Imagining Apple’s post-iPhone future

“Apple’s reported plans to cut iPhone production by 10 percent in the first quarter of 2019 make increasingly clear that the company’s base of loyal users isn’t an inexhaustible resource from whom it can forever extract a rent through its services offerings,” Leonid Bershidsky writes for Bloomberg. “Apple needs to compete more vigorously in all the other markets in which it’s present, without relying on the network effects of its large installed base.”

“In the medium to long term, the decline can only undermine Apple’s ability to feed off the ‘halo effect’ from its installed base, estimated at about 1 billion iPhones globally at the end of last year. In the company’s other markets, its products and services will increasingly compete on their own merits, with less help from the network effects that push iPhone users toward everything else Apple,” Bershidsky writes. “The company inevitably will need to face up to the fact that, as things stand, few Apple products are strongly competitive among the non-iPhone users.”

“Weaning itself from iPhone dependence will be a painful experience for Apple, not only because the stock market will punish it for being overoptimistic for too long, but also because the importance of each market in which the company is involved will increase. The iPhone’s enormous shadow won’t hide errors as well as it did in the past,” Bershidsky writes. “And competing hard against specialized players with a lot of skin in the game will become more of a necessity. The new situation requires a sharper focus from people in each of Apple’s lines of business and more multitasking from Cook, whether or not he’s willing to see things this way.”

Read more in the full article here.

MacDailyNews Take: We’ve been warning of an unfocused Apple for many years now.

Hopefully having several hundred billion dollars lopped off the company’s market value within a couple of months will sharpen some minds in Cupertino.

If he retired today, Tim Cook’s Apple would be known for coasting along on Steve Jobs’ innovations, rolling up tremendous profits that any halfway competent CEO would have accrued (or more), and devolving into being lazy, sloppy and routinely late. That’s a great legacy, Tim.MacDailyNews, April 10, 2018

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11 Comments

  1. this down turn should be pretty hard to ignore – but it wasn’t that hard to imagine, let alone predict.

    it has been evident for some time to a great many apple aficionados that the current leadership has not been minding the store, or thinking very far ahead.

    and where has the board of directors been all this time ? with the foolishness of such ha heavy dependence upon i phones, allowing its mac line to stagnate – and not even be advertised?

    seems to have been an over emphasis upon style rather than substance. and a foolish dependence upon increasingly expensive products powered by the mantra of premium products at premium prices for premium customers.

    newsflash: one hell of a lot of us either cannot or are unwilling to afford or spend nearly a thousand dollars on a damn phone – no matter how may millions of times more powerful it is than the computers that put appollo 11 on the moon.

    one can only hope that this financial kick in the hinder will travel up some several inert spines and register in the frontal lobes that it is time to take a serious look at operational dogma and see where it falls short and remedy the situation.

    otherwise apples fate may well be a slow protracted death by hubris.

      1. Three months ago, the rhetoric was quite different. There were people actually talking about iPhone supercycles (massive iPhone sales). Just one financial quarter changed everything about how Apple is fairing. Apple was the first trillion-dollar company, so there must have been some people who thought Apple was being run properly. I think all this current talk of doom and gloom about Apple is quite excessive. A company valued at more than $700B and flush with cash isn’t exactly a bankruptcy candidate.

  2. Bershidsky – like most Bloomberg contributors – trashes AAPL as clickbait. The article is clueless in so many ways. He laments decline in units sold in one region, without noticing that the installed base of Apple users has increased by 100 million in the past twelve months. There are now 1.4 million users in Apple’s “installed base.” He is repeating the advice that Apple should sell more units lest they lose market share to cheapo Android competitors, a group that, though much larger, fights over a small fraction of the total profits in the smartphone business. Apple has NEVER played that game, and should not start now.

    He recommends that Apple increase interoperability with competitor products. Where has he been? iTunes to be included to built in options in top-tier TV manufacturers next year. Airplay 2 is widely built into audio products now. Apple Music is available on Android.

    This clickbait piece was either written long ago — hence Bershidsky’s failure to notice the interoperability improvements — or Beshidsky is too clueless to know about them. I’d bet lots on the latter. Bershidsky is a polemicist who knows little about most things he writes about, which never seems to stop him from opining boldly.

    He — and MDN in its daily Cook slam – overlook the wearables story. Apple Watch Series 4 is still demand constrained, meaning they can’t make enough of them due to its cutting edge nature. It – along with AirPods – have each sold 3 to 4 times as much as iPod did when one adjusts for the date it was introduced. It’s early days for wearables. And the very day that AW becomes available that will measure blood pressure or glucose in real time, is the day Apple Watch becomes a must-have item for the over 50 crowd. Health insurers will eventually insist upon it (and likely subsidize it with premium reduction). With its unique combination of privacy safeguards, customer trust, and control over hardware and software — Apple is miles ahead of the competition in the wearables healthcare space. Virtually all of that has taken place under Cook’s stewardship.

    To write a hit piece on AAPL without mentioning wearables tells you all you need to know about Bershidsky’s competence to write about the company.

    1. DT, I have been lamenting for some time now Apples seemingly in ability to drive multiple products and services to great results. iPhone, iPod, and watch have been really good, but HomePod, Siri, airport, Mac Pro, Mac mini and iCloud have all languished. I admire amazon for what they have accomplished across a broad spectrum of business and products. Apple has to up its game a lot and expect excellent products in each category where it needs to play.

      I think Apple could benefit from a reorganization to one focused on product with accountability for results.

    2. Apple Net Income in 2007 was 3.3 billion, in 2018 was 59.5 billion. Of course MDN and the other Tim Cook haters could have done much better, because they are so much smarter.

  3. Hopefully there is no such thing as a post iPhone future.

    Just as there should never be a “post Mac” future or a “post iPad” future.

    This is part of the problem with Apple’s current leadership. They’re focused 99% on a single product line even if that product is only 60% of their current sales base. They are too focused on the current top sellers when their focus should be diverse and making sure all current products are properly evolving as well as tracking future products (even if only one or two out of 10 early development projects make it to the real product stage).

    Bottom Line: if anyone at the VP level or above cannot adequately multi-task then they need to be replaced ASAP.

    1. The Mac are still the best machines ever created, has the greatest operating system ever developed and runs efficiently even on aging machines. Your exaggerated claims make you sound spoiled and whiney.

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