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Apple grinding to a halt

by on27 April 2016

Bottom end hit by lack of ideas

Apple has begun its slow death march to oblivion as it is unable to come up with the new products which gave it its innovative image – yesterday Apple posted its first-ever decline in iPhone sales and its first revenue drop in 13 years.

The Tame Apple Press is doing its best to spin the story claiming that it is all due to a saturated market and currency woes, but the fact is that Apple has not had a new product since the tablet fad failed and its iPhone has fallen behind the competition in everything but price.

The company's sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues.

China is proving to be a grave yard for Apple. Once touted as its great white hope, Apple failed to understand that particular market. While some Chinese would buy an iPhone for status, they are more likely to want the best spec on the market for the lowest price. Chinese economy has forced those who might want an Apple status symbol to look for something better, cheaper.

Revenue of $50.56 billion missed expectations of $51.97 billion. Apple said it sold 51.2 million iPhones in its second fiscal quarter, down from 61.2 million in the same quarter a year ago. These would normally be considered good figures, particularly in a saturated market, but Apple’s share price is propped up on expectations of growth, something which cannot happen with Jobs’ Mob’s current business plan.

The Tame Apple Press said that this was just a quarter glitch and Apple will return to growth when it releases the iPhone 7. However indications are that the iPhone 7 will be an iPhone 6S with a better chip and little else. In fact the one innovation will be the loss of a headphone jack and its replacement with a wireless connection. This will mean that Apple users who have invested in a more expensive set of headphones will have to buy a new expensive set. It might make them think twice about upgrading.

Apple has already fallen behind its rivals in the smartphone business and does not appear to be too concerned. This year it arrogantly released an old smartphone design with a smaller screen which shows how little it really cares.

Neil Saunders, chief executive of research firm Conlumino said that Apple needs to come up with a radical new innovation or product rather than just the current incremental improvements to existing products. This is the only way in which it will reinvigorate sales growth.

Apple Chief Financial Officer Luca Maestri blamed Jobs’ Mob’s previous success with the iPhone 6 a year earlier for setting a difficult bar to beat in the second quarter. She said that the iPhone 6 was “an anomaly” – well it did rather bend a lot. But saying that means that Apple does not think it can top it.

The implication is that Apple will just produce moderate spec improvements and hope that eventually all the iPhone 6’s will die.

Chief Executive Tim Cook told analysts that the smartphone market was not growing, reinforcing wider concerns of saturation.
Cook also conceded that the iPhone 6S was driving customers to replace phones at a much lower rate than the 6. "I don't mean just a hair lower; it's a lot lower," he said. "If we'd had the same rate on 6S as 6, it would be time for a huge party."

Tim, you would have had that party if you had just launched new and better products.

Cook pointed to the services division, which includes Apple Music and the App Store, as a bright spot. Its revenue grew 20 percent to $6 billion and surpassed iMac and iPad sales.

However if Apple hopes that these will save its bacon it will be sadly mistaken. It needs China for them to work and the Chinese have already banned everything other than Apple pay. They also need people to buy iPhones for access them.

Cook also hinted that Apple had more gadgets to come. "The future of Apple is very bright," he said. "Our product pipeline has amazing innovations in store."

Yeah, don’t hold your breath. It is just as well you are sitting on a pile of cash from previous years because it is all downhill from here.

Last modified on 27 April 2016
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