Apple Faces 10 Threats to Future Growth, Prosperity

 
 
By Don Reisinger  |  Posted 2013-04-01
 
 
 

Apple Faces 10 Threats to Future Growth, Prosperity


Apple looks invincible at first glance. For years now, the company has been delivering products that customers can't wait to get their hands on, and most of its competitors have been unable to answer with products of their own that can match the same level of quality and buyer appeal. The iPhone maker seems to have it all together.

But a closer look at Apple reveals something much different. The Cupertino, Calif., company isn't necessarily in the greatest position right now, and there's no indication that things will turn around any time soon. The iPhone is now outclassed by the Samsung Galaxy S; Chinese government-controlled media seems to be turning on Apple, accusing it of arrogance and criticizing its warranty policies as onerous.

Now Tim Cook seems a little too willing to run Apple as a business, rather than an innovative company. Apple is simply facing more threats now than ever. It would be a mistake not to acknowledge that Apple's market situation has changed.

Read on to find out about the threats Apple will face and why the company's position in the technology industry might not be as cemented in success as some think.

1. Apple's China problem

Apple has a very big problem that the company doesn't like talking about much: China. Android is the dominant force in the mobile space in China, and even the government has announced plans to build its own Linux-based processor to reduce reliance on Apple's computers. Apple CEO Tim Cook responded to Chinese media criticism with a surprisingly contrite apology to customers for its warranty policies. He has made several trips to China to improve relations with the government and its biggest carrier, China Mobile, but so far, there is no indication that Apple's efforts to improve its relations in China will bear fruit.

2. Apple's India problem

Apple also has an India problem. That developing country, which is often forgotten in discussions on big, important markets, has one of the largest addressable consumer markets in the world. Still, Apple's market share in the country is in the low single-digits, and the company has trouble bringing its stores to India because of stringent local market laws. It's a real problem Apple needs to figure out.

3. Intense competition with Samsung

Samsung is an obvious one, isn't it? The company has been the only Apple competitor to crack the code of beating Apple on product design and innovation, and its sales reflect that victory. Apple has downplayed Samsung's success, saying that it's simply trying to copy the iPhone maker. But perhaps it's not as simple as Apple thinks.

4. Lawsuits are making it look bad

As the lawsuits between Apple and Samsung have dragged on over the last few years, they're starting to make the iPhone maker look bad. For years now, it's been waging legal battles across the world, and so far, it's won only a single notable case. It's time to let the patent lawsuits go away and fight a fair fight between itself and Samsung.

 

Apple Faces 10 Threats to Future Growth, Prosperity


5. What will replace the iPod?

The iPod is becoming a bit of a concern in Cupertino. Apple is watching the iPhone cannibalize iPod sales, and its percentage contribution to Apple's revenue is sliding each quarter. Still, the iPod is generating billions of dollars in revenue every quarter. And unless Apple finds a way to replace the iPod, it might have an increasingly difficult time hitting Wall Street's targets.

6. Has Apple forgotten the Pro user?

Pro users might feel like they have been left behind by Apple. As the company consistently updates its iPads and iPhones and MacBook Pros, it's forgotten all about the Mac Pro. That computer hasn't been discontinued yet, but if another year passes with no major upgrade, Apple's loyal Pro users—arguably its best evangelists—might decide to go elsewhere. And that's bad news for Apple.

7. The stock price is plummeting

Apple's stock price is near its lowest point in the last year, trading as of this writing at $429.16. Over the last 52-week period, Apple's shares had at one time hit a high of $705.07. So, what's going on? Shareholders are reportedly concerned with Apple's cash management, and they don't believe that it can continue to post such huge profits. It's a problem. And as a public company, it should matter greatly to Apple.

8. The innovation decline

Looking at Apple's products, it's hard to find the huge level of innovation that separates it from competitors. The iPhone 5, for example, is a nice product. But to believe that it's heads and shoulders above all other devices in terms of design is a fallacy. The same can be said for Apple's line of MacBook Pros and the MacBook Air. Innovation appears to be taking a backseat to business sense at Apple.

9. Apple's worldwide warranty problems

Apple has been hit with lawsuits in several countries around the world—most notably, Italy – over its AppleCare and warranty policies. Most recently, Apple CEO Tim Cook apologized to the country over the company's warranty policies. All of that hurts Apple's standing in the marketplace and can turn some customers to other products.

10. Tim Cook's lack of charisma

Charisma was part of the reason Apple was so successful in the first part of this century. Steve Jobs would take the stage, the crowd would go silent and everyone would wait to hear what he would say. It was a spectacle. And it was just as effective at marketing his company's products as the millions it spends now on advertisements. Tim Cook, on other hand, lacks the charisma of his predecessor. Unfortunately, the excitement surrounding Apple events hasn't reached the level it once did. That's something Apple must address in the coming years, or face the prospect of declining to a mature, slow-growing corporation whose best years are behind it.

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