The iPhone Apocalypse: Apple Records First Revenue Decline in 13 Years

by Matt Klassen on May 2, 2016

Apple-StockLast week something happened that had never happened before in the modern smartphone era: Apple’s revenues slipped on the back of slumping iPhone sales. To that end, on Tuesday the Cupertino company reported an almost 13% drop in quarterly sales, marking the first time revenue at the world’s most valuable company has dropped since it entered the smartphone game 13 years ago. Not only that, but Apple has predicted the decline will continue, leading many to speculate that the end of Apple’s tech reign is nigh.

But while over the years I’ve certainly predicted Apple’s demise from distinctly more innocuous occurrences (and so far have always been wrong), for once I don’t think this announcement heralds the end of the company, nor even a significant downturn. Instead, I see the news of Apple’s decline as a sign that the smartphone market is finally seeking a measure of equilibrium, the sort that naturally occurs when a company has effectively become as dominant as the market will allow it to be.

So while this news may indeed be the beginning of an iPhone apocalypse, let’s consider the actual meaning of that all-to-common (and often misused) word, not the “end of days” like most of us think but instead the “disclosure of knowledge”, and realize that this event will likely reveal to Apple that it can’t sit back on its laurels anymore and assume people will continue to be loyal, but that in order to remain competitive…well the company is going to have to be competitive.

“Despite the pause in our growth, our results reflect excellent execution by our team despite strong macroeconomic headwinds in most of the world,” said Tim Cook, Apple’s CEO.

Translation: The downturn in revenues represents the harsh reality that the company is going to face increasingly stiff competition regarding its traditional product lines over the next several years, particularly if the company continues to trend of incremental upgrades instead of the radical innovation it was once known for.

Not only that, but again in the true sense of “apocalypse,” this event will eventually motivate the company to once again transcend its current industry, revealing the need to migrate, as it did from computers to consumer mobile tech, to something entirely different.

The good news for Apple, it has the resources to successfully weather such a migration. The bad news, it’s unclear if Apple’s current leadership core has the vision or ability to accurately gauge, as Jobs did with smartphones, what transformative tech people will want over the next decade, but as of yet don’t have.

So there you have it, an incredibly wealthy company who has seen its primary revenue driver (the iPhone) steadily lose market share over the last few years, resulting in the company’s first decline in revenues since it used the iPhone to ostensibly create the modern smartphone market. While I doubt this is a sign of the end for the Cupertino tech giant, I do consider it a wake-up call, a revelation that standing pat in any industry means, as it always has, that you’re actually moving backwards.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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