Is Apple losing its (rose) golden touch?

Its seen a first sales decline in 15 years, lower profit forecasts over the holiday season, and the latest iPhones are a bit \_(シ)_/¯. But is this quarter simply an aberration for Apple?


“What goes up must come down.” This quote, attributed to Issac Newton, is often used to point out that everything — from corporates to celebs — eventually reaches a peak, hangs there for a while, and then a painful downhill tumble begins. They may not hit rock bottom, but these entities will never again soar to those giddy heights.

Newton perhaps had an apple in mind when he uttered that maxim. So it is rather amusing that, currently, a high-profile company this adage might apply to is Apple. Is this the zenith for the Cupertino company? In 2017, will critics look at Apple’s dwindling sales and depressing revenue figures, shake heads, and wheel out that standard lament — “If only Steve Jobs had been around…?”

On November 1, Business Insider carried an article with a rather scary (for Apple, that is) headline — “iPhone users are abandoning their loyalty to Apple”. The data to back this claim comes from UBS’ research division, and shows loyalty to Apple remains strong in the US, UK and Germany, but has significantly weakened in Japan. The most melodramatic drop, however, has been in the biggest market of them all: China. Here, retention rates have “fallen off a cliff”, declining 30 per cent over the past quarter.

The key reason given is that local Chinese brands have surged ahead on the wings of innovation, while the iPhone has been relatively stagnant. Even loyal fans would agree that the iPhone 7 isn’t a breathtakingly impressive upgrade over the previous version. If anything, some will tell you how upset they are about that missing headphone jack.

Unsurprisingly, reviewers too have been sceptical, despite Apple’s formidable hype machine. The Week says the iPhone 7 is not worth buying, and the reaction to the phone has been “lukewarm at best”. Forbes makes it clear in the headline itself that people should instead save their money for the iPhone 8. Or for a Chinese phone. Apparently, Apple CEO Tim Cook and design guru Jonny Ive know the iPhone 7 and 7 Plus’ designs are outdated, but “they left it in because they’re saving the really cool design changes for next year’s tenth anniversary phone”.

This sounds a bit odd. Will Apple risk loosening its grip on the market, just to save up for some magical experience next year? Is the company so bereft of creativity that it needs to put a few ideas into cold storage for the iPhone 8? And, most importantly, would disappointed fans who switch over to one of the latest Android phones bother coming back to Apple next year? As we have seen with the HTC 10LG V20 and Google Pixel line-up, Apple’s competition is more than capable of conjuring up impressive phones, this year and surely in 2017.

A Reuters report from October 26 notes that Apple posted its third successive quarter of declining iPhone sales, while forecasting lower profit margins over the upcoming holiday season. The report also quotes Neil Saunders, head of retail research firm Conlumino, as saying, “In essence, in China and elsewhere, while Apple’s products are still seen favourably, the distance between Apple and its competitors is nowhere near as great as it once was.” The Guardian adds that Apple’s annual profits fell for the first time in 15 years because of the decline in iPhone sales. Meanwhile, some analysts are concerned that the world may have reached peak Apple — almost everyone who wants and can afford an iPhone already has one.

Interestingly, the Telecommunications Regulatory Authority (TRA) report for the second quarter of this year reveals the top five handsets in use in the UAE were Apple iPhone 6 (penetration of 4.17 per cent), Nokia 108 (2.99 per cent), Samsung Galaxy J100H/J1 (2.45 per cent), iPhone 6S (2.32 per cent) and 5S (2.29 per cent). However, the report cautions that, although the data might suggest Apple is dominating the UAE market, in reality it is the Samsung brand that is most popular. “The TRA’s report shows that one third of all handsets registered on UAE networks during Q2 2016 were manufactured by Samsung. The top four brands were Samsung (33.3 per cent of all handsets registered), Nokia (27 per cent), Apple (13.6 per cent) and Blackberry (1.8 per cent).”

So has Apple lost its mojo? Or is the iPhone 7 an aberration in an otherwise awesome line-up of Apple products? Well, the newly released MacBook Pro is faring no better. An insightful read on ITBusinessEdge points out that new products released by companies that are on top can be “leading indicators of stagnation and decline”. Alternatively, they can point to continued innovation. But the report suggests that the MacBook Pro seems to be the handiwork of a company that has stopped innovating and listening to its customers. This is a terrible accusation, given that Apple built its reputation as the company with an “intuitive sense of what its customers want — or soon would want”.

But this is Apple we are talking about, and it may not be all doom and creative gloom from here on. The company is sitting on a massive stockpile of cash — CNBC states its enormous hoard has grown to $237.6 billion (Dh872.7 billion) in the fourth quarter, up $6.1 billion over the previous one. That should be more than enough for Apple to acquire a super deluxe version of mojo. In rose gold. So after a temporary glitch, perhaps the company will reach even greater heights. And perhaps the iPhone 8 will be such a great phone that millions of Android fans will camp outside Apple stores days before launch just to grab one. Those remaining Blackberry and Nokia holdouts might even join the queue.