THE BLOG

Is Apple's Allure Waning?

28/01/2016 09:49 GMT | Updated 27/01/2017 10:12 GMT

Three years ago I wrote a piece on The Huffington Post in which I asked the question whether, based on the first fall in profits its profits in a decade that had led to a severe drop in share price, the company Apple was losing its attractiveness.

That Steve Jobs, the person who founded Apple had died resulted in many questioning whether the company could maintain its commitment (some would say obsession) with creativity, inventiveness and attention to detail and usability that made its products so sought after.

The recent announcement that Apple's iconic iPhone sold 74.8million units in the last three months of 2015 creating quarterly revenues of $75.9bn (approximately £53 billion) and what are record quarterly profits of $18.4bn (£12.9 billion) is a situation that many corporate entities can only dream of.

However, what is causing concern is that Apple is seen as being far too reliant on the iPhone though, to be fair, it sold 16.1 million iPads and 5.3 million Mac computers in the last quarter of 2015. However, these products are less popular than they once were.

Significantly the iPhone sold 74.46 million units in the 2014 the company sold 74.46m in the last quester of 2014 which means that on a like-for-like basis sales of this product are flatling.

What many believe is that the market for smartphones is mature in the West and, in particular, China and that unless Apple can develop new innovate products it could potentially start to see a reduction in sales that leaves it vulnerable in a way that makers of the BlackBerry phone experienced.

One country that might provide opportunity for sales of Apple iPhones is India; especially as its population becomes more wealthy and wants the paraphernalia that is believed to go with the 'good life'. India, however, is a country awash with cheap mobile phones and may be harder to crack than, for example, China.

The latest version of the iPhone - the 7 - is due out this year. However, the excitement that greeted the launch of a new Windows operating system is now lost in the mists of history; that's the nature of technology these days.

Apple has attempted to develop new products such as its Watch, TV and what is known as 'Beats accessories'. These produced revenue of $4.4 billion for the last three months which was a significant increase on the third quarter of $2.6 billion. However, these are not perceived as being as revolutionary and as market-changing as the iPhone has proved to be.

Rumours of an Apple Car have been around for the last couple of years. The thing is, electric cars are no big deal. Besides, the recent rapid reduction in the price of oil has undermined the urgency that was felt only 18 months ago.

This brings me to the question of what Apple can do to reinvent itself as a company that, for the last thirty years, has been seen to be willing to take risk and able to achieve ergonomically designed products that are as aesthetically pleasing as they perform exceedingly well.

That Apple CEO Tim Cook has publicly stated that he sees virtual reality as being "really cool" may suggest that this is the direction that the company sees itself going in the future. But this is an area in which there is incredible dynamism and invention; especially among small start-up ventures.

Whether a behemoth such as Apple can be smarter and more ingenuous in developing new ideas and products remains to be seen.

In the meantime Apple will, for the foreseeable future, continue to enjoy the revenues of the iPhone though, as the history of products has shown, the point at which perceived allure declines can be as sudden as it is rapid.

And the corporate 'graveyard' is replete with once great companies whose fortunes diminished so quickly that they were unable to survive let alone maintain the inventiveness that allowed them to enjoy incredible - though temporary - competitive advantage.