Sales are down, the profit basket has shrunk, for the first time in Apple’s last 13 years, after 2003, in the last financial quarter. And it is driven by a massive drop in iPhone sales – the first time ever in the iPhone history. And everyone is writing about it.
Why it is so significant to write volumes about it?
After all, it happens with every brand, especially when it is about a tool of technology – as every pioneering technology is bound to become obsolete with time.
But Apple is different – for the way it has created a visible brand perception around the world – something that we can sum up as ‘beauty with a brain’ concept – something unheard of before Apple brings its products – yes that has been the unique hallmark of Apple making its products since Macintosh in 1984 stand out in the market – creating a cult following – that reached to phenomenal levels since the iPhone launch in 2007.
But the ebb is coming now.
Because of its over-reliant on iPhone only!
The first quarter slump in iPhone sales is here and it is massive – 10 million units – from 61 to 51 million units a year ago.
The Apple story since 2007 is the iPhone story – the smartphone that took the world by storm – registering stupendous growth year-over-year – from 3.7 million units in 2007 to 231 million units in 2015 – that is staggering over 600%.
In fact the world’s biggest listed company is solely dependent on iPhone for two thirds of its revenue. iPhone has made Apple the biggest corporation on Earth.
But that cannot last forever.
Unless Apple comes with another blockbuster product or some blockbuster enhancement to the existing line of iPhones!
Because, it’s largest market in the US is nearing saturation.
Because, it’s second most important market in China is the chief culprit in bringing down its revenue – 26% down in Hong Kong and Taiwan and 11% in mainland China.
Chinese companies are fast emerging as Apple’s alterative for ‘beauty with a brain’ smartphones with much cheaper prices and can replace Apple easily in a market that has been Apple’s growth engine. And we should always remember that China is a protectionist regime and would see interests of its home grown companies first.
Because, Apple has failed to capture the third largest smartphone market in the world, i.e., India. Apple’s market share in India is still less than 2%. Moreover, according to a Morgan Stanley report, India is projected to become the second largest smartphone market by 2017 overtaking the US.
Though, after faltering for years, Apple is now trying to tweak its strategy in India, offering older versions of iPhones for lower prices or launching the cheaper iPhone SE. But that is not working. The impression goes that Apple sees India as a dumping ground for old versions of iPhones. At $500, iPhone SE, a low priced version with a smaller screen size, and resembling much older iPhone 4S, was again a failure. People can have a much better smartphone than iPhone SE at a much lower price in the Indian market.
For most Indian consumers, they may still see beauty in the iPhone range but they fail to find any brain there.
Though for different reasons, the trend is spreading across the world – in other markets. Apple has been able to maintain the beauty quotient of iPhone but cosmetic measures like enhancing screen size or upgrading camera or operation system or introducing a personal virtual manager or even a biometric identification system with touch ID fingerprint sensor are now proving inefficient in keeping the ‘brainy’ tag of iPhone intact. These technologies are good but can’t act as differentiators for your brand identity because everyone else is also coming with them.
So, where is the new market for Apple – that can sustain its astonishingly high market capitalization and revenue figures?
So, unless Apple comes with something new, an innovation sort of offering a gadget that we see in Sci-Fi flicks, means it is ahead of the competition and thus creates new markets for its products in not so ‘price conscious’ markets like India, the trouble is going to grow.
A crude way to say that is, people have become sceptical of Apple’s motives, after just marginal enhancements in every subsequent generation iPhone, without offering any breakthrough.
iPhone is fast losing its ‘beauty with a brain’ tag. The law of average is catching up with it.
©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/