Why Apple may follow Nokia to the exit? | Daily News

Why Apple may follow Nokia to the exit?

Customers would sleep on the road overnight. It is cash alone I higher than many countries’ GDP. And it’s market value hit $1 trillion. Looks like Apple was invincible. But in 2007, Nokia too was considered invincible.

What went wrong?

In September 2018, Apple unveiled its new product lineup for 2018. But it did not get the excitement it used to and it did not make an impact on its sales.

Investor worries

Even the holiday season did not help. Apple’s suppliers like Lumentum had production cuts which saw investors interpreting it as a sign that Apple was not having the sales numbers it used to. Apple simply made matters by not releasing its Iphone sales statistics. This raised suspicions that Apple had something to hide.

Raising Prices

Apple has had a policy of fighting lower sales by raising the price of the Iphone, which meant that even though it sold less units, its revenue stayed stable or even went up. By raising prices, it also increased its profit margin bringing in billions of dollars which made Apple’s shares to keep going higher and higher.

Now, with a general slowdown in the global economy, that policy has not worked. The price of the IPhone is too high for consumers and Apple does not do itself a favor when the world has many alternative phone manufacturers offering phones for less than

one fifth the price of an IPhone. The consumers have said enough is enough. Even the diehard Apple fans have simply not gone for an upgrade as they do every year.

Apple’s shift to services business Another strategy which Apple had been telling its investors was that is was going to start making major profits from services it provides. IPhones have been Apple’s single most profit making product but Apple thinks that even though IPhone sales are slowing, there are still millions of

people with IPhones and that Apple can make money from the App Store,

ApplePay and Apple

Music. But investors have not been satisfied as these services though can bring in money, still cannot replace the enormous amounts of profits which came through IPhone handset sales.

US China tensions

The US China trade war has investors worried as around 20% of Apple’s sales comes from China. There is a constant fear about reprisals from the Chinese government against Apple in retaliation for US President Trump’s tariffs against China. The arrest of Huawei’s CFO in Canada at the request of the United States does not help Apple. Huawei is China’s flagship company. Targeting of Huawei by the Americans, makes Apple a very likely target for China in retaliation. Lastly, Apple heavily relies on China for manufacturing its products. Though, Apple

products have been exempt for now, it may not be in the future. President Trump has already said that he is not concern about Apple as it manufactures outside the US. All these have made Apple a risky investment for investors.

Lack of Innovation

Delays in many of Apple’s new services being rolled out have contributed to the impatience among investors. Apple not having 5G for its next IPhone, while most of its rivals will be having 5G will be another mistake from Apple as analysts say Apple is falling back on innovation.

Many consumers complain that Apple does not add new features to its next IPhone release even though it can so that Apple can keep it for the IPhone after that. This is at a time when its rivals Samsung and Huawei add the latest features to their next phone releases. Apple has already moved down to 3rd place after Huawei overtook it.

Nokia was the King before Apple

In 2007, when the first IPhone was launched, if someone had said Nokia will be wiped out in a few years, he would have been called crazy.

That was the sheer domination Nokia had on the market in 2007. But today, Nokia is gone. Apple stores have no more queues. Even its hardcore fans complain of a lack of innovation. Apple may have found out that it cannot fool all the people all the time.

(The writer is a Guest Columnist and Director of Hubpoint)


 

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