"The king is dead. Long live the king," Kass said on CNBC's "Futures Now," as Apple shares dropped about 10 percent to $460 a share. "The company faces a much more difficult business landscape, the competition is escalating and that's going to challenge profitability over the next couple of years."
(For a different perspective, see: What's Wrong With Apple? It's Not What You Think)
From the iPod to the iPhone and iPad, Apple had long released one "market-defining" product after another, but the tech company has grown so large that it's losing its "first-mover advantage" and its competitors are catching up, Kass said. The popularity of Amazon's Kindle and Google's Nexus 7 has crowded the tablet market. Apple's iPhone faces increased competition from Google's Android and Samsung's Galaxy operating systems. (Read More: Apple 'A Broken Company': Gundlach)
Apple's drop wiped out roughly $50 billion in its market capitalization to $432 billion, leaving the company vulnerable to losing its status as the most valuable U.S. company to second place Exxon Mobil at $417 billion. It's also lost some of its influence in the Nasdaq 100, CNBC's Seema Mody reports. At its high of $705 a share, Apple had accounted for about 20 percent of the Nasdaq 100, Moody said. Today, however, it accounts for just 13 percent of the Nasdaq.
Apple's disappointing results drew a round of price-target cuts from brokerages. At least 14 brokerages, including Barclays Capital, Credit Suisse and Deutsche Bank, cut their price target on the stock by $142 on average. Morgan Stanley removed the stock from its "best ideas" list.
On Tuesday, Kass correctly predicted Apple would likely report disappointing results. Looking ahead, he thinks the company will be more conservative on its forward guidance, tempering earnings expectations. (Read More: Why Doug Kass, Marc Faber Remain Bearish on Apple)
"This speaks volumes of a company who is maturing and whose valuation will settle into what most large tech companies sell in terms of valuation," Kass said, making a comparison to Microsoft, which was another widely owned and popular stock until it cooled off in the late 1990s. "They're both maturing, large cash flow stories. In the late '80s, early '90s, Microsoft expectations were elevated similar to what Apple was, let's say, in the middle of 2012."
(Read More: Apple Should Not Be Trading at This Multiple: Cramer)
Like Microsoft, Apple will probably be perceived by Wall Street as a "large cash flow generator with limited secular earnings growth," Kass said.
Going forward, he thinks the stock will likely languish between $425 and $500 for "as long as the eye can see."