In July 2019, in the US, as expected, Apple and Samsung dominated the top 10 sales charts for smartphones.
However, as compared to the past, the percentage of revenue contributed by the sales of iPhones for Apple has been on a decline. Explicitly, for the past few years, iPhones contributed to nearly half the revenue of Apple, which has now dropped by a massive 15% at times in 2019.
This slump is ringing alarms among some analysts. But, is it really that big a problem?
Apple’s Strategic Direction
Apple does not openly share its business strategy.
Therefore, the only obvious way to discuss Apple’s strategy is through analysing its recent activities.
Further, in August 2019, Apple is launching the Apple Card, a credit card service. Then, in September, Apple Watch Series 5 is coming, along with Apple TV+ and Apple Arcade, a new gaming platform. Add this to the on-going MacBooks, iPads, Airpods, and new XDR and beyond Displays, Apple has an ever growing list of products and services.
All in all, Apple is limiting its dependence on iPhone sales. In fact, to a certain extent, Apple is moving more towards hosting products on their platforms, for a hefty 30% cut, instead of relying on a direct B2C model.
And, there is a clear reason for doing so.
The Risk of Over Investment
Apple has the finances and ability to go for a self-driving car now.
However, the company has indicated that they will join the ranks of self-driving cars beyond 2020.
Here, Apple might be missing out on the first mover’s advantage. But, they are reading the market really well first.
Let’s ask a simple question: how likely are you to buy a 3D camera?
The prospect of owning a 3D camera sounds nice. But, in reality, the idea that people will drop their 2D cameras and move to 3D instantly is wishful.
Therefore, unless, you drastically change the market and tempt everyone into buying a product, there is little value in developing entirely new products.
And, as a result, Apple is allowing its competitors to set the stage for new products and services. Then, based on the demand, Apple’s branding holds the ability to join the race later and still compete.
Or, Apple might already have peaked. Who knows.