Is Apple Weakening?

Back near the end of September, Apple announced and released its latest gadget, the iPhone 5. The company seemed to be on top of the world; in some cases it literally was. Apple was the most valuable corporation in the country, and the world. Its stock price on the 21st of September rose to $705.07 per share. But since then the company has been running into some problems.

Apple is still bogged down in multiple patent lawsuits with its competitors (like Samsung) all over the world. More importantly, the announcement of the iPhone 5, despite decent sales, might have been the beginning of the end of Apple’s dominance. I’m not sure if that’s entirely true, but it’s definitely a possibility. Why?

Apple Seems Confused

First of all, Apple believed the Apple Maps product was on par with other services from Google, Nokia, and others. This was clearly not the case. Therese Poletti at MarketWatch believes that Apple’s “decline began shortly after [the] new Maps app started to get panned by reviewers.” Since then, Apple’s stock has dropped 15% or about $100 per share. That’s a pretty precipitous drop for a company that many outsiders were deeming untouchable.

Apple’s forecasts for the December quarter, according to Therese, are also “well below what Wall Street had been anticipating.” The iPhone 5 sales – despite being rather impressive – also failed to completely impress Wall Street. But, of course, Wall Street isn’t the only measure of a company’s strength. How management runs a company and how they make important decisions are also indicators of its health.

Changes at Apple

Lisa Rapaport at Bloomberg writes Apple recently “embarked on a sweeping management overhaul.” Tim Cook, Apple’s CEO, announced the departures of Scott Forstall (mobile software head) and John Browett (retail leader). Most importantly, Lisa quotes an analyst who reminds us, “Both departures were likely forced by Apple’s CEO and weren’t voluntary.”

Scott Forstall had been responsible for the success of iOS for many years. However, many employees disliked his leadership style and his personality. A few articles reported that employees appeared happy about his departure, a main reason being that Forstall refused to apologize for the Apple Maps fiasco. Also, John Browett essentially failed to manage the retail aspects of Apple in a way that worked. In fact, Apple ended up calling his new policies a mistake. Out they go!

Reorganization

There is also a great deal of reorganization going on at Apple. Lisa explains that Cook “is revamping leadership as Apple’s stock price sags and competition accelerates from . . . Google Inc., Microsoft Corps., and Amazon.com Inc.” Apple is merging its Mac operating system with its mobile operating system to have them under one joint program: iOS. They are also merging all of their online services like Siri and its struggling Maps app under one department as well. These consolidated departments will be run by experienced management. Will this work? Maybe.

Looking Forward

I’m no expert on the successes and failures of companies, so I won’t make any predictions about the future of Apple. But I do not there are two ways of looking at this story. One: Cook is making the necessary changes to improve harmony and creativity at Apple. And two: Apple is still reeling from the lack of leadership that Steve Jobs provided, and perhaps there is some infighting and management squabbles going on.

Sure they slipped up recently; Apple Maps was a relative failure, quarterly outlook was not as high as expected, and the flurry of new products created increased costs for the company. Personally, I think they are just going through some rough waters right now. Tim Cook has obviously shown he’s not afraid to make tough choices for Apple, and this is something he’s going to need to do more of as Amazon, Microsoft, and Google pile on the pressure with all of their new and competitive offerings. It’s going to be interesting to see where these four companies take us in the coming years.

Do you think Apple is on the decline? Why or why not?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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