Apple has been forced to swallow some unpleasant medicine in the last few days, as the earnings call for the consumer electronics giant disappointed investors. In response to the sub-par sales data, Apple stock briefly plummeted as much as 8 percent on Wednesday alone, and £46 billion was ultimately wiped out from the market capitalization of the company. Apple shares are now trading at below $100, and the short-term climate for the company seems to be extremely challenging.
The most damning aspect of the financial figures for Apple was the fact that the iconic iPhone unit recorded its first ever year-over-year sales decline. Apple had cautiously predicted this previously, but the reality of the number of iPhone units dipping from the same period in 2015 was still unpalatable for the corporation. The Apple story has been one of relentless success in recent years, but now the company faces challenges demonstrating that it has a viable business model and the potential for growth for the first time in many years.
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To put today’s financial results into perspective, the decline was the first since 2003, when Apple released iTunes for the iPod on the Windows platform. Obviously quite a while ago, so perhaps the market-leading manufacturer of consumer electronics can be forgiven this first blip in many years. Nonetheless, with sales of iPhones, Macs and iPads all in significant decline, there is massive pressure on Apple to deliver something outstanding in 2016.
Thus, in the short-term attention will undoubtedly switch to the Apple Watch 2 and iPhone 7 Pro. These are the two new big devices on the horizon that can represent a genuine innovation for the company, with the mooted Apple Car possibly a longer term growth creator for the corporation as well.
Although Apple would love to generate new sources of revenue, there is no doubt that the iPhone range remains incredibly important to the California-based company. The iPhone series still generates around two-thirds of Apple’s revenue, and even though the company would love to diversify somewhat, it is clear that for the foreseeable future the iPhone will remain absolutely central to everything that it does.
Yet recent iPhone releases have not really impressed anyone, whether consumers, critics or investors. Apple has certainly shifted a huge amount of smartphone units since Tim Cook took over the CEO position at the company, but Apple’s general policy has been accused by many of being rather negative and conservative.
Instead of delivering the sort of innovative devices on which the company made its name, recent smartphone releases from Apple have been little more than upgrades of the existing base model of the iPhone. In a smartphone market place that is balkanising and becoming more challenging for the major players, this has eventually come home to roost in Apple sales figures. Indeed, Apple has been largely reliant on non-traditional marketplaces in order to achieve growth in the last couple of years, but it now seems that its sales in territories such as China are stagnating.
iPhone 7 Pro upgrade
So can the iPhone 7 Pro play a major role in reinvigorating Apple’s fortunes? Well, early indications regarding this smartphone contender are that it will not necessarily be a huge departure from the existing iPhone range. Schematics indicate that the iPhone 7 Pro will feature the same thickness as the existing iPhone 6S Plus, 7.3mm, and largely identical dimensions.
However, Apple has seemingly included some new features in the iPhone 7 Pro, with space for a dual-lens camera apparent, and also a smartphone connector on the bottom rear side of the device. This latter feature could be utilized for both data transfer and charging, indicating that Apple is considering the flexibility of the unit.
It is also hoped that Apple will increase the screen resolution of the iPhone 7 Pro in comparison to other devices, which would certainly be an attractive proposition for consumers. However, it is harder to assert in the early renderings of the iPhone 7 Pro that there is anything particularly revolutionary included in it, and the rest of the iPhone 7 range will likely be based on incremental spec upgrades. Indeed, it has already been noted by analysts that the iPhone 8 is more likely to be the revolutionary new Apple smartphone in 2017.
The first Apple Watch can be considered something of a qualified success for Apple, enabling the smartphone competitor to dominate the Marketplace for wearables, but not receiving the sort of customer and commercial impact that the consumer electronics giant perhaps hoped for. There was also a fundamental failure to define the true purpose of the Apple Watch in the original iteration of the smartwatch series.
Early reports on the Apple Watch 2 suggest that Apple is currently working on including cellular connectivity and a faster processor in this new smartwatch. Apple will ensure that there is greater independence from the iPhone series than in the previous release, and there are also suggestions that a new mid-range model will be introduced in order to compete with entry-level Rolex and Omega variants.
Apple is also expected to include new health-tracking functionality that was delayed when the original Apple Watch was released. So this could be the most technologically advanced smartwatch that has yet to hit the market, and certainly a step forward over the original Apple Watch. But is it enough in the short-term to reverse Apple’s alarming slide?
Apple to recover in 2017
It seems that the iPhone 7 Pro and Apple Watch 2 are nowhere near revolutionary enough to see Apple’s fortunes recover in 2016. Indeed, analysts have already suggested that the smartphone manufacturer will fall further in the remainder of the calendar year, and that its sales of iPhone units will recede even more appreciably.
However, the longer term prospects for the corporation look brighter, with a report last week suggesting that a revolutionary iPhone 8 in 2017 will lead to sales growing by as much as 10 percent. The production of electric Aple Car could also be the next disruptive blow that Apple delivers in the consumer electronics marketplace. So don’t write off the market-leader just yet, but do expect 2016 to be a troubling year for Apple.