The first of GAFA to take a hit

If I were to envision a future in which of the “big four” were to decline, my instinctive choice would be Apple. That is not to say that I think it is possible for any of the four to fail completely or go bankrupt, but moreso speaking of their prominence. It is Apple’s influence that I predict will decline from its current dominance, similarly to how Microsoft and Blackberry’s brand presence has lost its visibility and popularity.

At the end of December 2017, it was confirmed that Apple purposefully slows down its older models of iPhones.  Apple’s purpose for slowing down iPhones was because the batteries of older devices simply could not keep up with the updates to the latest operating system (iOS). To summarize, what Apple essentially did was slow down the phone to extend the phone’s useful lifespan. If they did not do so, the older models would not run out of battery much quicker. What was once just speculation, is now official.

But what Apple did wrong was make the mistake of not being open and honest about their policy. This news sparked disappointment, outrage, and distrust from Apple’s customers. It became a collective wakeup call for Apple’s extremely loyal fanbase since there is nothing they can say to defend Apple in this case. Apple essentially made their customers out to be the fools the whole time, making them think that it was not the battery that had to be replaced but the entire device. Ultimately, Apple consciously made this decision to drive the sales of its latest models, and deceived their customers to thinking they need to upgrade their device.

However, it is not only customer loyalty backlash that Apple faces. Apple is now faced with over 26 lawsuits over slowing down their older models.  One of the most notable is from France, where a criminal lawsuit is filed against Apple. France being a country where planned obsolescence is against French law. These lawsuits negatively affect or disrupt Apple’s business operations because of the potential compensatory damages or class action lawsuits that could set Apple on the decline. I recognize that all the bad press that Apple is garnering is also going influence consumers to sway away from Apple, and no longer making Apple their go-to brand for the latest in hardware.

Update #1: I do recognize that Apple has very deep pockets, with over $250 billion in foreign banks, I want to reiterate that I do not think that Apple will fail solely because of  the  several worldwide class-action lawsuits against them. I also do not think that it’s so easy to say that only because of how wealthy a company is, that they are outside of litigation being a threat to their company.

Overall, it is the larger implication that Apple misled their customers about their iPhones. Therefore, causing customer backlash and disbelief in their product. Already, there is news reporting that Apple’s efforts to gain back their customer loyalty by slashing the price of replacement batteries is also garnering backlash. Additionally, the iPhone generates almost 70% of its revenue in comparison to all of their other products, so I also recognize that this is a signal of Apple’s potential decline from their prominence in comparison to other GAFA companies who do not have such backlash against them. Apple’s stocks are reported to have declined 6% in two weeks, and iPhones reportedly may have lost $10.29 billion in revenue.

Apple has made a huge mistake, with potential major consequences. It is the first major backlash out of the “big four,” that those other companies can learn from so they do not make the same mistakes as Apple. Out of this is where I see consumer choices and the underlying conditions starting to change. Apple will lose its loyal consumers, and those consumers consider other options. Especially now that their newer models have a high price tag (iPhone 8 starting at at $929 USD, and iPhone X starting at $1319), it’s becoming less affordable to stay with the iPhone smartphones.

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Blackberry was once considered one of the top smartphone brands in the world, but fell due to it’s the consistent service outage problems for BlackBerry Messenger and not being able to stay competitive in the market. Similarly, I think that Apple’s current problems parallel Blackberry’s decline: customer dissatisfaction, and a gradual decline in their sales is a hit that Apple may not be able to recover from to stay on top.

Apple’s old models will keep being slowed down too, making their “backlist” of models obsolete. Competitors like Xiaomi, OnePlus Huawei are fast growing smartphone brands, and more affordable than iPhones. Overall, what I predict coming out of this are consumers making better, smarter, and more informed choices when purchasing their next upgrade and diverging away from Apple and starting to consider other brands.

Update #2: I have asked many solely Apple users, who swear by their products (their choice of laptop is a Macbook, smartphone is the iPhone, etc.), and their easy answer is that each product is compatible with one another and conveniently synced across all devices. I am not going to attempt to argue against this point, as it is surely a mark of Apple’s success that I will not devalue for their customers. However, I also think that there are many ways which Apple limits or holds back their technological features with each product in such ways that it does not make sense to buy an overpriced Apple product when another comparable device is cheaper, and has the same specifications or better.  For example, iMac desktops, and Macbooks still do not have touchscreens when all other laptop brands have had it as a feature for years now. (Just looking at a Best Buy flyer will tell me this.) They have the iPad which is touchscreen, so they have the touch-screen technology but still choose not to move that to their desktop and laptop product. Apple products are also regarded as an industry norm for professional artists. If Apple were to release an iMac with touch screen features, similar to the Microsoft Surface Studio released a couple years ago, it would have the potential to breathe new life into their products. But, still they choose not to. To align myself with the argument I in my last paragraph, out of the companies of GAFA, Apple’s customers will start to realize other brands as an option. 

 

 

 

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