What's Next For Apple?

Hi, welcome to another ColdFusion video. In 2019, Apple could be having another 2005 moment. Like the iPod in 2005, the iPhone seems to be running out of steam. Can Apple make a stellar update to their device and make sales blast off again, or is it time for a completely new category of device altogether? In this video, we'll take a look at what's going on with the company and what they plan to do. You are watching ColdFusion TV. In 2005, the iPod, Apple's best seller, was running out of steam. To make things worse, mobile phones were just becoming capable of MP3 playback. This was a threat and Apple needed something to get themselves ahead. In 2007, Steve Jobs stepped out on stage at Macworld. He pulled out the first ever iPhone to a receptive crowd. Steve later put his finger on the screen and scrolled, and people cheered in amazement as if he was a time traveler. How do I do this? I just take my finger and I scroll. This is what Apple was best at. They had once revolutionized the personal computer industry and had now done the same for the mobile phone. For a long time and for a lot of people, Apple was by far the best and still may be depending on who you ask. However, a decade after unveiling the iPhone, their biggest profit maker, the smartphone market is starting to change. Competitors such as Samsung, Google and Huawei have started closing the gap, and this isn't to mention new players such as Xiaomi and Oppo which were nobodies just a few years ago. Meanwhile, Apple's laptops have HP, Lenovo and Dell to contend with. Apple seems to be losing ground on both sides. The world is changing. Technological ability and performance are becoming simply good enough for most people, regardless of the brand name. Sluggish iPhone sales are Apple's biggest worry. Historically, more than half of Apple's revenue came from the iPhone. In 2015, this was around 66% of revenue. But now, despite having higher prices, iPhones only account for about 50% of total revenue. Investors smell trouble, and Apple's share price has fallen 35% since its peak last year. But in saying this, some of the factors are outside the company's control. The whole market has generally been down since this period, and slow iPhone sales in China due to a slowing economy and a trade war with the eastern nation also contribute. In reaction, Apple has reportedly cut iPhone production by 10% for the first quarter of 2019. So the question remains, is there more to the story? Well, for many consumers, the price they're paying for what they're getting is just too high. The halo effect, where a loyal customer base is willing to pay a premium for Apple, as they have always done in the past, could be wearing off. The iPhone's iOS software, along with a tight ecosystem, might be the only thing holding up sales for now. So this next point is pretty important and just shows how the world has actually changed. Basically, the smartphone market is at saturation. Everyone who wants a phone has one. It's the natural progression of a maturing industry. It isn't just Apple facing these issues though. The global smartphone market has been decimated lately, from 40% growth in 2013 to a slight contraction of about 0.2% to 0.3% over the last two years respectively. So why exactly are global sales slowing? It could be that the global macroeconomic situation is weakening, and then there's stagnation in innovation. Who wants to get rid of a perfectly good phone for a new one that does basically the same thing? The bottom line is that people aren't buying right now. In November of 2018, Apple announced that it will no longer give the data for sales of its devices. So it's clear that Apple needs to do something. One thing that they could do is what they used to do best, innovate. So where are the new products, and where's the innovation now? Price increases, planned obsolescence, and incremental refreshes aren't cutting it. So Apple's cash cow may be drying up, and the company may be increasingly looking to the services sector to pick up the slack, and we'll get to that in a little bit. But the more I thought about the situation, the more I thought that Apple could have something up their sleeve. Here's what I suspect. There might be a breakthrough on the hardware side. Yes, there could be augmented reality glasses, but something else might be coming, something actually more gradual. Now this is me just thinking, but the 2018 iPad Pro strikes me. It could be a shining light and a glimpse into a new direction for Apple hardware wise. This iteration of the iPad Pro was a missed opportunity because its software was still basic, but its performance outshone the 2017 MacBook Pro and is on par with the i7 MacBook Pro of the same year. This is amazing for a mobile chip, but the main point here is that the A12X Bionic chip that powers the iPad Pro was designed by Apple. Even more important is that this chip was based on ARM architecture. ARM is the type of chip architecture used in mobile phones. Desktop PCs, in contrast, use x86 architecture chips like Intel. ARM chips use less power and have traditionally been seen as a weak platform for demanding uses. But in 2019, this is changing. Since the x86 instruction set, basically the built-in code that tells a chip how to operate, is bloated and inefficient compared to ARM. Now there's new talk of ARM being a pathway to the future of computing. Even some server farms have started using ARM chips to save power. Adobe has converted the full version of Photoshop to ARM processors to run on the iPad. And likewise, Adobe Premiere Pro can now edit 4K video natively on an iPad Pro with ease. Qualcomm has also announced a new chip designed from the ground up for PCs running full versions of Windows. This is desktop class performance and function on a mobile chip for the first time. In their own time, Apple might decide to create a full macOS iPad and put their powerful custom chips to good use in the coming years. As I was thinking about this even more, I went through Apple's recent acquisition history and found out that they recently purchased a UK chip manufacturer, Dialog Semiconductor, for $600 million. Apple also announced that they will completely design their own in-house graphics chips by 2020. So what I'm basically trying to say is that the new mobile chips from Apple may just be a dark horse that shocks everyone. Maybe even future MacBooks could could run ARM thanks to its lean instruction set. Many long-time subscribers would know that I've been predicting desktop-class mobile chips since 2013, so seeing such an event come true would be very exciting for me. So making a full macOS iPad that's modified for touch could eat into MacBook sales, but there could still be a case for it. So everyone has an iPhone already, but a laptop class tablet is still very rare. There's a gap in the market there, and if Apple could work their magic to produce a 2-in-1 convertible with the power to blow everyone else out of the water, that's a great opportunity. And if Apple could do it without being criminally overpriced, it could get people excited for the Apple brand again. And I'd argue that that's something that they need right now. So Apple could innovate, or they could do what they said they're going to do, and that is expand on services. In my previous Apple video, I mentioned that Tim Cook knew that iPhone sales were going to slow. He stated that the company will now be focused on services. This year, iTunes will allow streaming on Samsung's TVs and other competitor devices will support AirPlay. Until recently, these streaming features were restricted to Apple TV. Tim Cook has also stated that the company is going to be launching new services this year. It's rumoured that the new services could be something like a Netflix streaming service, but based off Apple TV content. Apple has also collaborated with Amazon to allow Alexa to control Apple Music. So Apple is opening up more, and they need to. We can just look at history. Allowing their services to be used across different devices has historically been successful for Apple. Most people forget that the original iPod almost flopped because iTunes was Mac only. It was only after iTunes' release on Windows that the iPod took off and iTunes became the top digital music store in the world. Apple has also recently bought Shazam, highlighting their interest in entertainment systems. Remember the iPod Touch? Well, there's a possibility that Apple may be re-releasing it after a three-year hiatus. It's actually a good entry-level strategy to get new people into the iOS ecosystem. In summary, Apple is facing tough competition in the smartphone market, the biggest revenue driver It's a market that has pretty much reached saturation and the end of its initial lifecycle. Many competitors provide cheaper alternatives that are not noticeably inferior to iPhones. So extrapolating, what happens in five to ten years time if Apple stays stagnant? For example, what if a company makes a great foldable phone that's powerful, cheap, but actually pleasant and convenient to use? Maybe that's a wild idea, but the point I'm trying to make is that Apple needs to figure out how to top the unexpected innovation. In the past, Apple figured out a way to make a better foldable phone that works like magic. But would that happen now? Tim Cook does believe that Apple's foundations and ecosystem are resilient enough to withstand the current downturn. And I kind of agree. Now I have to make this point very clear. Apple has a lot of cash, so they're not going anywhere anytime soon. But I am noticing a trend, and I have been commenting about Apple losing its magic for years. I did make a video in 2016 talking about this. I could see the trend, and now it's starting to come to light. Maybe in the future, Apple will mostly be a services and software company. Who knows? Apple has proven time and time again to be a market leader and innovator. This is the company that brought the Mac, iPod, iPhone, iPad, and revolutionized how we interact and see our devices. Even if you prefer their competitors' devices, their presence is undeniable. Steve Jobs and the team he led created something special, and something that lives in his memory. So if anyone can turn this around, it's Apple. But can they do that without Steve? Tim Cook was hand-picked by Steve Jobs. So, maybe they can. What do you guys think the future of Apple is going to be? Stagnation, innovation, or a majority services and software company? Let me know what you think in the comments section below. Anyway, that was our look at Apple. And this has been Dogogo, you've been watching ColdFusion. Thanks for watching. If you enjoyed this video and want to see more interesting topics about our world, you should consider subscribing. Alright, I'll catch you again soon for the next video. Cheers, guys. Have a good one.