Once again, the world of technology awaits the end of Apple’s fiscal quarter. Any change, upwards, but mostly downwards, is news. And as if this were not enough, the figures and especially the trends are open to many interpretations, but above all they open up the possibilities for the future of the company , Apple, which could hardly do better in terms of the market and in economic terms.
In the fast-moving technology sector everything is moving too fast, and it is difficult to make forecasts, as the numbers change in a very short time, as do consumer trends. However, the linear evolution of some markets does give us room to ask and try to answer this question: Apple, what will you be like in ten years’ time?
The distribution of the basket
Firstly, to have a better perspective of the possible evolution of the company, we are going to analyse how its main sources of income are in relation to the market, because this photograph of the current situation and above all its trends, will give us a clue as to how the different segments will evolve and how Cupertino’s are positioned in them.
It is really the slowdown in sales of this device that has made the most catastrophic headlines. The end of the quarter draws a practically flat graph, with a growth of only 0.4%, which suggests that the firm would have reached a ceiling with regard to this market. It is not possible to say that the iPhone as a product has disappointed in sales, but rather the opposite, what happens is that Apple could have filled the market niche it is targeting .
The iOS platform has proven to be an excellent core or thread around which to develop products and services
The firm, however, has known how to squeeze every last drop out of the premium segment, the most profitable in the market, but what happens is that even this segment can be saturated. And this slowdown has certainly not caught Apple unawares: its successful adventure in China and its firm commitment to India are good examples of Apple’s search for new fishing grounds where it can make money . On the other hand, we must also give credit to Tim Cook’s explanations, arguing the complex situation of the international economy at this time, coupled with the strength of the dollar.
But beyond the entry into new markets, the mobile phone segment is reaching maturity and the product penetration rate is at its highest, so we should get used to flat or even decreasing graphics. Apple always has the option of targeting a wider market, offering the popular low-cost iPhone: it has plenty of unit margin and surely with the economies of scale achieved, could reach a very competitive price making money in the sale of hardware. Although this looks like a silver bullet that Cook will either not use yet, or perhaps never use , since as 9to5Mac points out, it could damage his brand image of premium products.
iPad and Mac
But if with the iPhone the growth curve smoothes out and it looks like it could have peaked, the iPad and the veteran Mac markets are worse off. Both segments have not only reached their maximum, but have already begun a logical decline and now the firm is facing products that, despite their decline , are still very profitable , but from which we can no longer expect growth in sales. And it is well known that in technology it is necessary to grow in order to stay alive in the long term.
Apple, in spite of everything, has not abandoned the computer market, not even the famous ‘post-PC era’. The company continues to invest in the technological evolution of the Mac family, but above all, it tries to make the most of the hybrid segment , with a solid commitment represented by the iPad Pro. This market still has room for growth, especially in the business world, although it will never, by any means, be able to reach the figures of such a massive product as the mobile.
The Apple of the Future
But despite the disheartening prospect of the future in the markets where the firm obtains the bulk of its sales, Apple is in a privileged position to initiate a transformation of its product portfolio . And in fact, it has already begun to do so, as have other companies in the sector. What products could it rely on to continue fattening its extremely healthy income statement? In fact, we have seen or sensed almost all of them already:
Yes, the firm continues to reduce the weight of the product in its sales graphics by strategically placing it in the “Others” section, but there is no doubt that wearables will play an increasingly important role in the market , and not exclusively in the shape of a clock. Apple is clear that the devices that accompany us need to be closer to the user, and not in a pocket, and Apple Watch is undoubtedly a good first step in that direction. But there will surely be more, many more.
The rumors are already hard to hide, and it is already known that when the river sounds (especially with so much insistence)… Cupertino’s people would be developing their own vehicle in an attempt to increase the critical mass of iOS users, their real goose that lays the golden eggs . And there’s no need to be fooled, the firm’s real business revolves around the App Store, and anything that can feed its growth will be of great value to the bottom line.
In short, Apple already considers the user as a target to be made profitable by surrounding him/her with products and services based on the values that have elevated the company: product quality, innovation and user experience . The iOS platform has proven to be an excellent core or thread around which to develop products and services. We have seen this with Apple Watch and Apple TV, and as we pointed out, the most profitable business for the firm is found in this ecosystem and everything that surrounds it. With this maxim, it is very possible that the firm expands its tentacles towards new niches that share this base, like IoT or whatever may come.