Apple is clearly worried about the decline in smartphone sales as the company’s growth is heavily tied to its iPhones, which have started to underperform amidst a slowdown in the global smartphone markets.
Apple’s new scheme is to go into “services:”
The world’s most valuable public company releases its latest results on Tuesday and has no doubt, once again, sold billions of dollars worth of iPhones. But as the iPhone ages, it’s increasingly clear that Apple is looking for new sources of revenue, and Smith is part of that effort.
Big tech is moving into content production and distribution. For three years, the company has been hiring from the design and luxury industries – including top executives like Paul Deneve, the former CEO of Yves Saint Laurent, and Angela Ahrendts, the former CEO of Burberry.
It hired or consulted with Iovine, Dr Dre and Nine Inch Nails’ Trent Reznor after Apple acquired Beats By Dre in a $1bn acquisition and briefly repurposed them for the launch of Apple Music, which has now gained 36 million subscribers and is poised to overtake its music streaming rival Spotify in the US.
Rumors have even circulated that Apple is looking to buy parts or all of the troubled magazine publisher Condé Nast, a move that would further its push, initiated with the Apple Watch, to become a luxury fashion accessory, lifestyle and content brand.
Based on reports from Apple’s Asian supply chain partners, the company could be about to lower production targets for its iPhone X, the $1,000 model that has failed to meet sales expectations.
In mid-March, Apple stock peaked at $182; its stock price fell to about $162 last week, dropping over five straight Wall Street trading sessions.
“The street has gone into ‘full panic mode’,” the GBH Insights analyst Daniel Ives said in a client report.
Ives said that bad news from Asian suppliers correlated with “softer demand and $1,000 sticker-shock price points on iPhone X”. The big question, he added, was what demand for Apple’s iPhone range would look like after the company launched its 12th-generation model in September.
I have my doubts about how well this will work, as “services” was Microsoft’s plan too, but that did not stop them from being surpassed by Apple, Google, and the other current tech titans.