Apple’s challenge

Apple (APPL) has iPhone issues. Its money-spinning franchise is slowing down and the company is grappling with ways to keep the magic alive.

The company is aiming to tweak the design of the smartphone this fall, according to a recent post by Wall Street Journal.

Under consideration by Apple designers is the removal of the headphone plug. That would make the phone thinner and improve its water resistance.


Age Lines

What’s significant here is that Apple is diverting from its schedule of overhauling the design of the iPhone every two years.

More dramatic changes are coming in 2017, when the iPhone franchise turns 10.

As the Journal notes:

“Those changes could include an edge-to-edge organic light-emitting diode, or OLED, screen and eliminating the home button by building the fingerprint sensor into the display.”

iPhone Fatigue

How all these design changes will affect sales remains to be seen.

What’s clear is that the iPhone franchise is showing its age and may be nearing a saturation point.

That matters because the smartphone represents some 65% of Apple’s overall revenue.

Source: Apple Inc.

In April, Apple disappointed investors when it disclosed that iPhone sales had decreased by 16%. That was the franchise’s first ever year-over-year drop.

Apple is a great company and its Mac laptops are highly regarded. However, the prospect that the company is so reliant on a flagging franchise is weighing on the company’s stock.

Source: Bloomberg


Apple has confounded skeptics in the past, but it faces a major headwind with a core product line.

The iPhone franchise has age lines. And, unfortunately, there isn’t another business to pick up the slack at the moment in my view.

iPad sales are sinking and Mac sales are flat-lining. Add to the woes are a strong dollar and a very weak Chinese market.

Add it all up and, in my opinion, it’s clear Apple faces some challenges heading into 2017.

Photo Credit: Gonzalo Baeza via Flickr Creative Commons