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24 Jul 2013

POSTED BY DJackson IN General | Jul 24th, 2013 | 336 responses

Apple’s Dwindling Growth Rates – What is going wrong?

Apple’s Dwindling Growth Rates – What is going wrong?

24 July 2013

By David Jackson.

 

 

The period between June 2010 and June 2011 saw
a constant upward trend in Apple’s growth rate. As the Cupertino company
launched product after product, it grew larger and larger maintaining a
stronghold on the market. Since the past ten years, the annual growth in
revenue had been consistently more than 25% and often more than 50%. And for 2
consecutive quarters in 2011 when iPads and iPhones were selling like hot cakes
in the market, the revenue growth rates shot up by 80%. That was truly
phenomenal.

 

 

Data revealed for the last few months portrays a different picture. It seems that the growth rocket has come back on ground levels. Believe it or not, Apple has seen only 1% growth over the past one year – at least that is what the latest quarterly reports tell. From more than 70% sales growth rate in holiday season of 2011-12 it has come down to 1% in the last quarter. For the next quarter too, the projected sales growth rates are just about 5%.

 

So what went wrong? It is simply poor timing or have ‘Apple’s patrons’ started to understand the planned obsolescence game? Some inventory adjustments tuned to product maturity and market changes had negative influences on iPad sales. However if we delve deeper into the analysis, there is a larger picture that Apple may not be able to replicate again.

 

The golden period for Apple products was during the post-PC revolution- when people were migrating from desktops to handheld devices for fancy apps and utility tools. The tech giant did capture this movement very well and dominated sales and earnings in the new domain even if it was selling highly priced devices. With several competitors (especially its arch rival Samsung) picking up on all fronts, Apple may not enjoy the same growth rates that it did during the first time adoption cycle. Nevertheless, with launch of innovative products, it should be able to maintain an acceptable growth rate. 

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