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Apple faces challenging future, LBS economist warns

27 Jan 2016

Could the Smartphone’s double digit growth be coming to an end?

LindaYueh

Apple may be the world’s most valuable company but it faces a challenging future, a London Business School economist has warned.

Despite reporting total revenues of $75 billion for the three months to December, and beating its own record for the most profitable quarter in US corporate history, Apple’s double digit growth could be coming to an end, according to a London Business School economist.

Speaking earlier today on the Today Programme and Forbes, Linda Yueh, Adjunct Professor of Economics, London Business School, warns:

“It’s just a 2% increase which is a rapid slowdown from Apple’s previous double digit growth, on the back of the flat-lining sales of its iPhones. Thus, the outlook for Apple is more challenging than ever.”

Smartphone sales have plateaued in the United States as well as in Europe. But that’s not the only threat to the Smartphone giant, as Dr Yueh explains.

“Growing competition is also squeezing Apple’s market share in the world’s biggest smartphone market which is China. Domestic Chinese firms, Huawei and Xiaomi, hold the top two spots in the world’s second biggest economy, pushing Apple into third place. Lenovo joins Huawei and Xiaomi to make up the top five.”

With two-thirds of its sales outside the United States, global competition is heating up. But in markets like China and India where average incomes are much lower, it’s the cheaper competitors who are gaining an edge, Yueh explains.

“Apple’s future is in its own hands”, says Dr Yueh, “since tech companies depend on innovation and some argue, product diversification away from the iPhone.” 

But with Chief Executive Tim Cook warning that the iPhone, which accounts for more than two-thirds of sales, may drop for the first time since it was introduced in 2007, it’s clear that Apple will be put to the test now, perhaps as never before.