS any good? Simply, yes it is... but with flaws.

I switched to IQOS 100% in January of 2017, so I have a full year under my belt of puffing away. I will describe the experience as best I can in a broader sense; this is not strictly a consumer review article however.

Source: Vaporizer Reviews, Comparisons, & News | by VapeGuide.com

First off, you need to buy the device. Living in the USA, this was and is frankly a pain in the behind as I need to buy from overseas. The FDA application is currently under review in the USA.

The IQOS kits sell for roughly $129 which includes your charger, device and a cleaning tool. Once you have your device, you need something to put in them. So you also buy packs of what Philip Morris calls heets; these look like little mini cigarettes and contain a filter and tobacco.

Once you have both, you charge up your device holder and insert your heet into the device and hold the button on the front; this will blink until the heet is 350 degrees celsius.

Then you draw on the heet like you would a cigarette. The device is programmed to last roughly 6 minutes or a predetermined about of puffs, then it turns red and cools back down. You then remove the heet and throw it away, placing the holder back in the portable charger, which charges the holder in about 5 minutes.

So, what are the positives and negatives to my experience overall so far?

I have tried "vape" products and trust me, they do not hold a candle to this. I get the familiar tobacco taste along with the same feel of a hit on a cigarette. I encourage you to explore the reviews on www.thevape.guide.com and you will find that just about all reviewers notice that it really does capture the tobacco taste better than most all others currently.

Before I switched, I would wake up every morning coughing and hacking up stuff that would make the janitor at Taco Bell squeamish. Add in the zero sense of smell, taste, lethargy and terrible endurance for physical activity, and you have one unhealthy dude.

Since I have switched to IQOS, I have noticed a marked change in these issues. Two weeks after switching, I noticed that I felt like I had the flu. I was coughing even worse than before, I had headaches and felt lightheaded.

But then I noticed something. My sense of smell was coming back, I could taste things again and the coughing subsided. Cigarettes smelled horrible and my endurance had improved.

These changes continued over the next three months and made me a believer in the product. My smoker's cough went away, my teeth are whiter, my gums are healthier and my natural skin tone is back.

Now, I want to emphasis that these are my experiences. I have, to date garnered no medical evidence that I am actually in fact healthier, so I am in no way claiming hard evidence that this is healthier. But I sure feel like I am!

3) I can use heets inside my home.

This was something I did not expect when starting IQOS and I will expand on this in the next section. IQOS leaves behind no permanent odor or residue, either on your clothes, your breath, in your car or in your home.

Living in Michigan and being a smoker is utterly miserable in the winter; you see groups of poor souls huddled together outside in 10 degree weather in February and you cant help but feel sorry for them.

With IQOS, I can have one right now in my study as I type this article and in 15 minutes nobody will be the wiser. This to me was truly unexpected and has caused me to reevaluate my long term thesis on the company and stock.

I can pretty much use this anywhere. I have used it during my day job, at sports arena's, at bars... and I have even used it in an airport - the smoker's natural enemy.

So far, this seems like the perfect trifecta! With that... It's time for some issues...

1) The smell at start up

I am not quite sure how to say this, so I will just say it. When first starting a heet, as it warms up... It smells like someone has passed gas right in front of you.

This unfortunately familiar smell only lasts for around a minute, however it is nonetheless quite embarrassing in the presence of coworkers.

After the first minute it tends to smell like slightly burnt toast, which isn't bad, but man that first minute is a killer.

You sure cannot pull off that smooth, Rico Suave vibe when you smell like a toilet stall, even if in just the first minute. I sincerely hope this is addressed in a firmware update prior to hitting the US shores.

2) It requires a lot of cleaning

I have 2 devices (due to scarcity in USA, requiring a backup) and I have found that I thoroughly clean the device underneath the heating blade roughly 3 times a week.

If you neglect cleaning it, your experience will worsen progressively until the device simply dies. The problem is that, let's face it, Americans are lazy and asking us to clean something 3 or more times a week with a q tip, alcohol swab and a bent paperclip is likely not something a majority of people will do.

I, as a sprightly 36 year old, do not have an issue doing this, however I must admit, I slack at it sometimes and it is frustrating! A 65 year old IQOS user I doubt would have the fine motor skills to accomplish the Matrix like moves I use to clean my device.

3) The hardware breaks, and it can be very frustrating

I have committed to never smoke another cigarette, thus IQOS is currently my lifeline, while nicotine still runs my brain. This creates a quandary, as when I am away from home and away from my backup device, I require my one device to work reliably.

Now I must admit, I have only had a few true failures of IQOS; however they have been burned into my mind hotter than a lit cigarette. In the most glaring example, I was at a conference 700 miles from home and my holder malfunctioned and died; I realized I had to go for over a day with no go-go juice!

In my year of IQOS I have so far purchased 3 systems; one died as I have stated and another appears to be on its last legs.

Again these are things I am sure Philip Morris is aware of and hopefully hard at work on in the company lab located in Switzerland... I assume their lab is located deep underground, inside a mountain, where snow melts to form a moat surrounding the only entrance, which is disguised as a non descript but oddly located chocolate store.

I have overall enjoyed my experience with IQOS with, in my opinion, the positives outweighing the negatives. The appearance of health benefits in my experience have me as an advocate of the product.

However I do look forward to the company improving the device, required cleaning and maintenance, but more pressing is that initial smell.

I think at this point it is clear that IQOS has a chance at something special. If the initial data from Philip Morris holds true that IQOS reduces the harmful chemicals released by 90 to 95% compared to traditional cigarettes, then that will be a revolution for the tobacco industry.

If long term studies can confirm this, and that it may indeed improve, perhaps dramatically, the health and lifespan of tobacco users, then we have a serious game changer here.

Add in the rare second game changer, in that their appears to be no "second hand" danger... Meaning that once again, bars, restaurants, workplaces and even dare I say planes and airports could have non-combustible IQOS sections. This would lead to perhaps an arrest of the declining tobacco usage around the world.

The top two factors in my decision to switch to IQOS were, first, my health! I don't really want to die. And second was the social stigma of smoking. Smokers are looked at as dirty, dumb and ignorant.

This social stigma to traditional cigarettes is unlikely to change anytime soon and may even get worse as more and more people are quitting or have never started. I have noticed an interesting phenomenon with IQOS - people don't know how to label me. My doctor labels me on forms as an occasional smoker now, a welcomed downgrade from heavy smoker, and others in my social circle view me as either a hybrid or former smoker and thus have lightened up on the jabbing and social shame of a smoker.

Will this translate to a societal change and allow IQOS users to face reduced or dare I say no ridicule for their choice? Will IQOS usage eventually be accepted in public places? If so, you may want to grab plenty of (PM) stock as the party will be back on and perhaps even better than ever as Philip Morris seems to have the reduced risk product category on lock down currently.

Altria has secured a licensing deal with Philip Morris for the United States market and has recently submitted an application for approval, perhaps coming in 2018 to the USA. So these theories and musings may be put to the test very soon!

If approved in the USA and signs are pointing towards greater acceptance by non smokers, I will be adding to my current position, likely doubling it!

If that happens, I envision you may choose to do the same.

This article was written by

Disclosure: I am/we are long PM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.