Why Apple's Strategy has to Change

I'll naturally think Apple would be the best executor of the Metaverse, considering it's user experience edge and learnings over the years. However, it appears that Apple may not be playing any leading role in that part of Web 3.0. This has obvious strategic implications. Why do I say this?

Apple's Q4 results fell short of analysts expectations. It's hardware businesses (iphone, Wearables and Mac) particularly missed the target, while it's service business surpassed analysts target. This has been attributed to shortage of chips, leading Apple to knock off $6billion off it's revenue forecasts, also making Apple lose its most valuable company status to Microsoft. Growth has been good in India and Greater China (83%), but it must be noted that Apple sells discounted and cheaper iPhones in China. 

Apple has also had to increase prices to meet revenue targets. The point is that the hardware business may not be sustainable as the major source of revenues, going by the pricing and risk of over concentration of marketing operations in the Americas- the largest region in terms of sales. 

Apple should reconsider being it's  premium mobile/hardware company strategy. Instead, it should create a strategy around experience and data privacy. It should also think of getting it's product into underserved regions like Africa and India, like it has done for China. This will go a long way in supporting it's service business. 

There is absolutely nothing wrong with changing the course. Microsoft did same upon appointment of Satya Nadella as CEO, where he deprioritized Windows and focused on AI as the centrepiece of Microsoft's strategy. 

While it's focus on mobile phones is important for its service offerings, it is obvious that the pricing and market risks (Concentration of sales in America's and supply chain) pose huge strategic risk to its valuation and financial performance. 

Apple's focus on its hardware business as a primary area of opportunity and it's hardware design culture  will also limit opportunities in service design and new offerings. 

The world is making a transition to Web 3.0 technologies, where new digital lives will be created, propagagated and maintained. I believe there is no better company than Apple to design experiences and safeguarding personal data of people in the Metaverse. 

 #experience #sales #opportunity 

 

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