Is Apple making a beeline for the trajectory of IBM?
by Aditi Mahadware
Probably. Here’s what is happening:
IBM’s failure
If Titanic were a tech company, it would be IBM. Big Blue- once on the top, talked about highly, is now a sinking ship. Since Ginni became CEO, IBM’s value is down nearly 50% from a market cap of roughly $240 Billion down to roughly $120 Billion in just 8 years. However, Virginia “Ginni” Rometty has agreed to step down at IBM which sent the markets reeling and IBM stock soaring up 5%. Yet, IBM has a long way to go. All in all, it's been shrinking at an average rate of 4.2% in the last five years, according to Morningstar.
Hole in Apple’s ship?
The beautiful creation of Steve Wozniak and Steve Jobs: Apple is facing some backlash nowadays- lack of creative design, soaring prices, and declining revenue. There are a few points worth noting:
Jony Ive- former head of design at Apple- is said to 'lack the ability to envision and capture large new business opportunities that the late Steve Jobs repeatedly demonstrated after he returned as CEO in 1997.’
Apple’s growth has slowed down considerably. Apple's shares are trading 14% below their all-time high of about $230 last August.
Its financial report for the quarter ending March 2019, revenues fell 5% to $58 billion while net income slid 16% to around $11.6 billion and its net margin declined to 20%.
Its iPhone revenue - which accounted for 53.5% of Apple's revenues - fell 17.33%, according to CNBC.
Apple has seen better days. Once, revolutionizing the tech industry, Apple is finding it hard to pick itself back up. Clearly, Tim Cook lacks some ability as well.
The Cause?
Apple used to lead the world in Innovation. The game-changing, emotionally captivating marketing (I am looking right at you- 1984 Macintosh commercial), and the meeting at the fine line between creativity and technology. Genius. Behind it was Woz and Jobs.
Jobs- the mastermind- was excellent at puppeteering the company management. Jobs love for music lead to the creation of the iPod (MP3 players), and he also led the market for iPhone (Wireless Handsets) and iPad (Tablets). Additionally, the marketing and retail of apps iTunes and App Store is said to be outstanding, the supply chain credit goes to Cook. This lead to rapid revenue and profit growth.
Albeit, it certainly takes more for a company’s success than its hardware. The dynamic between CEO and Chief Design Officer i.e. Jobs and Ive, as described by the Journal:
“Mr. Ive and Mr. Jobs often ate together, feeding off each other’s ideas. Mr. Ive could translate futuristic concepts into physical objects with simplicity and sophistication. Mr. Jobs was the inspiration and the editor needed to bring these ideas to life.”
After Job’s tragic passing, such a dynamic was not found. The last mega-hit product launched by Apple was the iPad by Jobs in 2010.
Journal points out, "the one major new product of the post-Jobs era, the Apple Watch, made its debut five years ago. Its iPhone business is faltering, and more recent releases like its wireless AirPods haven’t been enough to shore up falling sales,"
The latest and much more expensive models of the iPhone drastically failed to meet demand expectations. Apple’s few products such as the HomePod flopped, and the AirPower charging pad halted production.
The Bottom Line
My take on the situation is that a vision for Apple that only Jobs could dare to envision has been lost most tragically. Through the apt partnership of the CEO and the Chief Design Officer, it gave birth to innovation through creativity, which Apple was one of the first to do. Jobs provided not only quality technological hardware but also the aesthetics, the design which made Apple a luxurious taste.
Would Apple take the same fall as IBM? Or will Apple revolutionize the industry once again?
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