On November 1 2018, Apple announced its Q4 2018 results. The limelight was stolen, however, by the warning of poor sales over the next quarter – the crucial Christmas shopping period. This announcement scared off many investors and since the start of the month the company’s share price has fallen by more than 20% – now down to $172.29 a share as of the close of markets on Friday November 23. The sell-off has effectively wiped all of Apple’s gains since the start of 2018, with the share price currently only 0.02% above its opening price on January 2.
Every company has to compete on either price or quality, or a combination of the two. Since its inception Apple has refused to compete on price. The company is well-known for completely revolutionizing industries – the release of its iPod music player and iTunes in 2001 and 2003 respectively turned the digital music industry on its head, while the iPhone in 2007 transformed the mobile phone industry despite being far from the best phone available at the time. The company has managed to craft an image that is in control and for years consumers have happily paid a premium to access Apple’s product line.
Increasingly, however, innovation in the smartphone industry has slowed down and become stale. While in the past smartphone companies were able to wow both markets and consumers with new technology such as fingerprint scanners, very large internal storage, smart AI and powerful cameras, developments today are more of the ilk of smaller bevels and adding an extra half-inch to screen sizes. Apple is slowly losing its image as the most innovative smartphone company because whatever new technology comes along today, every smartphone company is quickly implementing it in their devices.
Apple’s most recent release – the iPhone XR, which costs over $1,000 -, has proved to be divisive. While it has sold well, many consumers who were undecided about Apple are discounting the company, instead spending their money with more reasonably-price competition. Rival company devices are still almost as innovative (and in many cases more powerful) than Apple’s latest devices. Apple continues to position itself as a company creating near perfect devices, but as consumers are becoming increasingly frugal and savvy, the company is exposed to changing consumer demands.
Apple needs to broaden its horizons a little and develop devices that will suit the customers of its competitors. While the company isn’t going anywhere for a long time, the smartphone market is becoming increasingly saturated and the tech company needs to appeal to a wider audience to thrive. Its refusal to compete on price is leaving the company exposed as products become increasingly homogenized and customers become increasingly aware of just what they can get for their money.