There are several reasons why Apple may want to keep iPhone production flat as the market continues to grow tougher. Its new line of products is not translating into sales, and its high prices could leave it vulnerable if the economy continues to sour. Additionally, it’s not delivering on its promises and dropping Samsung from its list of memory chip suppliers could hurt its prospects. Read on to learn more.
Apple’s new line-up of products isn’t translating into sales
The recent introduction of Apple’s iPhone sparked a wave of hype. But sales have not followed. The price of the device, at more than $500 or $60, is keeping many consumers away. The company’s website has also gone down. Its online store has closed ahead of launch events. Apple has a tradition of building hype before it releases a new product. However, recent announcements have raised concerns that its new line-up will fail to translate into sales.
It is unclear whether Apple’s recent decision to stop reporting its product sales quarter by quarter has actually had a negative impact on sales. In addition to cutting quarterly sales reports, the company has also increased prices on its iPhones, which could leave it exposed to slowing economies. The high price tag of Apple’s products has also hurt its adoption in emerging markets. As a result, the company needs a radical shift in leadership and strategy.
Its high prices could leave it exposed if the economy sours
In recent months, the company has increased its prices to drive up revenue, but its recent stance on quarterly sales numbers has caused some concern. After all, Apple is already known for its high prices, and it could leave the company vulnerable to an economy that is slowing. The company has been responding to sluggish sales of smart phones by raising prices, but its decision to cut production has created more concern. Apple suppliers have announced layoffs and production cuts in recent months, which has heightened concern among investors.
Apple’s high prices are an attractive way to invest in the company, but they may leave it exposed to new regulations if the economy deteriorates. While the stock market seems to be complacent about the potential risks to Apple’s growth, new regulations are far from a given. For now, the company is still enjoying a record number of sales, but its high prices could leave it exposed if the economy sours.
Its decision to stop saying how many iPhones it has sold
Analysts and investors use iPhone sales to determine average selling prices and gauge the company’s financial health. Apple’s decision to stop saying how many iPhones it has sold has fueled speculation that the company is trying to hide something. However, Apple’s decision to stop disclosing sales figures suggests that the company has hit “peak iPhone” and is simply trying to protect itself. Besides, Apple’s decision to withhold sales data makes it more difficult to predict the company’s growth rates.
But some analysts don’t believe the company’s numbers. One analyst, Ben Reitzes, at Barclays, asked whether Apple was still a growth company. He implied that Apple had reached the peak of its iPhone market. Perhaps Apple is correct in saying that it no longer has a growth-oriented strategy. Regardless, Apple has been trying to shift its focus to services revenue in recent quarters. As of last month, Apple reported that services revenue represents one-sixth of its total revenues.
Its decision to drop Samsung from its list of memory chip suppliers
While Apple has a long-standing relationship with Samsung, the company is now in the crosshairs of a growing rival. The Korean company has acknowledged Apple’s desire to design its own CPU, but that’s not the main reason it’s dropped the South Korean manufacturer from its list of memory chip suppliers. Apple sources memory chips from a variety of companies, but Samsung commands more than 60% of the global mobile DRAM market. As Apple’s largest supplier, Samsung’s rapid rise has threatened to squeeze out its longtime rivals.
While a relationship with Samsung could cause serious problems in parts sourcing, the company is also likely to benefit if Apple decides to drop it from its list. While Samsung’s loss to Apple will certainly hurt its profitability, the relationship between the two companies is largely positive. The company is expected to contribute about 4 percent of its operating profit this year, and 6 percent in 2013.