iPhone Loses Its Magic

The price of around a thousand dollars for the iPhone X has been the last straw for many, according to the latest data. Apple’s key product has been largely disappointing for years, endured only by the most ardent fans of the American manufacturer (a repetition without significant innovation in design and technology), but after the approximate price of a thousand dollars for the latest model, it seems that even they are slowly giving up.

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As reported by the Financial Times, falling demand has resulted in the erasure of about 60 billion dollars in market value for the company in two days, with a stock value drop of 4.1 percent on Friday (2.8 percent the day before). The significant drop in value was caused by one of Apple’s most important suppliers, Taiwan Semiconductor Manufacturing, which expects significantly worse results in the second quarter due to weak demand in the mobile sector. Analysts are equally skeptical about the magical earning power of the iPhone, with Morgan Stanley now estimating that in the second quarter (up to June), the number of delivered iPhones will fall by 17 percent, to 34 million units, compared to the same period last year. Similarly, analysts at Mizuho, one of Japan’s largest banks, assume that Apple has cut orders for iPhone X parts by 30 percent.

The British daily also cites opinions that other indicators should be considered when evaluating the company, such as the expected repatriation of profits that Apple holds outside the U.S., as well as the growth of the service element of the business. The problem, however, is that the iPhone still constitutes a crucial factor in the company’s revenues. In any case, there is little dispute about the underperformance of the latest two iPhone models (8 and X); it is quite clear that the company, despite significant effort and money spent on marketing, has failed to convince consumers of the profitability of investing in the iPhone.

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The weaker ‘eight’ does not stand out from the competition in any way, while the X simply fails to justify its astronomical price. Compared to other manufacturers, who have managed to keep pace with the iPhone in every respect over the past few years, the X model offers little more than more efficient facial recognition, which is clearly not a sufficient comparative advantage relative to the price. From the outset, it was clear that with this model, Apple is actually testing the loyalty of its most ardent fans to the limits, trying to extract the last cents from their pockets, but it seems that the gamble has not paid off.

This, of course, does not mean that the company will fail, nor that it will perform poorly when everything is summed up at the end of the fiscal year, especially considering the gradual shift from the iPhone towards services and other products. However, it is becoming increasingly clear that the key product by which most people still identify Apple has not met expectations and is losing its previous profit-generating power.