Apple's shares have been quite uneasy recently, with it losing $160B off of its stock in December 2015, following a downward spiral in the price of its shares. Since then, the outlook for Apple hasn't improved, if anything the future looks even bleaker for one of the largest companies in the US and beyond.
To kick 2016 off, Apple's stock dropped below $100 compared to the high of more than $132 in May 2015. The company is soon expected to announce that, for the first time, iPhone sales will be in decline. When you look at the amount of iPhone's sold, it may not seem like a big deal, but when you then look at how Apple makes its money, the picture becomes much more vivid. 63% of Apple's entire revenue is from the iPhone. Yes, 63%.
Suddenly things don't look too healthy. When a company's main product begins to show signs of decline and uncertainty, then it is time to raise some eyebrows.
That's just the iPhone though. Once someone buys the iPhone, Apple continues to generate revenue from other services from the app store, its new music service dubbed Apple Music and accessories for the device. That 63% begins to increase when you factor the decline that these add-on options will also face.
If you thought that Apple's other products, namely the Mac and iMac, would help the company suffice, it might be time to take a look at how popular these products actually are, and how little of an effect they actually have on the company. The Mac line makes up only 13% of revenue, and it is also in decline, along with the rest of the computing industry.
Apple Watch, Beats headphones and iPod aren't doing too good either - Apple bundles these into a category of 'other' for reporting purposes, and altogether they only account for 8% of the revenue.
Apple appears to be struggling to gain new customers, and has since taken its devices to China. Apple's gains in 2015 were mostly thanks to recent expansion in the country, through opening new stores. However not even China seems to be able to help Apple; with the market there underperforming, rocking markets around the world.
The company has tried, with many products, to gain momentum in other areas, so that it is not relying on the success of the iPhone. It is reported that Apple is working on a car, which has the potential to send shares up. Until Apple makes this official however, its shares seem to be on a tumble. As of January 25, its shares were at $99.44, a 24-hour fall of 1.95%.
Not only does the company need to worry about its main product line being in decline, it also has several wars on the legal front. More recently, the company is being sued for patent infringements with its Siri voice assistant, as well as a class action lawsuit for allegedly crippling older devices to push customers to upgrade.
Will this fall destroy Apple? It's unlikely. Apple is still one of the richest companies in the US, and its products still continue to sell successfully around the world. Investors do have a right to be concerned however; a company relying on the success of one product is not healthy, particularly in such a dramatic market as technology, where constant innovation is key.
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