10 Threats to Apple's Future Mobile Market Growth

 
 
By Don Reisinger  |  Posted 2016-04-19
 
 
 
 
 
 
 
 
 
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    10 Threats to Apple's Future Mobile Market Growth
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    10 Threats to Apple's Future Mobile Market Growth

    Despite being one of the most successful companies in the world, Apple is facing a number of competitive threats that it needs to respond to quickly.
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    Apple Has to Do Something About iPad Sales
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    Apple Has to Do Something About iPad Sales

    There's little debating Apple has an iPad problem. During its last-reported quarter, Apple's iPad unit sales were down 25 percent year over year and its iPad revenue fell 21 percent. Declining sales also afflicts the broader tablet market, and some mobile device makers have abandoned the market in favor of more popular device types. Apple CEO Tim Cook believes the iPad has a strong future ahead, but Apple will need to prove it.
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    Chinese Companies Are Coming on Strong
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    Chinese Companies Are Coming on Strong

    According to research firm TrendForce, for the first time ever in the first quarter, Chinese smartphone makers together shipped more smartphones than Apple and Samsung combined. What's more, the company noted that Huawei is quickly coming on strong in the market and could one day surpass Apple for the second-place spot behind Samsung. All the while, Apple is watching Huawei and Xiaomi securing increasing sales in the crucial Chinese market. It appears that Chinese smartphone buyers are increasingly happy to buy domestic mobile products.
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    How Will Apple Appeal to Emerging Markets?
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    How Will Apple Appeal to Emerging Markets?

    Apple's iPhone SE is designed in part to be appealing to emerging markets. But in India—arguably the most important emerging market—it's overpriced for many consumers. Meanwhile, the company is forced to face entrenched local competitors with cheaper devices that appeal to those on a budget. Apple will have a hard time growing its market share in emerging markets if it's not willing to reduce prices.
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    Putting the Spotlight on iPhone Sales
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    Putting the Spotlight on iPhone Sales

    The iPhone is the Apple's most important revenue generator. But during its last-reported quarter, unit sales were stagnant year-over-year, revenue was up just 1 percent, and TrendForce reported on April 18 that it has cut its annual iPhone shipment forecast by nearly 10 percent compared with 2015. Of course, that's only one researcher, and some analysts believe 2016 could be a banner year for the iPhone. But TrendForce could still be right in noting that the global smartphone market's maturation could be a threat to Apple.
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    Apple Continues to Rely on Rival Samsung as a Supplier
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    Apple Continues to Rely on Rival Samsung as a Supplier

    Apple must not like relying so heavily upon its archrival Samsung. But unfortunately for Apple, it has no choice. After all, Samsung is one of the few companies Apple has used to build its processors. And now, a recent report suggests Apple is relying on Samsung Display to deliver the screens for the iPhones it plans to launch in 2017. Apple has no choice but do business with its chief competitor.
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    The Android Phenomenon Continues
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    The Android Phenomenon Continues

    Debate rages over how important mobile market share really is. Regardless, Apple is losing ground. Researcher Gartner revealed in February that iOS market share at the end of 2014 stood at 20.4 percent, compared with 76 percent for Android. Just a year later, Apple's market share fell to 17.7 percent share as Android neared 81 percent. Android is on pace to gain even more market share in the coming years, which could create all kinds of issues for Apple as it tries to maintain customer loyalty and keep developers focused on the iOS platform. That issue hasn't reared its ugly head just yet, but if things get out of control and Android gets 90 percent of the market, some analysts say Apple's market position could get squeezed.
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    Is It Time to Move to Tablet-Notebook Hybrids?
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    Is It Time to Move to Tablet-Notebook Hybrids?

    To offset their own tablet troubles, other companies have moved to two-in-one hybrids. Perhaps the time has come for Apple to do the same. But what will that mean for its notebooks, which come with the traditional clamshell design and still appeal to customers? Although hybrids are one of the few growth areas in the mobile computing market, Apple hasn't jumped in for fear of cannibalizing its tablets and notebooks. But if the iPad continues to have trouble, Apple might have no other choice but to follow the crowd.
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    Those Patents Matter Greatly
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    Those Patents Matter Greatly

    Apple is in for the fight of its life when it comes to the patent infringement lawsuits it's brought against Samsung. The companies will battle all the way to the Supreme Court over some patents while it continues to litigate other cases in lower courts. Apple needs to prove that its many patents, like slide-to-unlock and pinch-to-zoom, aren't "obvious" and, therefore, unpatentable. If Apple loses its Supreme Court case, it loses its ability defend its intellectual property built into its devices.
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    OS Security Is a Never Ending Battle
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    OS Security Is a Never Ending Battle

    Several security researchers have posted alerts that hackers are increasingly targeting iOS devices. That cannot be overlooked. Apple needs to stay a step ahead of hackers and do everything it can to reduce bugs and zero-day exploits and keep its credibility as a company that's strong on security. While it might be difficult, making the world continue to believe that iOS is more secure than Android is critical.
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    It's Not Easy Being Apple
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    It's Not Easy Being Apple

    Being Apple isn't easy. The company is constantly under a microscope, and it needs to consistently beat Wall Street expectations, even if it's still generating billions in profits each quarter. The worst thing that can happen to Apple is to watch iPhone shipments slip and the iPad continue to falter. Apple is in the unfortunate position of needing to top itself each quarter. And as markets mature, people hold on to devices for longer periods and the competition grows strong, that will be increasingly difficult. Being Apple—the technology industry's most successful company—isn't as easy as it looks.
 

Apple generated nearly $76 billion in revenue in its first fiscal quarter ended that ended Dec. 26. About $59 billion of that came from iPhone and iPad sales, enabling Apple to generate billions in profits. But that doesn't mean that Apple is immune to mobile market trends and competitive forces. While Apple's smartphone business remains strong, a recent study from research firm TrendForce found that iPhone shipments were down nearly 44 percent quarter-over-quarter in the first three months of 2016. Meanwhile, Chinese smartphone makers continue to gain ground and Apple's iPad shipments are plummeting. Those issues, combined with heavy competition in emerging markets and a surprising resurgence of Samsung's smartphone business, raise questions about the future growth of Apple's mobile business. Apple might be one of the most successful companies in the world, but it's still facing competitive threats that it needs to respond to. This slide show looks at the various market challenges confronting Apple's mobile business.

 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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