Uh oh. There are thunderstorm clouds on the technology horizon, and the once shining beacon of hope for the tech sector has it a wall (it’s Friday; mixed metaphors are on sale).
Apple is projecting not just slower growth in the future, but no growth, as in revenue and profits in the next quarter that are going down; lower than the same period last year. It’s been expected for years by the Chicken Little market prognosticators, but now it’s official. Apple has hit its peak. Years from now will we look back and see 2016 as the start of the Great Technology Apocalypse?
News From Chicken Little
The sky is falling is a common refrain from members of the technorati elite politburo. That’s not necessarily based upon numbers– Apple has defied predictions for years– but such a position helps to sell ads on ad laden digital rags, and Apple is an easy target for the nattering nabobs of negativity.
Here’s what should give us pause. Not that Apple is in danger. It is not. The company has plenty of money, plenty of margins which, even when sales go down, still yield crazy rich profits for years. Instead, we need to look elsewhere on the field of battle. Samsung, an Apple supplier and nemesis, reported a larger than expected decline in earnings the past year. Why? The tech business has slowed down and profits are expected to fall.
Some of that situation can be blamed on Samsung and some of it on Apple. Samsung dared to compete on Apple’s turf by stealing intellectual property and losing the resultant lawsuit(s). Apple decided to take some of it’s component manufacturing elsewhere, which means less revenue and profits for Samsung. That trend is likely to continue and the impact on Samsung the past two years has been horrific.
One way to corroborate the tea leaf readers and their gloom and doom chorus is by checking on vulture capitalists and how much money they push into the technology sector. Hint. It’s going down, and that’s a sign of a lack of confidence in the industry from the very people who should know what the future will bring.
Also, there’s the market penetration factor. It can be said that everyone who wants a smartphone already has a smartphone and that’s probably true of personal computers, notebooks, tablets, and other tech goodies. Health tech and home tech haven’t exactly set the world on fire so what’s going to happen?
I call it the sift and shift. The market is sifting and shifting. That means a change is coming, a filtering of players, consolidation, if you will. Once major players– HTC, Motorola, BlackBerry, and others– are no longer major. The mid-range and low end of the smartphone market, the largest mover of technology the past decade, operates on thin to no margins, and there’s only one company that offers an aspirational brand. Even while Apple’s revenue and profits dip, competitors will drop even more, and worse, their most valuable customers, who aspire to own better products, will move from Android and Windows to Apple.
In short, the technology apocalypse has already started and the next couple of years are going to be messy and convoluted except for one company which is well positioned not only to ride out the economic problems, but prosper. Yes, our favorite Cupertino company will feel the pain because new multi-billion dollar product lines are not so easy to come by, but Apple will not only weather the stormy apocalyptic clouds, it will emerge lean and clean and mean because Apple’s entire product line is aspirational in nature which attracts the customers that will prosper during the apocalypse.
If only Apple could figure out a way to bring home some of the nearly $200-billion in overseas banks without paying a 40-percent tax burden.