OnRecycle Blog
Apple Profits

Apple Profits

Can Apple put the brakes on its tailspin? Over the last year their shares have plummeted and all eyes are on the iconic brand as they try to shift their fortunes.

Last April Apple broke through the $600 (£393) share price mark, and experts were predicting they would rise still further to a whopping great $1,000. The brand had overtaken Exxon Mobile as the world’s most valuable listed company, and rumours were doing the rounds that Apple was about to branch out into internet enabled television. Time magazine named Apple’s chief executive one of its most influential people while Al Gore – Apple board member and former vice president – said “Tim Cook, a soft-spoken, genuinely humble and quietly intense son of an Alabama shipyard worker and a homemaker, hasn't missed a single beat." How things have changed – and in just twelve months.

Today their shares are worth $376 (still impressive, sure, but not in comparison to their own standards) and net profits for the March quarter are predicted to have fallen (compared with the same period last year) for the first time in a decade. And there is no sign of iTV. Sob.

Apple's period of growth took a turn for the worse with the arrival of the iPhone 5; reports of the screen being so sensitive that it was scratched in the factory didn’t help, nor did the frustrations of critics and users alike over the brand’s lack of innovation. Analyst at Jefferies Bank Peter Misek has commented on signs that the iPhone 5 (whose release was billed as the biggest consumer electronics launch in history, reaching 100 countries in 3 months) are falling faster than its predecessor the 4S; in the last 3 months the handset accounted for only ½ of the Apple phones sold through America’s largest network Verizon Wireless.

Although the Apple brand accounts for just 11% of handsets bought, it actually takes 60% of the industry’s profit (Samsung taking the majority of the rest), because of its premium prices. But this percentage might shift, as the western market becomes saturated and the focus moves to cheaper phones for poorer parts of the world. More affordable handsets by rivals such as Samsung, HTC and Nokia are increasingly impressive in terms of spec and are likely to sell most successfully in developing nations. But it does seem like Apple are adapting to the new climate; a cheaper iPhone is set to launch alongside the 5S. Both of Apple’s new handsets will sport the same 4” screen, but the cheaper version probably won’t include the finger print technology featured in the 5S and will have a cheaper plastic casing. They are also branching out into the wearable technology market, too, with the launch of the iWatch.

And despite all this doom and gloom, not everyone is feeling quite so depressed about Apple’s fortunes; Benedict Evans at the Enders Analysis research firm said: "Nobody seriously thinks there is going to be some collapse in Apple's business; the concern is how much bigger it will get. The company grew at over 50% a year for almost three years and, on a purely mathematical basis, the growth rate was going to slow."

But blips such as the delay in the iPhone 5S launch won’t help. Problems with the new finger print scanning feature designed by Apple to replace the existing passcode unlocking system being the route cause.

Let’s hope Apple don’t miss another beat before Samsung (now the world’s biggest seller of mobile phones) and other up and coming rivals grab the dominant market share. Are you thinking of buying yourself one of these new iPhones? If so, don’t forget to recycle your old phone with us here at OnRecycle; it’s good for the environment and your wallet – what are you waiting for!