Karma biting Apple

Dads Army Frazier - doomedThe shine is finally coming off Apple which is seeing iPhone sales fall and share prices plummet.

The Tame Apple Press tells us it is too early to write off the fruity cargo cult yet. After all, every Apple fanboy is just waiting to buy the new iPhone in a couple of months. But there are signs that this is not the case – Apple is slumping and Wall Street knows it.

Apple’s problem is that it has nothing new to offer. Its business model was dependant on appearing to have the next important technology. While it usually borrowed this technology from someone else and marketed the hell out of it, it did a good job and managed to grow at a huge rate. It was helped by its legions of fanboys in the press, who would praise a plague rat if it had an Apple logo stitched on its behind.

But Apple arrived with “the next big thing”, wearables, too late to make an impact with a product which was out-of-date. Sales were still good but not enough to make up for the falling sales of tablets, or iPods or all the other things that were dropping out of fashion.

This is part of Apple’s biggest problem. While it touts itself as the innovator building the future technology, it is just a fad merchant producing the next hula hoop. It has to guess the next fad or it will die and that is precisely what is happening now.

It has run out of ideas and now is just an ordinary tech company. Its explosive growth is consigned to the past, and reality has to bite.

Shares of the iPhone maker have been in a rut since posting disappointing quarterly results in late June, falling to a six-month low of $113.25 on Tuesday.

The recent declines have wiped out nearly $100 billion of Apple’s market value – about as much as fellow Dow units Boeing and McDonald’s are worth in total.

Apple is now dependent on its iPhone which is not a great market to be involved in either. Sure it is doing well, but that can’t last.

Sales in the US have dropped by 2.7 percent according to recent statistics. This was offset by sales in the UK and Australia and to a less extent by China, but is terrible news for Apple.

The US is its home core market, the others are subject to greater fluctuations. China for example is predicted to slump next year.

The Chinese do not buy a new phone every year, and the expensive smartphone market is saturated.

The argument that the slump is happening because punters are waiting for the iPhone 6 does not hold water either. For Apple to preserve its sales, all its buyers would have to renew their phones in a couple of months. This means that China, the UK and Australia which propped up that quarter will not be buying – not even an Apple fanboy buys a new phone for two months.

We are watching a turning point were the Apple cult slowly dies. Its death will be slow and painful. It is sitting on far too much money to die quickly. It lacks the structure to adapt to change quickly. It is part of the Apple religion that no one admits there are any problems. This has already lead it into unnecessary legal conflict because it cannot admit that whatever atrocity it committed was wrong.

Apple could get away with this attitude when it was on top, but if it is fighting for its life it needs to identify what is going wrong and stop it.

Unless Tim Cook can change this, his company will implode.