Game-changing hardware product:
After iPhone, Apple hasn’t produced a killer product. Wait a minute! In last article, you just mentioned that Apple has successfully expanded their product and service and make tons of money from them, wtf are you talking about now? Don’t be panic. Please let me explain first.
If you take a closer look at the product and services that Apple has launched in the past 10 years, yes they definitely brought really amazing sales result. However, if you have a sharp eye, you will find out all of them are created surrounding iPhone. For AirPods and Apple watch, the reason why consumers buy them is they have already had iPhone and Apple-produced product seems to be more compatible to iPhone. For service business, most of services are built on the iPhone ecosystem, such as app store and iPhone default licensing, so if we take out iPhone, then the service business can’t be so successful.
Tim Cook ever said “We love to integrate hardware, software, and services, and find the intersection points of those because we think that’s where the magic occurs.” Now Apple fully embodies this philosophy, but once their hardware product (iPhone) hasn’t had a dominant influence over consumers anymore, they are gonna lose their competitive advantage. Therefore, from my perspective, Apple should launch a game-changing product in the next 10 years and it could be iGlasses that focus on mixed reality, iCar that focus on AI & driverless car tech or any other stuff. Again, don’t forget Apple’s core value is integration with hardware, software and services. Apple will lose its advantage if there is no dominant hardware backing it up.
Big tech fiercer competition:
In order to protect their own cash cow, big tech titans used not to encroach each other’s core business. However, when the market cap of each tech companies reach to plateau, it’s really difficult for them not to grab food from each other in order to gain more profit. For example, Apple has not only been planning to launch iCar which is gonna compete with Tesla but also planning to develop iGlasses which is gonna confront with Microsoft’s Hololen or Facebook’s Oculus.
Aside from new product, Apple will encounter very powerful competitors in the cut and thrust of streaming service industry. When it comes to Apple TV, the main competitors would be Netflix and Disney+. Both of them have had tens of millions of subscribers at hands and are still gradually capturing the market share. Compared to them, Apple TV is just like a new-born baby who start to know how to creep. Also, there are some relatively smaller players like Amazon prime video, HBO max, Hulu all gearing up to devour their enemies.
Apple has the slightly different situation in streaming music industry. Surrounded by strong rivals such as Spotify and Tidal, Apple music definitely has had a bunch of its own supporters. Due to the characteristic of streaming music industry, the profit you gain need to share with the music artists/creators and it’s super difficult to gain more revenue. However, with tons of Apple podcast listeners, Apple should come up with a plan to monetize them. Subscription or advertisement seem practical and feasible. Also, Creating and developing their original podcast program can attract more users to stay in the platform and make them more willing to pay the fee.
Geopolitical issues:
As we know, China is one of the most critical market for Apple and it accounts for nearly 20% of Apple’s total revenue. Besides, Apple has increased the reliance on Chinese vendors to manufacture their product. Judged by Apple’s supplier list, there are more than 52 vendors from China and it’s not easy for Apple to scout for other qualified vendors in a short period of time.
Although Apple temporally escaped the mounting tensions between China and the U.S., the anger will be spilled over to Apple in the near future. With the trade war gradually exacerbating, Apple might need to take side. Apple previously “friendly” approaches for China, such as creating Chinese own data center in China or allowing Chinese government to intervene which apps should be launched in app store is gonna piss U.S. gov and U.S. consumers off. But in the same time, Apple might lose China market if they don’t make concession to authority in Beijing.
Antitrust :
Tech giants in the U.S have been facing antitrust lawsuit as they are accused of handling too much power. For example, Facebook’s acquisition and social media influence over the users, Google’s advertisement dominance, Amazon asymmetric info to stifle competition. In Apple’s case, it would be app store, the only way for consumers to download app in iPhone. App developers have been complaining about Apple’s arbitrary app store rule and the commissions (now it is 30%) Apple take. Epic Games, Fortnite’s developer, filed an antitrust lawsuit against Apple and firmly believed App store is a monopoly. The result hasn’t been announced yet. If it turns out to push Apple loosen their App store rule and lower the commissions, it will make a dent on Apple’s lucrative service.
