Apple empire wavers as iPhone sales slow

The Big Five: The top tech companies had a combined value of over $3 trillion last year.

Are we reaching the end of the Apple age? And if so, should we mourn it? This week, CEO Tim Cook warned investors that the company’s latest revenues will be lower than expected.

“Today, Apple is going to reinvent the phone,” said Steve Jobs. The audience erupted in cheers. It was January 2007, and the Apple founder was launching the first ever iPhone. It was a legendary moment in Apple’s rise to glory.

Jobs’s declaration 11 years ago was true. Two thirds of the world’s adults are predicted to own a smartphone this year. There are over one billion Apple products in use around the world. Last year, the company briefly became the first ever to be valued at $1 trillion, cementing Apple’s place leading the “Big Five” technology companies.

But on Wednesday, Apple’s current CEO, Tim Cook, warned investors that its revenue for the last three months of 2018 would be around $5 billion less than Apple originally thought.

Cook blamed China’s slowing economy, Trump’s trade war and customers holding onto their smartphones for longer. Its share prices dropped by almost 10% yesterday as a result.

The Big Five — Apple, Google (under its parent company Alphabet), Facebook, Amazon and Microsoft — dominate the technology world. Like the vast empires of the past, their wealth and influence stretch around the globe.

They “came along at a perfect time,” explains the business professor Geoffrey G. Parker. Between them, the Big Five control almost everything about the way people use computers, from the devices themselves to the sites they visit.

And yet each has its own distinct character and expertise: Apple’s commitment to beautiful design and game-changing ideas is matched only by its tight grip on security. Meanwhile, Amazon’s convenient delivery and cheap products have transformed shopping, while its cloud service hosts some of the internet’s most popular websites. Facebook’s social networks have changed how people communicate.

Microsoft, once the leader of the pack, is still used by millions of offices around the world. And Google is using its enormous search data and artificial intelligence to expand into everything from self-driving cars to living longer.

And yet history has shown us that all empires fall eventually. At the end of last year, many tech giants (including Apple) began to see their market value fall. If Apple’s time is coming, should we be sad to see it go?

Decline and fall

Good riddance, say some. Apple’s flashy designs mask the fact that its products are vastly overpriced. And the company is far too controlling — even its screws have a unique design to prevent tampering from outsiders.

Apple has earned its place, say others. Since the iPod’s launch in 2003, the company has been an amazing trendsetter; smartphones and tablets have changed our lives, and Apple’s sleek designs really are beautiful. We would miss them if they were gone.

You Decide

  1. Will you be sad to see the end of the Apple empire?
  2. Is it dangerous for five companies to be so powerful?

Activities

  1. Apple is known for taking ordinary objects — like watches or phones — and transforming them. Choose something you use on a day-to-day basis and give it an Apple makeover.
  2. The year is 2076 — a century has passed since Apple was founded. Write a “history” of the company, beginning with the story of Steve Jobs and ending with your predictions for its future. Has the empire crumbled?

Some People Say...

“Our goal has never been to make the most. It’s always been to make the best.”

Tim Cook

What do you think?

Q & A

What do we not know?
Although Apple was briefly the most valuable company in history last August, it has since struggled; the value of its shares has fallen by around 30% since October. CEO Tim Cook wrote a letter to investors predicting revenue of around $84 billion for the last three months of 2018. This would be a 5% fall from the same period last year.
What do we not know?
Whether Apple can stay on top if smartphone sales continue to fall. It relies on iPhones for around two thirds of its sales, so if they have reached their peak, it will have to focus on making its other products work. These include hardware (such as the Apple Watch and iPads), software (such as the iCloud) and rumours of an electric car.

Word Watch

Steve Jobs
Jobs co-founded Apple in 1976 with Steve Wozniak and Ronald Wayne. He was known for his difficult management style and was forced out in 1985, in a “humiliating” move by the company’s board. In 1997, as Microsoft dominated the PC industry and Apple operated at a loss, Jobs returned as CEO and led the company to success. He died in 2011.
Two thirds
According to the research company Zenith Media in 2017.
$5 billion less
In November, Apple predicted sales of $89 billion in the three months leading up to December 29. On Wednesday, it revised that number to around $84 billion. The final figures will be released later this year.
Trade war
The US and China have each imposed tariffs on goods from the other country.
Most popular
Netflix, Spotify, Instagram and the CIA are among the Amazon Web Service’s most well-known customers.
Living longer
Google’s mysterious biotechnology company, Calico, was launched in 2013 with the ambitious aim of “curing death”. Its website says it aims to “harness advanced technologies to increase our understanding of the biology that controls lifespan.”