Monday, September 12, 2016

From China -- Lack of innovation precipitates Apple's Decline

I scraped this one because it's good, and I don't know about the stability of the source.

Apple's iPhone fever has apparently faded, however, the iPhone 7 announcement remains in the global spotlight. Despite a lot of rumors and leaks surrounding the new phone, expectations are generally low for Apple's next-generation phone, supposedly coming with processor and camera upgrades, new colors and a slightly different exterior style. These improvements suggest Apple has turned from a trendsetter - as it has been known as for years - into a follower of other manufacturers.

Next year will mark the iPhone's 10th anniversary. Over the past year, the global smartphone industry has been stuck in a downturn and only innovation can help revive and save the entire sector. Apple, however, seems to have been absent during the battle of innovation. The company's market capitalization touched $767.2 billion on April 28, 2015 before getting trapped in a downward spiral. Prior to the iPhone 7 launch event, Apple's market capitalization had lost nearly $200 billion from its peak.

In the fiscal quarter ended March 26, Apple reported its first revenue decline in 13 years. In its third fiscal quarter ended June 25, the company took a global hit. In greater China, Apple's revenue dropped 33 percent in the third fiscal quarter from the year before. A revenue fall to such an extent is generally considered a disaster, but luckily Apple still has over $200 billion in cash revenues.

In the global technology arena, it seems that Apple never invested heavily in research and development (R&D), but instead held to the lowest possible R&D investment. The iPhone maker that has focused on the smartphone world, in a stingy way, has for years failed to present any exciting innovations. In fairness, recent advances in the smartphone landscape have all represented a sustaining innovation, in the commercialization of virtual reality jointly pushed by Facebook and Samsung, camera breakthroughs unveiled by Huawei, curved phones from LG, phones outfitted with modular attachments such as speakers that Lenovo is betting on, or some so-called black technology - frameless smartphone display, curved screen, fast charging capability, dual-camera tech, and eye recognition features. But even in these little waves of change, Apple almost always goes missing.

When the iPhone fever cools and Apple's legend fades away, and as consumers embrace a return to reason, Apple should probably brace for a recession in the future. With smartphone users worldwide having just hit 2 billion this year, less than 30 percent of the world population and lower than the global online population of 3.5 billion, the curtain has only just risen on the smartphone era inaugurated by Apple. Smartphones have already become the most convenient and effective tool to enable Internet connection. At this time, we can't forecast who will be the next to stand out as the next huge innovator, but surely without Steve Jobs, it is less likely to be Apple.

Unlike Apple's previous new product events, Chinese consumers staying up all night to be among the first to get information about new phone details was no longer expected prior to the iPhone 7 launch event. The continued cooling of the consumption triggered by Apple's legend may still be good for the industry after all, making way for late-coming innovators to embrace new opportunities as well as open space.

Globally, sales of the iPhone have hit 1 billion, a record that may not be broken for quite some time. Banking on its iOS operating system and App Store that has gathered a galaxy of developers across the globe, and 600-700 million active users, it is unlikely that Apple will follow Nokia's path and tumble quickly. However, there are conspicuous signs that Apple is falling from its pinnacle. The fundamental reason behind the dismantling of the US tech giant's dominance is that with the Internet sweeping across the world, "Innovation is King" remains the supreme principle to achieve success. Thus Apple which rose to fame thanks to innovation may be destined to fade away because of a lack of innovation.

The author is the founder of technology think tank ChinaLabs.

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