[Text/Observer Network Lu Dong] About a year ago, Apple’s share price exceeded US$3 trillion (approximately RMB 21.6 trillion) for the first time. It was in the limelight and was touted by the American media as “the undisputed leader in the technology industry.” King". But a year

[Text/Observer Network Lu Dong]

About a year ago, Apple’s stock price exceeded 3 trillion US dollars (approximately RMB 21.6 trillion) for the first time. The King of Controversy.” But a year later, when innovations in automobiles, AI, mobile phones and other fields are emerging one after another, when we look at Apple's situation again, we will find that this technology giant is besieged by many challenges, and its past halo is increasingly dimming.

In the Chinese market, with the return of Huawei and the introduction of other Chinese brands, the market demand for iPhones and iPads is cooling down; in the European and American markets, Apple is facing unprecedented antitrust and business challenges; in the current hottest field of generative AI, Apple lacks the presence that users expect; and in terms of developing new product lines, Vision Pro has not yet become a hit, and Apple has given up on building cars.

Affected by multiple challenges, the capital market's confidence in Apple began to decline. Apple has lost hundreds of billions of dollars in market capitalization in recent weeks after reaching a record $3 trillion last year. Now, Microsoft, which sometimes competes with and sometimes allies with Apple, has become the world's most valuable technology company. Nvidia, which is on the forefront of AI, has also continued to surge, and its market value is ready to surpass Apple at any time.

Looking forward to the future, whether Apple can properly respond to the ten major challenges ahead will affect Apple's rise and fall.

Apple CEO Cook

1. Besieged by Chinese brands, iPhone has been cold in China

iPhone has had a rough start to the year in China. According to data released by the research agency Counterpoint, in the first six weeks of 2024, China's smartphone sales fell by 7% year-on-year, of which iPhone sales fell sharply by 24%, which was the largest decline among the top five manufacturers, and its 16% share also fell to fourth place. . In contrast, Huawei's mobile phone sales increased by 64% year-on-year, ranking second with a 17% share. A senior analyst at

believes that Apple faces fierce competition in the high-end market due to the return of Huawei, and is also squeezed by aggressive pricing by manufacturers such as Oppo, vivo and Xiaomi. The iPhone 15 has not been significantly upgraded, which affects consumers' replacement. machine will. Among the top five, the third-ranked Honor sales increased by 2%, and the first-ranked vivo and fifth-ranked Xiaomi also experienced smaller declines than Apple.

In Apple's latest financial report, iPhone contributed about 60% of revenue. How to maintain the growth of iPhone has become a key challenge for Apple. According to analysts, the price cut will give Apple room to maneuver. Before the Lunar New Year, Apple uncharacteristically started to cut prices, with 4 new models reduced by 500 yuan. After entering March, the iPhone 15 series dropped prices again, with e-commerce platforms dropping prices by more than 1,000 yuan.

But for a technology company, relying on price cuts to stimulate sales is obviously not the best strategy.

Picture source: counterpoint

2.ipad sales are sluggish, losing the number one spot in China

For Apple, the iPad is not as important as the iPhone, but it can also bring Apple US$7 billion in revenue in a single quarter and occupy about 40% of the global market. . The problem now is that after more than ten years of iPad popularity, many users are gradually losing interest in tablets and turning to foldable screen phones or returning to laptops, causing global tablet shipments to hit a new low in more than ten years last year.

In the past year, Apple has not updated its iPad product line for the first time in 14 years, which has exacerbated the decline in iPad sales. According to data from research institutions, in the global market in the fourth quarter of last year, iPad shipments fell by 24% year-on-year, Huawei tablets increased by 95.4%, and Lenovo tablets increased by 14.9%. During the same period, in the Chinese market, iPad share fell by 6.7 percentage points year-on-year, and it was the first time in 14 years that it was Huawei surpassed and lost the first place.

As for folding screen mobile phones, Apple is still the only one among mainstream manufacturers that has no layout. Recently, US media broke the news that Apple chose Samsung panels for folding screen testing, but the test prototype suffered varying degrees of damage after only a few days. Some analysts pointed out that if this is true, it may mean that it will be difficult for users to see the arrival of foldable iPhones for at least the next two to three years.The lack of presence in the

3.ai field. The explosion of

chatgpt has once again set off a wave of AI around the world. NVIDIA's market value has soared to more than 2 trillion US dollars. Chinese mobile phone brands such as Huawei, Honor, OV, and Xiaomi, whether from the bottom layer or from applications, Innovations have been carried out around large AI models, aiming to provide users with more convenience. On the other hand, Apple has always lacked a presence in the field of generative AI, which has triggered investors' concerns about its lagging behind in the field of AI.

Apple has emphasized to investors that artificial intelligence has long been integrated into its software and services, but the technology giant clearly needs to show more of its presence.

This may have to wait until the Apple Developer Conference in June this year at the earliest. Last month, Apple CEO Cook said that this year he would "break new ground" in the field of artificial intelligence. The person in charge of Apple's software revealed that it will develop as many new AI functions as possible for operating system updates this year.

But users and the market can only wait and see what results Apple will eventually produce.

4. Giving up building cars, is it a blessing or a disaster

Last week, when the news came out that Apple had given up building cars, the capital market reacted positively to it. After all, this means that Apple no longer has to spend billions of dollars on a project that requires long-term investment. and projects with great uncertainty. But giving up building cars will cost Apple the opportunity to make money in the huge car market. According to foreign media, although it is difficult to build a car, Apple can price it at US$100,000. While the margins on cars may not be high, they can be used to boost Apple's revenue. In fiscal year 2023, Apple's revenue fell by 3%, the largest decline in seven years.

's abandonment of car building also triggered another concern, that is, Apple is becoming conservative instead of daring to pioneer and innovate. It will take time for

5.vision pro to become popular.

vision pro is actually a representative of Apple's new development. This headset, which Apple calls a "spatial computing platform," was officially launched in the United States last month, triggering a rush among Apple fans. However, it didn’t take long for the American media to reveal that a surprising number of users returned Vision Pro and chose to get back their $3,500. The reasons were that it was too heavy, difficult to wear for a long time, and cumbersome to use. Many software developers have postponed plans to develop dedicated software for Vision Pro. Apple's challenge now is to make Vision Pro lighter and cheaper, closer to a product that average consumers are willing to buy, but that process could take years.

Apple vision pro

6. Talent continues to drain

For large companies, it is common to change senior executives. However, according to US media reports, Apple has lost a number of "outstanding leaders" in recent months, including Bart Andre, Apple's longest-serving senior industrial designer and the largest contributor to Apple's patents. One of the holders. Top designers Colin Burns, Shota Aoyagi and Peter Russell-Clark also left at the end of last year.

Not only that, but the team once led by the legendary Jony Ive - a team that helped define Apple's aesthetic - has all but disappeared. Yves's successor left last year. Apple's industrial design and user interface departments now report to chief operating officer Jeff Williams. Putting an operations person in charge of the department responsible for design and innovation caused dissatisfaction among some employees, people familiar with the matter said. Cost-cutting measures also fueled dissatisfaction, they said.

7. Legal setbacks for smartwatches

Apple recently had to take the rare step of halting sales of watches with blood oxygen sensors due to a legal dispute with medical device maker Masimo Corp. The watches are the core of Apple's wearables, home and accessories division, which contributed more than 10% of revenue last year, or nearly $40 billion. While Apple was able to remove the feature and get its watches back on the market, it was an embarrassing legal setback for a company that rarely suffers from such situations. The loss of blood oxygen function may also prevent Apple from adding functions to the watch in the future, such as the ability to monitor high blood pressure and sleep apnea.

8. EU’s antitrust pressure

Starting this week, the EU’s “Digital Markets Act” (digital markets act) will take effect.

The new law will prompt Apple to open up certain aspects of its app ecosystem in the European Union, allowing the use of third-party app stores on iPhones for the first time and providing alternatives to in-app purchases. Apple has lobbied hard against the moves, which would reshape a business that generates billions of dollars in revenue and was previously the only way to install apps on its devices. American media believe that the new EU law "will further attack Apple's core concepts, security strategies and business models."

Just a few days ago, the European Commission just issued its first-ever antitrust fine against Apple, announcing that it would impose sanctions on the American company. The company fined it $2 billion, saying it violated existing antitrust rules that restrict app developers from telling users alternative ways to subscribe to music streaming services. Apple announced that it would appeal the decision and said the European Commission failed to find "any credible evidence of harm to consumer interests."

iPhone in offline store Source: Observer.com

9. Legal and business challenges in the United States

After suffering a record-breaking antitrust fine from the European Union, Apple is facing another legal challenge that may change its business landscape.

The U.S. Department of Justice’s years-long antitrust investigation into Apple has entered its final stages, and a lawsuit may be filed as early as this month. U.S. antitrust law enforcement officials said that Apple has imposed software and hardware restrictions on iPhones and iPads, making it difficult for competitors to compete. The investigation also covers Apple Watch, digital payment systems, etc. Some analysts believe that Apple is facing an unprecedented legal and business challenge, and the final result will not only affect Apple's future, but may also have a profound impact on the entire technology industry.

10. How to regain its luster

Amid many challenges, Apple’s financial situation has attracted much attention. When disclosing financial results in February this year, Apple Chief Financial Officer Luca Maestri admitted that Apple’s sales growth may not continue and that the current quarter will be difficult compared with the same period last year because A rebound in demand for iPhones last year added nearly $5 billion to Apple's revenue, but aside from that impact, current-quarter revenue would be flat compared to the same period last year.

analysts predict that Apple's sales will decline by 4% in the current quarter, which means that Apple's revenue has declined in five of the past six quarters. "In our view, Apple stock is at a crossroads," Rosenblatt Securities analyst Barton Crockett said in a note this week. He admitted that the failed Car projects and the immature Vision Pro have eclipsed Apple's glory. The question now is whether Apple's increased investment in generative AI can bring it back.

Just before the Spring Festival, Ming-Chi Kuo, an analyst who has been paying attention to Apple for a long time, publicly expressed his pessimism about Apple. His supply chain survey shows that Apple has lowered its forecast for iPhone shipments in 2024 to 200 million units, a year-on-year decline of 15%. Among the world's major mobile phone brands this year, Apple may have the largest decline. Due to the absence of folding screens and generative AI, shipments of the iPhone 15 series in the first half of 2024 and the iPhone 16 series in the second half of 2024 are expected to decline by 10-15% compared with iPhone models in the same period of the previous year.

There are many challenges facing Apple, and what kind of countermeasures it comes up with will affect the final course of this $2.6 trillion ship.