Apple's Incredible Success Streak Can't Last Forever: 10 Reasons Why

1 of 11

Apple's Incredible Success Streak Can't Last Forever: 10 Reasons Why

by Don Reisinger

2 of 11

Profits Are Sliding

For the first time in a decade, Apple announced that its profits for the first quarter of the year were actually down—18 percent compared with the year-prior period. Of course, the company still generated billions of dollars, but it suggests that Apple can't maintain its sensational growth indefinitely.

3 of 11

What Company Can Sustain Such Growth?

This really might not be just an Apple problem. Looking at the history of major companies, there hasn't been a single firm that has been able to keep such growth levels going forever. Eventually, customers get bored, tastes change, technology evolves relentlessly, important employees depart, and companies lose touch with that often indefinable formula for success. Then they can only watch as their performance slides. Apple might be falling into that same trap.

4 of 11

The iPod Cash Cow Is Wasting Away

Apple's iPod is causing some trouble for the company. For years, it was the leading moneymaker at Apple, but now its contribution to the firm's bottom line is dwindling. Over time, Apple might have no choice but to ditch its declining and costly iPod business, leaving billions of dollars out of its financial statements. That's a hole Apple must fill.

5 of 11

Samsung Is a Huge Threat

It didn't seem possible just a few years ago, but Samsung is a huge threat to Apple. The company's smartphone, the Galaxy S 4, is far better than the iPhone, and Samsung has done a fine job of offering up solid tablets. Samsung might just turn out to be the biggest reason Apple's success won't last forever.

6 of 11

Tim Cook Is Not Steve Jobs

Although Tim Cook has watched Apple's profits and cash rise, he just isn't Steve Jobs. And as time wears on, that's becoming increasingly clear. Tim Cook is the kind of leader who knows how to run companies but doesn't necessarily know how to manage creative, innovative people. And Apple's recent drops in share seem to show that. Cook will stay at Apple for the long term, but he might actually contribute more to the company's troubles than board members want to admit.

7 of 11

iPad Mini Will Continue to Cannibalize iPad Sales

Apple's iPad Mini is cannibalizing sales of the company's larger iPad. In fact, some analysts have said that as much as 20 percent of Apple's larger iPad sales have gone to the iPad Mini. Whether that's true is unknown, since Apple doesn't talk about cannibalization, but it's something to keep an eye on. The iPad Mini is cheaper and its margins are tighter, and Apple's financial performance will continue to be negatively affected by that factor.

8 of 11

Iterative Updates Will Cause Problems This Year

Apple's 2013 can only get worse. Apple is expected to launch only iterative updates to its iPhone and iPad this year, which gives companies like Samsung, LG and Google the opening they need to steal market share. While iPhone and iPad sales will still be strong this year, the expected small updates to the company's core products could turn off some Apple customers.

9 of 11

Where Are the New Product Categories?

For years now, we've been hearing about Apple's plans to launch a new television. And lately, we've been hearing that Apple is working on a watch. There's even talk of the company getting into the gaming console business. But when are these new product categories going to see the light of day? Maybe Apple has no plans to launch any of those devices and it's hoping for its current products to carry it into the next few years. If so, that could be troublesome.

10 of 11

Google Is Making Inroads Into Apple's Business

Google's growth in multiple markets is thwarting Apple's ambitions. The company started that with Android and Admob taking on iOS and iAd, respectively. Google is also getting into the hardware business with smartphones and tablets, which makes it an increasingly worrisome competitor for Apple. With each passing year, the search giant becomes ever more of a threat.

11 of 11

Advertising Is a Key Part of the Future

Apple has focused much of its business on mobile. And as nearly any analyst will say, the future of revenue generation in that marketplace is advertising. Apple understands that by virtue of its own advertising platform, iAd. The trouble is iAd is projected to generate only a small fraction of the billions of dollars that will be generated in mobile advertising. This effectively leaves Apple on the outside looking in. Until Apple can find a way to improve its advertising efforts, the company will have trouble adapting to the future.

Top White Papers and Webcasts