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For the first time in thirteen years, Apple went through a decline in revenue but that’s no longer news. The Chinese market has been Apple’s biggest stronghold but it appears the company is gradually losing it. The last quarterly market analytics shows that Apple may be heading towards a very hard time but then, it may be too early to judge.
Has Apple reached its zenith already? Is the once most valuable brand in the world to become the next Nokia? Is Apple’s future doomed like the once-famous Blackberry? These are the may questions that make the future of Apple appear gloomy but again, it may be too early to predict.
The rise of Chinese brands
The last quarter sprung some surprises as Oppo and Vivo made the list of the top 5 smartphone vendors in the world. Apple lost a fairly large chunk of its market share and the biggest gainers were Huawei, Oppo and Vivo. Apple is losing China and this doesn’t look good.
From 18.3% market share in Q1 2015, Apple’s market share dropped to 15.3% in the first quarter of 2016 leading to a YoY decline of -16.3%. Samsung too took a hit but this is a mere -0.6% and this is the same company that recently overtook Apple as the largest smartphone vendor in the US. Chinese brands on the other hand had interesting year-over-year changes with Huawei recording 58.4%, Vivo recording 123.8% and Oppo with a whopping 153.2% YoY growth.
China accounts to for the largest sales of the iPhone in recent years but recent statistics shows that homegrown brands like Huawei playing in the high-end market may be affecting sales of Apple products. Jan Dawson, founder of tech consulting company Jackdaw Research said:
Whereas China accounted for half or more of the company’s revenue growth for several quarters, it’s now accounting for half its year on year shrinkage. One of Apple’s biggest drivers of growth has become a driver of decline.
This isn’t good news and there are speculations Apple might have reached its peak already. As its Chinese market share appears to be dwindling, the company seem to see India as the next gold mine. Apple’s attempt to sell used phones in India, Tim Cook’s visit to the country and the planned Foxconn plant in India all suggests this.
Lack of innovation?
Since the demise of Steve Jobs, the iPhone keeps going through its evolution but the company has been accused of losing touch with its disruptive innovations and product simplicity. In terms of innovation, Apple appears to be trailing behind in these recent years and nothing out of the ordinary has been witnessed.
Apart from being the first to utilize a 64-bit processor on the iPhone 5s, a pressure-sensitive display on the iPhone 6s and a few others, Apple’s magic touch may not be as strong as it used to be.
Loyalists would argue that the company still has it and truthfully, this may not necessarily be the reason for this major decline in the company’s market share.
Does Apple need to consider the mid-range market?
Apple has made failed attempts to enter the mid-range market and this has never worked. iPhone 5c was supposed to be the “cheap iPhone” but this was just a flop. Despite being touted as the affordable one, the device didn’t appeal to the target market as there are better devices within the same price range running Android OS.
Of course, the recently released iPhone SE too has a price tag that’s relatively cheap compared with the iPhone 6s, no one wants to use a tiny 4-inch device anymore and again, the device is not actually that cheap.
Well, one might argue that the iPhone SE wasn’t meant to be another iPhone 5c but Apple’s attempt to put the power of the iPhone 6s into a smaller shell for those who prefer 4-inch devices.
Now, does Apple really need to seriously consider the mid-range market with a much better approach to weather the storm?
Perhaps it’s all a cyclical change
With the introduction of larger iPhones, Apple’s revenue grew massively over a period of 18 months or so. The growth was explosive and things may just be returning to normal, giving the impression that they are slowing down. The company is also very optimistic about the sales of the next generation iPhone and Apple is reported to be prepping 72-78 million devices ahead of launch. Analysts also suggest that sales will smash existing records this year.
Also, as the iconic iPhone clocks 10 years in 2017, the 10th year anniversary will likely see a redesigned device and Apple may bring back the magical piece it introduced in 2007.