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Apple Can’t Recover

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Apple Can’t Recover

Author: Douglas A. McIntyre
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Bloomberg reports that “Apple Is Rebooting Its Search for a New Next Big Thing.” The problem for the huge consumer electronics company is that there isn’t one. Apple Inc. (NASDAQ: AAPL) is trapped by its reliance on a few major hardware products, an operating system, and an app empire under siege. Each has problems, and there is no path to another massive business.

The company’s revenue is still dominated by its hardware: iPhone, iPad, Mac, and wearables, mostly the Apple Watch. In its most recently reported quarter, Services revenue was $23.1 billion of the company’s $119.6 billion total.

The iPhone had $69.7 billion of the quarterly total, and the new iPhone 16 model is about to launch. iPhone 15 sales have been only modest. There is word that, early this year, sales plummeted in China, the world’s largest smartphone market. The iPhone has not had upgrades beyond cameras and chips for several years.

The Mac is now decades old, and upgrades are very modest. It has not shown any surge in demand. The same applies to the iPad, to which Apple makes small changes. Its smartwatch does not produce enough revenue to move the revenue needle meaningfully. (Here are five reasons to avoid Apple products today.)

Its iOS keeps customers who own its 2.2 billion active devices within a “walled garden.” Apple products do not run on any other operating systems. iOS upgrades tend to produce only the most modest changes to its devices.

The app business is enormous. However, Apple’s legal challenges in the United States and European Union could partly dismantle that large contributor to its success.

Is There Any Hope?

There is some hope that Apple will add artificial intelligence to its iOS in a way that would make hardware more attractive. For now, the company does not have an AI product and is behind in the industry in introducing one.

How does Apple turn around? In the near term, it doesn’t.

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