It may be one of the most recognizable brands in the world, but sales of the iPhone, the core of Apple’s success, are softening, a sign that the company could be “in big trouble,” says business strategy expert Scott Latham
Latham, faculty member in UMass Lowell’s Manning School of Business whose industry experience includes roles working with IBM, Gillette and Hewlett-Packard, says Apple has become too reliant on the iPhone while offering consumers too little in its latest model and in products like the Apple Watch to generate the sales it needs. Apple this week announced that its senior vice president of retail is departing in April.
“If there is a recession, they will really be in trouble as smartphone purchases will crater,” says Latham, who faults CEO Tim Cook for Apple’s softening sales and adds that the company needs to look for a new leader.
“Steve Jobs always had a new technology on deck. There is no new innovation on deck now to save Apple,” Latham says, adding that hitting that innovation plateau means the company is facing choices like whether to go with a less expensive phone in an attempt to drive sales at the risk of alienating its loyal customers.
Cook’s failures, according to Latham, include not getting the latest iPhone to the market in time to maximize holiday sales.
“Tim Cook has done a poor job of paying attention to the details, which is shocking because his background is in supply-chain management and operations,” Latham says.
Although the company recently announced its Apple Pay business is expanding to more major retailers nationwide, only 14 percent of smartphone owners report they use so-called “digital wallets,” according to data from Juniper Research, and more competition is on the way from credit card companies that are moving to introduce “contactless cards” as soon as this year.
“Apple Pay is not going to save Apple; it’s not even going to help,” Latham says, because of low margins on transactions and competition from other companies.
Instead, Apple should be taking steps including looking at getting into the content business, a la Netflix, says Latham, whose expertise includes turning around businesses that are in trouble.
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