Why is Apple facing its longest slump in 20 years?
In 2007, Apple was credited with revolutionising the landscape for communications when it launched the first iPhone – a mobile phone that could play music and access the internet.
The product laid the foundation for 17 years of smartphones and propelled Apple to become the world’s first company to reach a valuation of more than $3tn (£2.3tn) last year.
In recent months, its fortunes have taken a turn.
The company has faced pressure from rising competition and regulations, the cost of living squeeze and a spate of legal challenges leaving it on the brink of its longest slump in over two decades.
At the start of the year, Wall Street analysts delivered a second downgrade to Apple’s stock, leaving investors worried about the year ahead.
Earlier this week, Apple began making $500m (£391m) in payments to customers in a long-running class action lawsuit over claims it deliberately slowed down certain iPhones in the US.
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The company has also stayed out of the race among tech giants to develop the most influential AI system, a move that analysts have suggested is to blame for it losing out to Microsoft, the main backer of OpenAI, as the world’s biggest company.
Some have argued that the maturity of the smartphone market has raised new challenges for the firm as it deals with changing consumer attitudes.
Ben Wood, chief analyst at CCS Insight, the technology research firm, said: “The smartphone market has changed beyond all recognition over the last decade or more.
“It’s become a commodity product. Just something that people have to have. But they’re quite comfortable with it. And they’re keeping it for longer.”
He added: “A good analogy is like the humble washing machine, you don’t wake up in the morning and think I’m ‘gonna go out today and buy myself a new washing machine. But if it breaks, you absolutely have to get a new one.”
Others expect Apple’s ecosystem of apps, services and other tech products to keep consumers coming back.
Charles Arthur, a tech analyst and author, said: “Fewer people are buying iPhones, but they still have iPhones in their hands. And that means Apple can sell them services of one sort or another whether it’s cloud storage, whether it’s Apple TV plus, whether it’s fitness, fitness apps and so on.
“So any sort of slow down like that is simply the law of big numbers. It can’t keep on growing exponentially forever.”
February will be key for the company. Investors are awaiting the release of its financial results at the start of the month, which will confirm whether or not revenues declined year-on-year for a fifth consecutive quarter over the Christmas period.
It also marks a new start: the company’s latest offering is the Vision Pro augmented reality headset, which launches in the US next month with a hefty price tag of nearly $3,500 (£2,750).
The success of the launch will demonstrate whether Apple still has the power to shape the market with its ideas.