Time for Apple to make the angels sing

Its shares fell despite reporting revenues of $57bn. The pressure is on for the technology giant to find its next big thing

New York

When consumers switched on the first Apple Mac computer 30 years ago, it is said that for many of them “angels started to sing”.

At crisis points in the development of the company, that same ability to innovate, to bring an “insanely great” product to market, came to the rescue.

The MacBook, the iPod, the iPad, the iPhone – they all blew consumers away.

Well, if ever Apple needed to make the angels sing again, this is the time.

The company's stock has taken a hammering in the last two days despite announcing record sales of iPhones and iPads late on Monday. Record sales they may have been, but Apple is losing overall market share in global smartphone sales at an alarming rate.

Much of the pressure to make the angels sing again is likely to fall on the shoulders of Newcastle Polytechnic's most-famous design graduate, Sir Jonathan Ive, Apple's British-born design chief.

With Steve Jobs no longer around, markets are looking to Sir Jonathan to come up with the goods.

Apple's stock fell another 8 per cent in early trading on Tuesday to around $508 (£306), down from more than $700 in September 2012. One analyst, Bert Dohmen, predicted the stock may fall as low as $320.

With the corporate raider Carl Icahn building a stake in the company and agitating for increased stock buybacks, Apple may have to act faster than it would like.

When a company announces record sales of 51 million iPhones, 26 million iPads, record revenue of $57.6bn and maintains a gross margin of around 38 per cent, and its stock falls as much as Apple's has in the past day or two, something is very wrong. And it is that in the same breath as announcing record quarterly revenue, Apple also forecast that revenue in the current quarter would be between $42bn and $44bn, below many analysts' estimates of $46.1bn. Cue the sell-off in the shares.

Investors and analysts had hoped that Apple's contract with China Mobile, the world's biggest wireless carrier, would have led to more optimistic forecasts. They were disappointed.

“I think all investors were looking for brighter expectations for these new products and not such a sharp fall off,” said Morningstar analyst Brian Colello.

What really concerns many analysts is that Apple is securing a smaller and smaller percentage of the global smartphone market as serious competitors and cheaper producers alike take their share of customers.

Research firm Strategy Analytics says Samsung had almost 30 per cent of the world's smartphone market in the fourth quarter, way in front of Apple's 17.6 per cent. Apple's share of that market was roughly 22 per cent about a year earlier.

Apple faces the classic dilemma confronted by many companies: produce cheaper products, sell more of them, but at reduced profit – or keep its products high end at higher prices and higher margins but risk taking a smaller market share.

Apple's chief executive,Tim Cook, said on Monday night that the company's objective has always been to make the best, not the most.

So it's settled then? Well, for now at least.

“They either stay on the high end and make very good gross margins but maybe growth is a little less than expected… or the other way around – they drive growth but it's not very profitable,” Mr Colello said.

He stressed that Apple still has armies of loyal customers, but that “it's just trying to gauge how much further growth there is beyond that in places like China and other emerging markets and right now it just looks like it's a little less than anticipated.

“It just seems they are going to sell fewer units than what we expected of their main products.”

The timing of all this is troublesome for Apple. The company is currently sitting on $159bn of shareholders' cash and it is under pressure from Mr Icahn and others to increase its share buy-back programme.

Mr Icahn is a very resourceful operator and he is unlikely to go away soon.

Apple has faced down other crises in its storied history –and what saved it was always innovation. If Mr Cook is true to his word and Apple refuses to sell 'em cheap and pile 'em high, then innovation has to be the answer. Apple needs its next “insanely great” product or service.

There is talk of new product categories this year in “wearables” and TVs and perhaps “in-car systems” – but no firm details.

Apple just needs to bring us the next great thing we did not know we needed. No pressure then, Sir Jonathan. Just make the angels sing.

News
University Edible Garden, Leeds – a sustainable garden in the centre of the university, passers-by can help themselves to the home-grown produce
newsFrom a former custard factory to a Midlands bog and a Leeds cemetery
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
PROMOTED VIDEO
News
i100
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
Arts and Entertainment
tv
News
media
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
footballA colourful discussion on tactics, the merits of the English footballer and rebuilding Manchester United
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Travel
The shipping news: a typical Snoozebox construction
travelSpending the night in a shipping container doesn't sound appealing, but mobile crash pads are popping up at the summer's biggest events
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz