It’s hard to think of Apple, a company with hundreds of billions in the bank and billions more rolling in every quarter, as having problems. But even when roiling in cash and enjoying a commanding control over the market, Apple has problems that it finds hard to fix.
The first is falling iPhone sale.
Apple is in the enviable position where it can both cut prices at the low end and increase them at the other, and essentially still keep revenues buoyant as the market contracts.
But how long this trick will work for is unknown. The market is contracting, and the Chinese market especially is not growing in the way it was expected to grow.
Another associated issue is that Apple is struggling to find a product or service to take the place – or augment – the iPhone. Sure, Apple is seeing growth in services, but a collapsing iPhone market makes this growth somewhat unpredictable.
Another problem facing Apple is 5G. It looks like Apple might be late to this party, which is fashionable for Apple, but the underlying reason is pretty worrying.
Apple has been working closely with Intel on 5G, but with Intel now out of the 5G modem market, Apple has few choices. It could align itself with Qualcomm, something it’s likely to want to avoid. It could maybe strike some deal with Huawei, but the current climate suggests that’s a no-go. Or it could bring 5G know-how into the company.
The latter might be the best move in the long term, and rumors are circulating that Apple is in talks to buy Intel’s German 5G modem division, but it’s not a short to medium term solution.
It also means that Apple is spending more and more on R&D, and essentially getting to a point where it is handling vast parts of the iPhone development process.
Finally, there’s the China question. No, I don’t mean Chinese sales, I mean the fact that Apple’s manufacturing is tied so closely to China. Not a problem in the past, but the US-China tariff wars sees Apple caught in the middle. As a result, Apple it seems is considering moving 15 to 30% of all iPhone production out of China, Nikkei reported.
And Apple is keen to distance itself from its heavy reliance on China.
“The truth is,” Apple CEO Tim Cook said in an interview with CBS News, “the iPhone is made everywhere. It’s made everywhere. And so, a tariff on the iPhone would hurt all of those countries.”
A tariff war between the US and China is not the sort of thing Apple wants looming over its head ahead of an iPhone launch this fall.