Apple, once the biggest smartphone manufacturer in the world, might face some hard times this year as its weak results, publicly shared a few weeks ago, shocked the public eye. Apple’s stock has fallen 36% Since last October.
The latest IPhone sales report was so concerning for investors, that Tim Cook, Apple’s CEO gave an interview on national TV in the United States and sent investors a letter to reassure its audience.
Cook said that poor sales in mainland China, one of the brand’s top countries, was due to the tariffs rule passed by Donald Trump. However, analysts argue that Apple high prices might have been the cause of this decline.
In response, Tim Cook announced new products in order to reach new audiences, including new services for TV and News, as well as new Air Pods and a brand new Mac Pro.
Did tariffs really affect Apple’s sales?
It seems that the era where Apple was rejoicing of reaching the milestone valuation of $1 trillion last August is… far away. With a very weak demand from China, the giant manufacturer has missed sale targets and disappointed its pool of investors.
As a reminder, “Greater China is Apple’s third-largest market by revenue, accounting for about 18 percent in the fiscal fourth quarter”. analyses CNBC. While Tim Cook says that the tariffs passed by Donald Trump might have affected the cost of Apple’s products in the country and created a lower demand, analysts have another read on the situation.
For the past few years, competitive priced smartphones have emerged – and have been catching the eye of consumers. From Huawei to Xiaomi, Chinese manufacturers have bet on the “Made in China” stamp and cheaper prices – starting prices are at $100, compared to $749 for Apple – to attract a patriotic clientele. As a result, Huawei beat Apple in China for its 2018 Q2.
Apple's new Q1 guidance:
• Revenue guidance of $84B, down from $89B to $93B
• Gross margin guidance lowered to about 38% from between 38% and 38.5%
Full story: https://t.co/iOf79ebo17
— CNBC Now (@CNBCnow) January 2, 2019
Moreover, Apple seems to encounter hardships to remain competitive – which is why Cook has declared the brand will launch new products this year, offering more “connectivity”, something that Huawei has excelled in.
Has Apple lost its leadership?
Apple is trying hard to get back on track on something that has made the brand iconic: its forward-thinking innovative designs.
Fans and investors agree to say that it is about time: the brand has been struggling since its founder’s death, Steve Jobs, in 2011, as Apple has started 2019 with the first profit warning in 17 years.
As the most anticipated tech event in the United States CES is about to start in Las Vegas next week, other brands have already revealed innovative devices for this year, such as Samsung who designed a foldable smartphone (video above).
Apple does not seem to reveal any kind of ground-breaking device anytime soon. While 2018 IPhone XS was set to be “waterproof”, many customers have shared flaws and reported incidents for this feature. The smartphone can only go down to 6.5 feet for a maximal duration of 30 minutes.
To some experts, such as Nigel Vaz, emerging markets and Asia-Pacific CEO of Publicis, “the mobile market is maturing, and customers can no longer be relied upon to upgrade every time a new iPhone is released”.
In other words, it will be challenging for Apple to resume its leadership, as the market has become extremely competitive and Apple top engineers have left for other new companies, such as Samsung and Huawei.
New products for a new audience
All in all, IPhones sales are falling short likely because of their prices, reports several analysts. A reality that Cook has tried to admit while giving a 44-minute long interview to CNBC last week.
As CNBC reports, “Apple’s AirPods are the company’s most popular accessory ever, according to TF International Securities analyst Ming-Chi Kuo”. As a result, a new model is expected in 2019. The new version should be water-resistant, noise-cancelling and could connect with the Apple Watch more efficiently, especially for fitness trackers and applications.
There will also be “over the ear” headphones similar to what Apple already sells through Beats.
Last but not least, Apple is set to offer free TV shows to its new clients, as it just launched the first 4K TV device. With this strategy, the brand hopes to attract consumers with a competitive offer, in order to gain attracts potential subscribers from Netflix, Hulu and HBO.
A few hours ago, Apple has revealed a pro-privacy 13-story billboard ahead of CES in Las Vegas, where it is written: “What happens on your IPhone stays on your IPhone”, with a link to Apple’s privacy website.
It seems that the giant’s strategy for this year is to show its transparency; a more inclusive image that might help the brand getting back to its glory days.