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The news and rumors surrounding Apple have been very strange recently. The company is still the most valuable in the world, despite reporting lower iPhone sales for the first time in its latest earnings call. That's not terribly surprising of course, because the expectations on Apple are often very high and given the company's size, at some point growth had to stop. Consider this: Apple's fiscal 2015 total revenue was around $210 billion. If Apple were its own country, that revenue would have made the company the 45th largest country in the world, just behind Finland. That's pretty insane and impossible to maintain. Frankly, it's amazing Apple held it this long.
The rumors about upcoming products are more strange and confusing though. The standard operating procedure for Apple since the iPhone 3G was introduced eight years ago has been to give a new phone design one year and a refinement and performance boost the next. After the refinement last year with the iPhone 6s, the expectation was for a redesigned iPhone 7 this year. However, that doesn't appear to be what we'll get. Instead, the majority of rumors and leaks imply the iPhone 7 to be a minor redesign in general though it should include the usual performance boost, and word has it there will be a dual-camera system. The big redesign for the iPhone is now expected in 2017 and could include an all-glass enclosure.
If you're not growing, you're dying
This is especially troublesome for Apple because the iPhone made up about 73% of Apple's revenue in 2015. Apple just announced a decline in iPhone sales. The newly released iPhone SE may slow the decline a bit, but without a new flagship iPhone coming for another five months or so the declines are likely to continue. Add in the fact that the iPhone 7 will look very similar to the iPhone 6 and 6s and Apple may well fail to impress customers.
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iPad sales are still slow, just like all tablets. The Apple Watch has done far better than any other single smartwatch, but it's not a product that's going to move the needle much for Apple. Macbooks continue to outperform PCs, but again that doesn't do much for the bottom line. All that to say, without the iPhone, Apple doesn't have anything else that can keep the revenue up.
Overall, that makes the future sound like trouble for Apple. There's a fair chance Apple could keep revenue up enough so when the redesigned iPhone hits in 2017 things aren't too bad, and in general while the iPhone may no longer be a growth product, it is still going to bring in huge revenue for the foreseeable future.. But, the bigger issue for Apple is that the high-end smartphone market is completely saturated. Keeping up sales there can only happen by getting customers on an annual upgrade plan, or by convincing users to switch from Android. Even if the 2017 iPhone wows the world, Apple still needs something new to keep investors happy because the iPhone will sustain the company but in the U.S. economy, if you're not growing, you're dying.
Can Apple reinvent another market?
Apple undoubtedly wants to reinvent itself and come up with another consumer device smash hit and the company has been working on trying to figure out what that might be. There have been slight rumors that Apple is looking into VR as well as the constant rumors of Apple making its own self-driving car. VR is unlikely to be a massive consumer hit all that soon and the automotive business wouldn't just be adding a new product to Apple's lineup, that would be a massive shift in what Apple is as a company. And, the automotive business is very competitive and only likely to get more tough as Google and Uber work on self-driving cars, and Tesla continues its push with electric cars.
There are also the pretty consistent rumors that Apple will make a TV or turn its Apple TV into a true gaming console competitor, but those rumors have been going long enough that we need to see more before we believe anything. There's also the burgeoning market for home automation products, but Google has more headway into that space with its Nest purchase and Apple has no real news in the space.
And, regardless of if Apple gets into VR, cars, TVs, gaming, or home automation, none of those markets have the stagnancy or mismanagement on which Apple has been so good at capitalizing in the past. Consumer electronics has been looking for a new revolutionary product and no one knows what that might be. Wearables aren't becoming the behemoth that analysts expected at first. Facebook and Microsoft are betting on bots right now, but it's unclear how that will work out. In general, if there is a revolution coming with consumer electronics, it's more likely to come on the software side than hardware. Apple has been a solid software company, but almost all of its profits and revenue come from hardware so that future doesn't inspire confidence either.
It's possible Apple is gearing up to revamp its product lineup next year, but it's hard to imagine the kind of changes that could keep Apple's numbers as high as the iPhone has. The iPhone isn't going away any time soon though, so the situation is far from dire. Apple's numbers may level out or even drop, but that still leaves Apple as an immensely profitable company. Eventually the company is going to need a big win in a new market, it's just hard to imagine what that might be.
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Michael Heller is known for his clear and informative articles on mobile technology. He explores important topics such as the rollouts of 5G networks and the advancements in mobile payments, offering readers insights into the evolving tech landscape.
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