Tablets

What the decline in Apple's stock means for tablets

Does the decline in Apple's stock signify the beginning of the end on the tablet front, or will the company be able to bounce back?

At the time of this writing, tablet powerhouse Apple's stock hit a 16-month low. I don't have special knowledge or ability in the stock market, but these lows seem like a strong vote of "no confidence" from the investor class in Apple's future prospects. Among the major concerns is a growing sense that Apple is no longer the driver of innovation it once was, and that Android is now where the action is.

On the smartphone front, there's certainly growing truth to Apple's dwindling market lead. We've been inundated with speculation about "an iPhone killer" phone from a competitor ever since the current iPhone's release. In the current market, however, flagship Android phones stand on their own or are compared to other Androids, with nary a consideration of iPhone slaying abilities. Even on the fashion front, where the iPhone was once the domain of hipsters and wannabes, it's now the uncool device of mom and dad, as Samsung recently pointed out in a well-done advertisement. Is it time to write Apple off on the tablet front as well, as the market seems to have already done?

On sales and innovation

Looking at current sales numbers, Apple is still the company to beat in mobile, and particularly with tablets. Apple has a distinct tablet advantage in terms of sales numbers and tablet-optimized applications. However, all is not roses and astronomical sales numbers in the future. According to many analysts, Apple has been forced into a defensive position due to the large variety of tablet form factors and price ranges available running Android. The prime indicator of this fact arrived in the form of the iPad Mini, which is regarded by many as a response to competitive pressure rather than an innovative move. Even recent introductions of the iPad have done little to differentiate themselves from previous generations, beyond technical specs like processor speeds and screen resolutions.

When the going gets tough

It seems as if throwing rocks at a person or company at the top of their game has become a public fascination, and Apple is no exception. The company that was a scrappy underdog is now being shunned by investors and hipsters alike, and some portion of Apple's stock decline is due to public opinion more than any inherent flaw with the company. Apple has come back from the brink before, and it sits on a massive pile of cash that could be a potent weapon against Android and other competitors.

For the enterprise, there's still a massive untapped opportunity in fully integrated devices. Despite owning an Apple-branded laptop, tablet, and smartphone, the three devices don't communicate and only share data and services at a very rudimentary level. Competition is wide open on this front, with Microsoft, Google, and Apple offering slightly different visions of integration, but none of these companies offer full integration between devices.

If Apple develops compelling, hardware-driven integration, it could gain a leg up with consumers and enterprise customers alike. Alternatively, this integration may occur through cloud-connected software, making the tablet little more than a commodity device that connects to the appropriate cloud provider. Apple's iCloud services still lag behind Google and Microsoft, especially considering that these two offer their services on iDevices, while Apple limits its software to its own platform.

Apple still leads the numbers game on tablet sales, but its lead is declining as Android presents a variety of price points and form factors, and Microsoft attempts to reenter the category it defined a decade ago. For enterprise customers, a move toward cloud services available on a variety of platforms could allow standardized services across a variety of different tablet marques. While this may be great news for consumers and enterprises, it certainly won't help Apple's stock price.

What do you think the future holds for Apple? Will they bounce back, or is it the beginning of the end for Apple on the tablet and smartphone front?

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

24 comments
BillGates_z
BillGates_z

Otherwise typical rubbish reporting by republick of tech pimps

danmar_z
danmar_z

"The stock market is the WORST indicator of economic ANYTHING." Shame so many people take it seriously.

Jaytmoon
Jaytmoon

The Apple honeymoon is over and the cost competition is heating up. Android is knocking on the door and will be taking it's piece of the pie.

Slayer_
Slayer_

Android gets lots of cool apps that iOS will never get. The best being emulators.

subash sivakumaran
subash sivakumaran

Strength of Android platform is that the o/s can be used by tablet manufacturers as its open source. Apple should also think of making its stable O/s available to tablet and smart phone manufacturers. This will have a long term implication on market share for apple. Knowing Apple they will eschew this path however.

Yangtze
Yangtze

By no means am I an Apple-holic. I actually tend to shy away from them for personal reasons. However, as an Accountant-Turned-Data Analyst, I can tell you that this kind of reporting is at best inflammatory and down-right comical. The stock market is the WORST indicator of economic ANYTHING. It is based on nothing more than a salesman's pitch to a greedy investor looking to make a quick buck. Very few of the stocks listed on the Dow distribute dividends. Therefore the only way to make any money on these stocks is to sell them. There's no incentive to keep the stock any longer than necessary. Equating stock value with anything more than greed is BS.

Vulpinemac
Vulpinemac

Apple's stock price has risen 12% since it's most recent low point of $390 per share since then. What this has done is proven that Apple can still sell products and that their products are still popular--to the point of still exceeding analysts expectations [i]despite[/i] not introducing anything new and groundbreaking during the quarter. Apple is returning to its old way of operating where they don't work on a schedule, but rather wait 'til they're sure the product is going to work before introducing/releasing it. It seems also that their famed secrecy is working again as the information leaks we have become used to appear to have dried up. Will Apple innovate again? Will they create another game-changing device? I'm sure they will. What will it be? We can only guess. But don't try too hard; your best guess will likely fall far short of the reality as it has for the last ten years.

pattas
pattas

I personally own no Apple products, and don't have an iTunes account. I have an Android Phone and several PCs. That said, Apple's stock price was incredibly high due to expectations for future revenue and profit growth (think the gross margins, the difference between the cost to produce and the asking price, or the 30% cut of revenue on iTunes). When financial results start showing that gross margins are under pressure from competition, the projections of future growth get cut back and the stock becomes less valuable. Apple still needs to innovate to continue to meet its revenue projections, which are still very healthy. Apple at its current stock price still is (in my opinion) overpriced, but current projections of revenue and profits are still among the best in the computer and electronics industry. Look at recent reports about Sony's return to profitability. Compare to Apple. Clearly Apple wins and their business model has been more successful for years. Google and Facebook are in similar positions, where it will only take one or two quarters of fair growth instead of robust growth for their stock prices to go the way of AOL.

hhendrickson
hhendrickson

Tablet computers have existed long before Microsoft even had it early (failed) attempt at a tablet OS. You just have to look back to Apple and Knight-Ridder ads and PR pieces to see the early vision (1990 and 1994, respectively). It could be argued that the first true handheld was the much lambasted Newton MessagePad. Anything before that was just a desktop OS with a few pen drivers that were buggy at best. And yes, I'm an Apple fan. It works for me and what I want to do. If something else works for you, then great for you. Do I wish Apple was a little more open, sure. But it's not been a limiting factor for me and my use to date.

gak
gak

Apple sells premium and only premium. This limits its market share to 15% in any market, anything above that is temporary. Apple squeezes money from customers by being incompatible. That was tolerable when a maiden customer decided what to buy - PC or MAC. There are few maiden customers left, when a customer decides what to buy for the first time she already has what the parents had bought when she was 5 years old, and that is not likely to be Apple. That was tolerable when the World was disconnected, but now all things come from all sources and being incompatible is self defeating. Apple is a software and design and ecosystem company. As China rises, Apple will be less and less capable to protect its designs in court. Objective C base and iOS design are ancient already. Buggy and ad-hoc hacked Android is technologically on par or better just because it is the next generation system. .NET and Visual Studio are one league (two leagues?) above xCode and Objective C. Everybody already knows how to build an ecosystem. Failed Windows 8 has surpassed MAC OS on the desktop. This is what the equilibrium point for the current Apple should be and it must reach it on tablets shortly. Apple is committing suicide. That is not unprecedented, just remember the iMAC story. Show me iPad with an OTG cable and I will reconsider.

desilvav
desilvav

for companies like Apple stock price has noting to do with innovation or performance in the short term. It is just about speculation! the stock price of Apple was over priced anyway, and this was a good opportunity for market traders to cash in of a spike. Investors may participate on the periphery. Idiots who want to manipulate this take companies like Apple to court so they can create news for their own ends. In the industry segment I operate we have been trying to use tablet like products for 30 years, and it is only when a "tablet" (note the manufacturer agnostic use of "tablet") arrived the the solution worked. In the meantime it was a real bind.

Vulpinemac
Vulpinemac

Emulators for other game systems? Emulators for other OSes?

TRgscratch
TRgscratch

and I agree that stock market price is an indicator of only how stock purchasers and sellers agree on a price; no different than if they were selling / buying oranges there are two kinds of people in the stock market: those who care what the price does over a twenty-year time frame and those who care what the price does over a twenty-minute time frame. the latter are screwing the former.

Stalemate
Stalemate

Google stock also rose about the same percentage points as Apple, but from approximately 765 to 877$ a share. As did BlackBerry, but from 13 to 15$. This is not indicative of success, it is indicative of the markets' fickleness.

Vulpinemac
Vulpinemac

Yes, Apple does sell "premium" products; they sell products designed to work right and work for a long time. I still have an iPhone 3G that works as good as when it was new, a first-gen iPad that still works as good as new and a now nearly 6-year-old iMac that works better than it did new (upgraded to 6 Gig RAM). Apple products simply do not fail as readily as cheaper products; so the price differential is worth the extra cost. However, the argument stating, "This limits its market share to 15% in any market, anything above that is temporary," is completely false as Apple held a mere 2% of any market only ten years ago and sold only a paltry 700,000 computers in all of 1995. So Apple's market isn't limited by its prices that much, especially since that market continues to grow. Even now when sales of all computers using a desktop OS is down significantly--some brands down more than 30%--Apple is realizing only a marginal loss by comparison which is getting balanced by their high tablet sales, still numbering almost 20 million units per quarter. "Failed Windows 8 has surpassed MAC OS on the desktop." Only when you look at raw numbers. When compared to the overall user base, however, Windows 8 shows only two-tenths of one percent (0.2%) in internet usage and little better when measured against all versions of Windows currently in use. That number falls below even Linux--for now. As for your "just remember the iMac story," well, I'm using an iMac and the iMac is the most popular desktop Mac on the market. So please, tell me this story that says Apple is committing suicide with the iMac.

Slayer_
Slayer_

I got so far on my nexus 7, gameboy, nes, snes, n64, ps1, sega genesis, game boy advance. All run perfect, though obviously without using a gamepad, action games are sort of off the table. I could bluetooth a gamepad if I wanted to. I have seen some windows emulators (I assume like Wine) but I haven't tried any of them. I see no need to.

Vulpinemac
Vulpinemac

That the stock value has no connection with the company's ability to create/sell products.

Stalemate
Stalemate

Apple came dangerously close to bankruptcy in that time period, even after Steve Jobs' return, and the deal they struck with Microsoft was instrumental in keeping their head above water. Using that as an example that the company's pricing scheme does not need an overhaul isn't accurate, as is using "internet usage" to define an actual user base. Mobile browsing is not reflective of actual purchases ans usage. If you compare net usage of mobile devices (http://en.wikipedia.org/wiki/Mobile_operating_system#Mobile_internet_traffic_share) to actual OS market shares (Android = 70%, iOS = 21%), there's not only a discrepancy, the nembers look inversed... when you can even make sense of the actual numbers that is (http://techland.time.com/2013/04/16/ios-vs-android/).

Vulpinemac
Vulpinemac

And some of those Atari games are the Arcade games.

Slayer_
Slayer_

I got two ripped PSx CD's, so legal, a few SNES games that I downloaded (so illegal). The n64, I did own but lost, so it's downloaded, not ripped, so technically illegal. Glad to hear you iPad is powerful enough for Atari games.

Vulpinemac
Vulpinemac

And it's more like over a hundred Atari games, not just "a few". All legal.

Slayer_
Slayer_

You have a few Atari games. I have every game ever made for those systems. And the billions of dollars in budgets that went into those games. While your playing moon patrol, I have Final Fantasy 1 - 9. Play your angry birds, I have access to 1500 SNES games. And emulators aren't illegal, ROM's are but the ROM's aren't provided. Technically the PS1 bios is illegal unless ripped from a system you own. So I might be bad there.

Vulpinemac
Vulpinemac

Are directly ported to iOS without the need for an emulator. As for all those emulators you describe I have one question: Are they licensed by the owners of those brands to permit game play on your Android device? Illegal is still illegal and copyrights are still copyrights.

Vulpinemac
Vulpinemac

On the other hand, browsing is a fairly accurate reference if you don't narrow the datum to almost strictly corporate websites. According to some analysts that do, Windows still holds well over 90% browser share for desktop/laptops yet a similar analysis at almost any other site shows that Windows has fallen to 80% or less. The same sorts of variances occur with mobility as well, as Blackberries access primarily corporate sites and as such have almost no visibility on retail or personal sites. Android devices when all are clumped together hold an approximate 70% market, yet the Kindle Fire--centered around Amazon alone--holds almost half of Android's tablet market while iOS devices hold the majority of retail/private site hits based on nearly every report.