Apple's biggest problem is not the slowdown in the Chinese economy or the trade war between the US and China, which the company cited as a major downgrade of sales forecasts.
Τthe biggest problem is that it takes consumers at home and abroad for granted.
In the US, Apple assumes that the iPhone is a unique product in an ever-growing market, where consumers are willing to pay ever higher prices for newer versions. That was certainly the case a decade ago, when Apple was the leader in smartphones and mobile phone companies were subsidizing new smartphone markets.
But it does not apply nowadays. While some Apple fans still find its products unique, there is plenty of competition from other smartphone makers.
Meanwhile, mobile service providers no longer subsidize smartphone sales as the market matures.
This change in the "context" - the current situation and market conditions - makes it increasingly difficult for Apple to continue to implement its old strategy: to introduce new versions of its product and to have consumers pay higher prices for 'they. Hence the warning for a slowdown in sales growth.
"For those who do not see the future of Apple as rosy, the current environment underscores the fundamental challenge the company faces in the next stage of its development: convincing customers to pay more for iPhones, at a time when the smartphone industry has reached "Zeniths and cheaper phones are flooding the market," said Haris Anwar, Senior Analyst at Investing.com.
Abroad, Apple assumes that consumers are just as excited as American consumers about its products. While this is true for consumers in other developed countries, it is not the case in emerging markets such as China, India and Brazil, where per capita GDP is a fraction of that of developed countries.
In fact, Apple has done almost nothing to address the specifics and special conditions of these markets, leaving them to Asian manufacturers, who offer affordable smartphones.
Apple is neither the first nor the last fast-growing company to take consumers for granted and suffer the consequences.
Back in the 1990s, McDonald's focused on opening new restaurants and buying other food chains and not keeping up with the demands of the new generation of consumers - a menu with more vegetables and less meat. Big mistake. Growth and profitability declined as consumers sought value elsewhere.
In the early 2000s, Cisco Systems became obsessed with the product supply chain and moved away from its end customers, losing market share to Juniper Networks and Huawei Technologies.
And then there is the case of Research in Motion (now BlackBerry). In the early 2000s, growth was present for Research In Motion. Every quarter the company announced better results than expected. BlackBerries have surpassed conventional phones - leaving even Apple behind. But over the next decade, the company failed to keep up with innovation. Big mistake. RIM customers reacted by replacing BlackBerry phones with iPhones.
Whether Apple customers will give up the iPhone for competing products remains to be seen.
Anwar, meanwhile, remains optimistic about Apple's innovation momentum. "I remain optimistic about Apple's future expansion and the enormous power of its innovation," he says. "I think this is the fundamental element that the market is discounting right now."
He is also optimistic about Apple's ability to grow in India. "And there is another, potentially important growth factor for Apple: India. The country remains the largest untapped smartphone market for the company with iPhones accounting for just 1% of total smartphone sales in the region. ”
This, of course, also depends on whether Apple will find the right product to address the specifics of this market.
