Gravitas Plus: Will Apple be the Next Nokia? By WION

How, many of you remember that ringtone it was a signature ringtone of a Nokia phone. If you have lived through the mobile phone boom, there's a good chance that you owned a Nokia phone and if you're living through the smartphone age, there's a good chance. You do not have a Nokia phone today, and you don't really need me to tell you why Nokia failed the smartphone killed it Steve Jobs unveiled the iPhone in 2007. It did not have a physical keyboard. It had just that one home button the screen stretched across the phone. You could pinch and zoom photographs with your fingers.

The geeks were wowed. Now look at your phone today. Most of you have that same touch screen that Steve Jobs mainstreamed with the iPhone 13 years ago. Nokia missed the smartphone bus. In less than 10 years it went from market domination to a sell-off.

Microsoft bought Nokia's phone business for 7.2 billion dollars in 2013. Three years later, Microsoft sold these assets back to former mobile executives of Nokia and Microsoft for 350 million dollars from 7.2 billion to 350 million pennies on the dollar. In the meantime, look at what happened to apple: it has gone from strength to strength becoming one of the most valuable companies in the world. In many ways, the story of the fall of Nokia and the rise of apple as a smartphone giant are deeply intertwined, but 13 years after it revolutionized an entire industry is apple. Making the same mistakes as Nokia is apple, going the Nokia way is it poised to collapse just like Nokia, hello and welcome to gravitas, plus I'm park Sharma today, we'll discuss if Apple is indeed going.

The Nokia way now Apple is not a company in crisis. In fact, it is one of the richest companies in the world. If you were to buy all the shares of apple today, you would need well over two trillion dollars. You heard that right more than two trillion dollars in August apple's market capitalization was more than the GDP of Italy, Brazil, Canada, Russia, South Korea, Spain, Australia, Saudi Arabia, just to name a few, so Apple is more valuable than several countries in the world. By the end of the September, quarter apple had reported more than 64 billion dollars.

In revenue, it had an income of more than 12 billion dollars, and it had a little more than 38 billion dollars cash on hand. So money is not a problem. What about sales? Apple's revenues are impressive, but they're not what they used to be in February apple warned its investors that it will not be able to live up to its revenue forecast. The pandemic had just begun, and china was shut. Apple depends on the supply chains in China.

It was bound to feel the impact of the Wuhan virus outbreak, but there's more to the apple problem than the pandemic. The bleeding in Apple had begun well before the virus from China struck. The company issued a similar warning last year too, the first one for apple. In the last 16 years, it cut its revenue outlook by nine billion dollars. The reason slowing iPhone sales, especially in China, apple CEO, Tim Cook, made an admission in a letter.

He said in fact, most of our revenue shortfall to our guidance and over 100 percent of our year over worldwide revenue decline, occurred in greater china across iPhone mac and iPad. Almost a year later, the losses have grown in October. Apple shares fell by close to six percent revenue in China, dropped by 29, the lowest since 2014. Why are the numbers down last year? An analyst at Goldman Sachs said that this is the beginning of a long-term story. Rod hall compared apple's situation to Nokia.

He said Nokia relied on customers upgrading their phones frequently, but people started waiting longer and longer to upgrade their phones because they did not need a new one. Frequently apple faces the same problem. People like to repair not to replace. Last year, Tim Cook listed repairs as one of the many reasons why Apple is unable to sell new phones. The company seems to be depending too much on the glories of the past.

Newer phones and computers will not help its cause. The launch of the iPod, the iPhone the iPad, the app store. These were moves that not just launched a new business vertical for apple. They made it a dominant force in that market, but for almost a decade now apple seems to have fallen behind on innovation instead of conquering new lands. The company seems to be more focused on defending its stuff.

I skate to where the puck is going to be not where it has been Steve Jobs loved. This quote from Wayne Gretzky I skate to where the puck is going to be not where it has been apple seems to be failing to live up to these words, words that its founder, lived by for any new innovation, whether it's a company or a country they need to spend on research and development apple, despite its massive cash coffers, is underspending on innovation when compared to its peers. Here are some numbers during the second quarter. This year, apple spent 4.8 billion dollars on research and development, r and d. That is, eight percent of its total revenue sounds like a lot, but when you compare this to apple's peers, it isn't a lot in the same quarter.

Microsoft spent five point: two billion dollars on r d that is close to fourteen percent of its total revenue. Google's parent company alphabet spent six point two billion dollars on r d. That is almost sixteen percent of its revenue. Mergers and acquisitions is another way for companies to bring fresh ideas and new products into their fold, but Apple is going slow on this front too. According to one claim, Apple has spent only 2 percent of its cash flow on mergers and acquisitions.

Since 2012. , despite the tough competition, what keeps apple going is its brand value. Buying an apple product has an aspirational value. If you buy anything apple, you feel that you belong to that higher class, even if it means shelling out substantially more money, there's a term for it. The apple tax and Apple can charge this tax because of its brand value, but in recent years even brand apple has taken a hit.

Here's a chart when apple launched its new series of iPhones this year it did not generate the same buzz as it used to on Google. The launch of iPhone 5 was the peak, and since then, it has seen a steady decline. Time and again, we've heard about the poor working conditions in factories that make apple products. Recently, the Washington Post reported that apple tried to weaken a bill aimed at preventing forced labor in China. Last week, pictures from an apple factory in India went viral.

Angry workers destroyed parts of this facility, allegedly over unpaid wages, and while all of this may not have a direct impact on sales, it does hit perception. It tarnishes brand apple in the market and in the media and then there's a charge of cutting corners. Recently apple decided to no longer include wall chargers and earbuds in the boxes of new iPhones apple says it is for the environment to limit e-waste. Since people already have phone chargers at home, they may not need a new one guess what they do. No one is buying this argument.

Fewer people are buying the iPhone by October. Revenues from iPhone dropped by 21 for apple people still need chargers or earphones, but they'll simply buy it from elsewhere. They'll still add to the e-waste. By the way apple was not saving the environment, it was saving its margins. It was trying to maintain the profitability of the iPhone parts for a 5g phone cost, more apple sold about 217 million iPhones in 2018, and if just five percent of these people decide to add the AirPods to their cart, that's an additional 700 million dollars in gross profit for apple.

Brazil seems to have seen through these tricks. It is forcing apple to include a charging brick in their iPhone boxes. Well done we say in the world of technology, things can change at lightning. Speed apple faces a dual challenge today, to not only survive the cutthroat competition, but to remain a dominant player in the market. So it cannot be business as usual for apple, focusing purely on the bottom line will not help incremental upgrades and cutting corners may give Apple's profits a boost, but Apple needs to go beyond existing product lines enter new territories, build products that are new and different that bring new customers else, face the risk of meeting the fate of the Nokia and the blackberries of the world.

Perhaps apple can find some inspiration in one of its old taglines think different gravitas plus co-presented by ?koda. Simply clever.

Source : WION