Apple has done more than fall from the tree; it has rolled down the hill and is struggling to get back up as other technology competitors are surging forward. Coming off a great year in 2012, Apple seems to be falling into a rut, much like it did in 2001, after the iPod release. While there are some that think this is the beginning of the end, others are confident the giant will rally again with something great.
What’s Happening with Apple?
Since the introduction of the iPad mini, things have been on a slippery slide for Apple. The popularity of the mini is a double-edged sword. While it is bringing in lots of new Apple customers and sales are great, the profit margin on this tablet is less than that of the iPad. To make matters worse, the more affordable cost of the mini is forcing the price of the iPad to drop.
The company has been losing its share of the smartphone market bit by bit as competitors offer better choices. Apple’s slice of the smartphone market is a mere 20% while the Google Android has 70% of it. Right now, Apple is still leading in the tablet market, but it will likely diminish too. As more affordable and comparable tablets come onto the market, Apple will lose more of its share of that market and will be forced to drop its prices even more in order to stay competitive.
The other factor that is taking its toll on Apple is the popularity of some of its older products. IPhone 4S, a 2011 product, is still the leading phone in Apple’s line of products. For the newest version iPhone 5, this means the price had to come down, leaving the company with a slimmer profit margin on its latest and greatest phone. Zing Broadband CEO Steve Zalinski says “the iPhone 5 could be the last generation of apple products dominating the cell phone market, especially with the emergence of the Samsung Galaxy.”
The Numbers Speak for Themselves
Profit margins are down for technology leader Apple this year compared to previous years. The first quarter of this year saw a profit margin of 37.5%, which sounds pretty impressive for most businesses. However, in the first quarter of 2012, it was 10 points higher.
Stock in Apple has dropped an astonishing 40% since September while Google’s has been going up. Search engine Google is diversifying in a big way with technology like the Nexus tablet, which is comparing very favorably with the iPad, and even spreading its wings as an Internet provider offering the very first ultra high speed Internet service in Kansas City.
The Future’s So Bright – Not!
Right now Apple is delivering the standard line about the exciting new products that are coming. Often, in the technology world, that means that the Research and Development team is hard at work, but there is nothing concrete enough to announce just yet. It also means that anything major is at least a year away.
Rumor has it that the company is working towards a smart watch. However, with Google Glass set to come out before year’s end, Apple’s smart watch will likely be eclipsed by the popularity and advanced options it offers.
Despite still being a very profitable company, Apple is no longer the most valuable company in the world. If it wants to win back that title, Apple needs to pick itself up and put a more concentrated effort into a new major product like the iPad or iPhone. It has made its name and its success from being the forerunner in technology. That’s where it needs to focus!