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CNN said:Article Link: Apple is in trouble!
Apple is in deep trouble. With a ten percent drop in its stock price on the day and low sales forecast in China, the technology behemoth is facing a tough quarter ahead.
Samsung, the largest conglomerate in South Korea, is also struggling to deal with low sales. As smartphones users feel less compelled to acquire new models, satisfied with older versions, smartphone manufacturers could continue to see a decline in sales throughout the years to come.
Dilemma of Apple
Apple shares took a 10 percent haircut on Thursday.On January 2, Tim Cook, the CEO of Apple, wrote in a letter to the investors of the company that the firm’s projected revenue is expected to be lower than its initial expectation.
Cook wrote:Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance. While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates.Due to the ongoing trade war and the unresolved tension between the two countries, the overall demand and popularity of Apple products in China declined in recent months.
Similar to the U.S., Japan, and South Korea, the economy of China, affected by the poor performance of its stock market, has weakened throughout 2018. The slow rate of growth of the Chinese economy, as well as the conflict between local conglomerates such as Huawei and Western authorities, are said to have contributed to the decline in sales of Apple products.
Cook said:China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States.Within merely few hours, the stock price of Apple plunged from $158 to $142.5, by nearly 10 percent.
The steep sell-off of Apple shares comes from the company’s belief that the root issue that caused the company to struggle in the past quarter is the increasing tension between the U.S. and China.
However, if the trade war is the driving factor of Apple’s declining sales and it remains uncertain whether a comprehensive trade deal will be established by March 1, investors cannot possibly expect the performance of the company in China to improve in the short-term.
Apple Doesn’t Understand the Real Issue
Apple CEO Tim Cook said that customers weren’t upgrading to newer device models as quickly as the company expected.As The Verge social networks columnist Casey Newton said, many analysts have pointed towards the high specifications and strong performance of Apple’s previous mobile phone models as the major contributing factor to the company’s short-term struggle.
For the first time, users are finding it challenging to justify an upgrade from the previous model (iPhone X) to iPhone XS.
“This was the first year in five that I didn’t upgrade my iPhone. Two reasons: – iPhone X was really, really good, and battery life is still great – The 2018 models were functionally identical to the iPhone X,” Newton said.
The MacBook Air, an ambitious redesign of one of the company’s flagship products, has also been criticized for its pricing, which costs around $100 less than the MacBook Pro, a high-performance version of the MacBook that exceeds the specifications of the MacBook Air and is not that much heavier than the Air.
This is something that has been bothering me lately with Apple, and it has to do with this article.
I remember the days when I used to eagerly wait something awesome from Apple's new release schedule. I knew that the product I was buying was going to be great! That hasn't been the case in the past couple of years. It's been mostly riddled with let-downs.
Hopefully 2019 changes that with a new Mac Pro that is supposed to be introduced(praying and hoping!). Everything has turned extremely stale for my. I miss that excitement that I used to get when buying a new Apple product I would get some years ago knowing that what I was buying was something great. Competition has caught up, and that excitement has shifted to other manufacturers and products. Obviously, this is business, and everyone knows the market eventually balances out, but it only paints the bigger picture for Apple, but they seem too blind to see: their new products are getting boring in today's competitive market!
When it comes to knowing Apple products, with exception to reviewers, I don't know of anyone who owns(or has owned) as many Apple products as I have. I don't even bother updating my owned list anymore because it changes so much. I like to believe that if I have this feeling about them, others will as well. There isn't a single product from Apple that interests me right now. The one thing I was interested in, I already own. Introduced in 2013 and hardly changed since: Trash Can Mac Pro.
I have a considerable amount invested in Apple through my Vanguard retirement package, and I chose to do so because Apple is one of the few tech companies I love to stand behind. So, it is in my interest for them to do well...which is why it REALLY FRIKIN bothers me that Apple claims they don't know what is causing their issues!! Are they really that blind? You have analysts. You have reviewers. You have Apple product experts. You have a MASSIVE and isolated buyer's segment. You also have all other demographics that have the ability to purchase their products across the world. You know the common criticism from all of them? The products are getting predictable with new micro generational updates. They're getting old, stale, and stagnant. And Apple claims they don't know what the issue is here? I'm extremely disappointed how they pass the blame on trade war, when other competitors are having record sales! People like to comment on how buyers are pulling away from expensive phones, but top-tier phones, those that come close to, or exceed the $1K price point, are having record sales!
What I wish from Apple:
- Tim needs to go! His penny-pinching business qualities are not what Apple needs.
- Stop pinching pennies when profit margins are the largest in all segments.
- Design for quality first, then make it visually pleasing! My first gen iPad was a tank. My new iPad feels like I could break it in half just by blowing on it. Everyone knows about the Trash Can Mac Pro.
- Stop focusing on trying to COMPLETELY redesign something just to show off your design abilities(cough...Mac Pro...cough)- and this goes back to quality of esthetics. There should be no compromises with great products, but this seems really hard for Apple to understand.
- Listen to what the customers want, instead of being SOOOOOOOOO stubborn and prideful!
- When you make great products, as well as products that are more expensive, people tend to hold on to them longer. Instead of incremental changes every year for a phone that looks the same, Hold out for major updates. There's no need to chase a competitor's quick product cycles if you have a better product to begin with.
It's simple! Make something great without any compromises, and people will love it!!