Will Apple survive? (1/2)

Speculation and doubt are often heard nowadays in connection with Apple. Recently the company reduced its revenue forecast, which is something we are not used to. It seems that the key drivers of revenue – physical devices – can no longer grow so fast. So what will be Apple's next major item?

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According to an article on the website of the INSEAD business school, Apple has not embarked on a path towards the same dire fate as Nokia suffered with its mobile phone business.

Period of transition

Apple is currently undergoing a transition. It wants to move away from selling hardware. New revenue streams should include ecosystem related activities (content distribution, payment systems, cloud services, intelligent homes, etc). The company also wants to form more partnerships such as the one with LEGO, which is aimed at providing education and entertainment via augmented reality.

With ecosystem revenues it is not so straightforward. Their contribution to the profitability of a company is hard to measure when compared with simply counting the margins from sales of physical products. Therefore the future potential in this area is not easy to calculate.

Apple is an opportunistic innovator which always tries to get ahead in introducing the next big thing and making money out of it. It has a powerful brand, plus superior design and user-friendliness. Another advantage is its highly effective global supply system. Physical devices have been driving growth for many years.

Today, however, it is still not clear what the next big thing is. Smart watches so far have not quite delivered. Intelligent homes and autonomous vehicles are major opportunities, but both Amazon and Google, as well as Tesla and other car makers, are currently better placed in this sphere.

-jk-

Article source Management Issues - British website cntaining practical information, tips and advice to managers
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Will Apple survive? (1/2)

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