As of late Apple and its investors have been watching their beloved iPhone’s sales decline and the latest XS and XR didn’t help to bring them up.
Unexpectedly, smart phone sales are down everywhere in the world, and iPhones are also in the same boat. Apple even went as far as to stop reporting iPhone unit sales to try and save their reputation. Despite those attempts, their stock is down.
It turns out, the demand might be flat simply because the market is saturated and there is simply no need for new devices every year. The sales are down and everybody is scrambling to find ways to boost them. Apple is discounting their iPhones and looking for innovations to stop the decline that started happening this year, first time since 2001. To add to investors’ stress is news that long-time design chief and Steve Jobs’ collaborator Jony Ive will be resigning and leaving.
Term “The next iPhone” used to be a referral to an innovative product that any company can develop and see their sales soar. Today Apple is in the need of its own “The next iPhone”.
Apple has a few products and services on the market now and some concepts currently in the developmental stages, so there is hope. We decided to do some analysis and comparison to determine if that one saving grace is on the horizon for the company and all of us.
1. What services does Apple offer and can they help?
Apple currently has over 1.4 billion active installed devices and that offers countless ways to get customers to buy various services for all their phones, watches, tablets, and computers.
This is where new services come in. Think Apple Music, Apple Pay, movies, iTunes and new Apple Card, Apple TV+, Apple News+, and Apple Arcade.
The revenue from all these services together is on the rise and saving Apple one day at a time. It’s also growing fast and is based on subscriptions, so there is recurring income versus unpredictable hardware demand. Services revenue also carries high margins once the entire infrastructure is in place, which currently seems to be.
According to financial analysts, Apple should rely on services heavily because in the next 3 years they will be bringing the most revenue. There is also a risk of lawsuits and backlash against Apple monopoly-like situation when it comes to apps, but that’s not quite imminent just yet.
2. How is Apple watch doing?
When Apple watch was introduced in 2015, it was supposed to be the next “it” item and beat the sales of iPhone, which were at 3.7 million the year the smart phone was first introduced. While there were 12 million units of watches sold in 2015, it fell way short of optimistic predictions of over 40 million.
The watch saw countless improvements over the years and became a fitness tool with electrocardiography function and fall detection enjoying over 22 million units sales in 2018. Despite its popularity it never became “The next iPhone”.
The potential is still there though, especially with the focus on health and rumored blood sugar monitoring technology in the works. Diabetes is on the rise and the need for blood sugar monitors is expected to grow from $21.9 million current market to $38.5 billion in 2026.
Apple and Fitbit are both working on getting into health insurance market. The ideal outcome of this collaboration would be a free Apple watch for every customer to encourage fitness activities and to serve as health issue alert device, which would be a lot cheaper than constant doctor visits and full blown health crises. This is especially essential and profitable as our population is aging.
3. What is Project Titan?
Smart phones have nothing on auto industry, as it turns out. Auto industry is on the verge of total explosion of electronic cars and autonomous technologies. According to rumors and news bits, Apple is pursuing its next cash cow – automotive market product. They already have the name and the technology in place, so the venture there is only natural. The secret project is tentatively named “Project Titan”, has 5,000 employees, and growing.
There are currently Apple self-driving cars in California and nobody knows what exactly the new direction entails – electric cars, autonomous technology, or some collaboration with traditional auto manufacturers. Some people think Apple is working on a physical car that could be unveiled by 2023-2025. Others claim that Apple is merely assisting existing manufacturers with technology. If that’s the case, licensing and technology will still bring revenue in while we all eagerly wait for that Apple car.
4. Augmented Reality Apple glasses?
This would not be a new concept, nothing like cell phone market with Apple iPhone entrance and disruption, but there are a few things to be said about this too. Google and Microsoft have been there and done that with disastrous results and public ridicule. Google is currently renewing their Google Glass AR project for business and Microsoft has always stuck to corporate strategy for its HoloLens AR glasses.
Despite initial fail, the augmented reality remains popular and useful despite technological limitations. Ikea uses it on its app for home visualization and Pokemon Go game was a global phenomenon all thanks to AR.
Apple has been interested in this technology for years with their ARKit framework for software developers and attempts to buy AR Startup Leap Motion. Who knows, the company might be developing AR glasses to blow away all other such glasses. This would be spot on for the estimated $85 billion AR market expected by 2025 ($4.2 billion in 2017)
For now the AR is mainly developing in medical and industrial sectors, and consumer demand is not likely to catch up, at least not for a while.
5. What potential does folding iPhone have?
This concept was in the news for the past year and not always for good reasons – futuristic looks, ridiculously high prices, and the delay of Samsung’s Galaxy Fold due to multiple failures. One thing is for certain – there is huge potential for this perfect technology and resulting $2,000+ price points. All Apple needs to do is come out with superior looks and technology and folding iPhone might just be their “The next iPhone”.
Finally, maybe there is no such one product that will carry the entire Apple on its back, at least not yet? Maybe it’s the combination of all of them, new and old?
Apple relied on a few product for years and that might have been the biggest mistake. The saving of the company might be in improving current products and developing new technologies because nothing is constant in this world, especially when it comes to technology.
Many experts agree that the current sales decline is temporary and Apple will bounce back in the near future because the company was always capable of great things and innovations. That leap remains to be seen and we will be eagerly awaiting that and all the new technologies to make our lives easier and more fun.