Apple stock continues to perform well and is once again the most valuable company in the United States. Apple carries a stock-market value of approximately $945 billion and stock shares trade at around $200. Despite these obvious positives, if you delve deeper into Apple as a whole, you just may find plenty of reasons to be concerned. Below are several warning signs that could suggest that Apple may become a precarious investment in the coming one to two years.
1. The market for Apple has become saturated.
While Apple has control over a remarkable 87% of the industry’s earnings from mobile phones while only retailing 19% of its devices, the demand for iPhones is diminishing. Deliveries have dropped, and Apple has altered how it reports its sales numbers to offset these down trends. Due to both reduced incremental changes to products and increased prices, individuals are keeping their devices for longer periods of time and/or switching to competitors’ products. Considering the fact that iPhone comprises such a significant share of Apple’s earnings, this is certainly not good news.
2. Apple places too much focus on investors.
Think back to the Steve Ballmer era at Microsoft., when Microsoft overlooked Mobile, Cloud, and Big Data due to the fact that it was too centered on generating short-term earnings for its shareholders. While under Tim Cook, Apple has slipped into the exact same pitfall of no longer seeing its users as actual customers, instead viewing its investors as customers. Development and design have grown to be secondary concerns and it’s starting to show. Investors are of course essential, but the long-term success of Apple is dependent on the actions of its consumers, not investors.
3. Apple is no longer an innovator.
When Apple was an up and coming brand, it upset the market. It was an innovator. It was forced to think outside the box and to be a rebel. The instant that Apple became the leader, it lost its individuality, its purpose and its perspective. That explains why Apple is attempting to be everything to everyone currently: a credit-card company, yet another digital video streamer (like Netflix), the Reader’s Digest of media, perhaps an AR company, possibly a car company. Furthermore, Apple continues to look to the past for concepts rather than the future. Steve Jobs was known for having vision, while Tim Cook is known for having spreadsheets. Only vision will product fantastic Apple products.
4. Apple is no longer the creator of new markets.
Steve Jobs was a creator of new markets. His business model was centered around building completely new markets out of fresh product groups that showed opportunity. The success of Apple was once predicated on a combination of measured risks and flawless timing. These days, Apple no longer appears to be capable or inclined to generate new markets within which to expand. Apple could have been the company to corner the smart home market, not Amazon or Google. It truly should already be in the Mixed Reality business, but if the rumors are true, Apple has not yet produced an innovative XR product. This leaves companies such as Microsoft, Facebook and Magic Leap to be the leaders in the XR category.
5. Apple is falling behind.
In the mobile phone product category, Huawei and Samsung are transforming the smartphone with fold-able technologies, 5G and a variety of other state-of-the-art features. Unfortunately, iPhones continue to carry 2017 specifications, and Apple looks to be at least one year or more behind Android device producers in launching 5G devices. There are even rumors of Apple’s initial 5G phone being postponed until 2021. As for computers, PC manufacturers are transforming the laptop with Always Connected PCs, while MacBook advancements have been gradual at best. Every one of Apple’s leading competitors now have VR products which are quite spectacular. Meanwhile, Apple continues to say that they are, “working on it.” Even in the category of AI, Siri is one of the least competent digital assistants in the marketplace. Charging high premiums for small improvements to older product groups is not ideal, especially when others are providing exciting improvements to consumers who most definitely want them.
6. Apple product quality has declined.
Steve Jobs was painstakingly careful about ensuring that products were shipped out only when they were perfect. Beneath Tim Cook, flawed products are allowed to be shipped to consumers, requiring additional software updates and in some instances hardware repairs. The MacBook keyboard issue continues to be unsolved. Some question whether Apple even cares about computers any longer. Consumers have no desire to pay for a premium PC, only to endure the quality-control concerns they were trying to steer clear from to begin with.
7. Consumers now trust Apple less.
The list of Apple wrongdoings over the past few years continues to grow. Apple has been accused of lying to its customers, stealing intellectual property, bullying suppliers, and handing over control of your device screen to third-party applications. These infractions are making consumers distrustful, skeptical and resentful toward Apple, which in-turn can have a substantial impact on consumers’ spending choices. To put it simply, trust matters.
No one thinks that Apple will fall apart overnight. The company is robust. However, core signs of its success are no longer what they used to be. If Apple only had to deal with one serious problem, there really wouldn’t be any cause for concern, but it has all of those listed here, along with the potential for damage that could come stem from its ongoing lawsuit with Qualcomm and its unsure bet on China. Combined, these factors could lead to a reduced sales for Apple, something that we are already witnessing. There certainly could be reduced profits and reduced shareholder returns in the future, making Apple stock a riskier purchased than it has been in quite some time.