Apple is doing well and it is among the best performing U.S companies. Its stock has a value of approximately $945 billion and shares trade at around $200.
If you research more about Apple’s business, you will realize that there are many reasons why investors have a reason to worry. Below are seven reasons that indicate that Apple, AAPL, will become a risky business for the first time to invest in over a decade, in the coming two years.
Apple’s Market is Full
Apple has control of over 87% of profits that accrue from the smartphone industry. It is now selling 19% of units, causing the demand for the iPhones to reduce. The number of iPhones shipped has also significantly reduced.
As a means of mitigating the reducing numbers, Apple has changed the way it reports its numbers. Because of the few changes made in iPhones, people are holding their devices for a more extended period without buying new ones. Some people are also going for competitor’s devices. This is bad news since the iPhone contributes the most significant share of Apple’s profits.
Apple has Reduced its Efforts to Remain The Best
This is in comparison with Microsoft, MSFT, which is focused very much on short term profits to benefit the shareholders making it miss Mobile, Cloud and Big Data during the era of Steve Ballmer. However, Satya Nadella came up with a solution to the problem in less than a decade.
Apple is now in the same problem again under the administration of Tim Cook since the company’s concern is much about the investors compared to its customers and users. Innovation and design is no longer the company’s primary goal. It is no doubt that investors are essential but in the long term business, Apple has lost a significant number of their customers.
Identity Crisis in Apple
During the times when Apple was challenging its competitors, it disrupted, innovated and thought different. When Apple was serving, it let loose its identity, purpose, goal and vision. Apple is now making efforts to be everything, be it a credit card company, Netflix, Reader’s Digest News and at times an AR company.
Apple is always looking back for ideas instead of focusing on the future. The company is failing because of a lack of vision. Tim Cook is using spreadsheets which don’t make a product great while Steve Jobs had a vision and that why the company was prospering.
Apple is Failing on Innovation
A market creator, Steve Jobs was with his model that was building new markets from new product categories which had potential.
The success of Apple was as a result of proper risk calculation and right timing. Unlike then, today Apple is not in a position to open new markets where it can grow. It ought to be the Mixed Reality (XR) company and the smart company but not Google or Amazon. Apple ought to be at the forefront of XR product producers doing better than Facebook FB.
Apple is Lagging Behind
Mobile tech companies like Samsung and Huawei are inventing new technology like 5G and plethora. On the other hand, Apple Smartphone up to now still has 2017 specifications meaning it is one year behind. Rumors have it hat the first 5G Apple phone has been postponed up to 2021.
On the computer side, other computer companies are working on laptops with Always Connected PCs while Apple still doesn’t have a touch screen laptop. Different competitor laptops have impressive VR while Apple is still working on it. Consumers are eagerly waiting for the launch of new products while charging high premiums will not work for so long.
There is Decline in The Quality of Apple Products
Steve Jobs ensured that shipped products were of high quality. Unfortunately, under Tim Cook, low-quality products are allowed to leave the company. Some of them require software update and hardware problems.
One of the issues that have remained unresolved for long is the MacBook keyboard. Quartz in an article recently asked if Apple minds its PC’s anymore. Customers do not want to pay premiums anymore yet they are still experiencing quality control issues that they are trying to escape.
Apple is Losing Consumers’ Trust
There has been an increase in misdoings by Apple. Among them is lying to its customers, stealing intellectual property and bullying its suppliers. It also gives third part apps control of your screen. This is making its consumers skeptical and resentful towards the company’s products.
The company won’t crumble overnight but somehow it will with time. Apart from the obvious seven problems Apple is facing, it should be cautious of the Qualcomm QCOM. Although the companies have recently settled their lawsuit and agreed to work together for the next 6 years, it is all up in the air what happens after.