Apple’s disappointing second quarter earnings – including the first-ever drop in sales for the iPhone – sent the company’s stock tumbling for eight consecutive trading sessions. It was the first such drop since 1998 and, coupled with comments by activist investor Carl Icahn that he has dumped his shares in the company, it accelerated worries about how Apple will deliver the strong future growth that investors have come to expect.

Coming off more than a decade of blockbuster products, Apple Inc – the most valuable company in the world based on market capitalization — has become so large that Wharton experts say it is now confronting the law of large numbers, which suggests that its high earnings and growth in share price will eventually slow.

At this point, what Apple needs is its next iPhone – but Wharton experts caution that it will take more than moonshots to cement robust future growth for the company. Moreover, it’s unlikely that the company can come up with a new hit product that will rapidly improve sales immediately. In the meantime, the iPhone is coming off a strong upgrade cycle, the iPad has lost momentum, and the Apple Watch, while successful to some degree, hasn’t moved the needle as significantly as many past new products.

“No … company can grow forever. Apple has had an extraordinary run, and it’s still a phenomenally successful company,” says Kevin Werbach, a legal studies and business ethics professor at Wharton. “Few companies in history have ever had a product as successful as the iPhone, so it’s a bit much to expect that Apple find a second one.”

An Expectations Problem?

Apple’s sales for the fiscal year ending Sept 30, 2015, were $233.7 billion, up from $182.8 billion in fiscal 2014. By contrast, in fiscal 2011, Apple sales were $108.2 billion, which was up from $36.54 billion in fiscal 2009. Wall Street is expecting Apple to grow revenue by under 4% in fiscal 2016, compared with a 28% revenue expansion in the last fiscal year, Thomson Reuters reported in January.

While the smartphone market globally may be hitting the saturation point, Apple CEO Tim Cook noted that the iPhone, which accounts for 65% of the company’s revenue, can still take share from Android users and grow globally. Though the earnings announcement was disappointing in the face of past successes, Apple is hardly hurting: Second quarter net income was $10.5 billion on revenue of $50.6 billion. A year ago, Apple reported second quarter earnings of $13.6 billion on revenue of $58 billion.

Cook said on the company’s earnings call that Apple’s iPhone business is still strong. “From an upgrade perspective, during the first half of this year, the upgrade rate for the iPhone 6s cycle has been slightly higher than what we experienced in the iPhone 5s cycle two years ago, but it is lower than the accelerated upgrade rate we saw with iPhone 6, which as you know, was a big contributor to our phenomenal revenue growth a year ago,” said Cook on the April 26 call. “We continued to see a very high level of customers switching to iPhone from Android and other operating systems. In fact, we added more switchers from Android and other platforms in the first half of this year than any other six-month period ever.”

Nevertheless, analysts are anxious about what Apple has in the iPhone pipeline in the future. “There was massive pent up demand for larger screens. This led to the mother of all upgrades when the iPhone 6 was released,” explained Macquarie analyst Ben Schachter in a research note. “We don’t think this is anything structural and will be solved by time. However, a second issue is a more significant concern. We believe that the lack of new ‘must have’ innovative features will lengthen the upgrade cycle. If iPhone 7 doesn’t surprise with meaningful new useful features, we worry that consumers won’t upgrade.”

“No … company can grow forever. Apple has had an extraordinary run, and it’s still a phenomenally successful company.”–Kevin Werbach

In other words, the smartphone market is starting to look more like the PC industry, where there is little to differentiate different companies’ product lines and customers stretch the lifespans of their systems for longer than vendors would like. “The market is gradually shifting from smartphone introduction to smartphones on a replacement cycle,” says Werbach. “That’s simply not going to be as dynamic a market opportunity, although it will still be a very good one. Microsoft is still doing fine after personal computers shifted from a rapid growth market to one based on replacement, although it’s not the rocket ship it once was.”

But it’s clear that Apple’s once-hot product line is cooling. For the second quarter, Apple’s iPhone revenue was down 18%, iPad revenue fell 19% and Mac revenue fell 9%. On the bright side, Apple’s services category (which includes Apple Music and iCloud subscriptions, software sales and App and iTunes store revenue) was up 20% to $5.99 billion in the second quarter. Apple’s “Other Products” category, which includes Apple Watch, Apple TV and Beats headphones, increased 30% to $2.19 billion.

“The next two to three quarters will be critical for Apple because there’s a problem of expectations for both the iPad and iPhone,” says Saikat Chaudhuri, an adjunct professor of management at Wharton and executive director of the school’s Mack Institute for Innovation Management. “There’s a natural maturation process, and Apple is big and slowing down.”

‘One Great Innovation Can Last for a Decade’

David Hsu, a management professor at Wharton, says that Apple’s conundrum isn’t unique. Many companies such as Microsoft and IBM have developed new technologies to grow quickly, but then are forced to reinvent their businesses. “One great innovation can last for a decade,” explains Hsu. “But the broader issue is that the smartphone category has matured and many people have multiple devices. It’s hard to sustain the iPhone growth and create new products because Apple is following up the most popular product in history.

“There’s no doomsday picture here,” adds Hsu. “But the iPhone peak may have already passed.”

Indeed, Apple projected further deceleration in sales as third quarter revenue is expected to be $41 billion to $43 billion. Average selling prices will also fall due to the launch of the iPhone SE, a 4-inch phone device that’s less expensive and aimed at emerging markets. “It is becoming clear that Apple has a significant iPhone growth problem on its hands,” said Neil Cybart, a former Wall Street analyst who follows the company via his subscription Above Avalon site. “The combination of a slowing iPhone upgrade rate and declining number of growth catalysts for expanding the iPhone’s addressable market will make it very difficult for management to report unit sales growth going forward given its current strategy.”

However, Peter Fader, a marketing professor at Wharton, isn’t worried about Apple. “Customers are more in love with Apple than ever before. I’d be worried if Apple customers were switching to Android and Mac users were going to Windows,” says Fader. “There has been crazy growth, but Apple still has health and stability. Maybe Apple doesn’t have to swing for the fences.”

“The next two to three quarters will be critical for

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