Since Tesla CEO Elon Musk commented publicly last week that he believes Apple will build the Apple Car, there has been much talk. Musk, along with most others, believe that the car won’t come to fruition prior to 2020 and that Apple should have started sooner and be moving faster.
Motley Fool believes that Apple should surely produce the Apple Car to compete with Tesla. However, the report’s reasoning is different. It’s because it is time for Apple to turn a corner and move forward beyond the iPhone. This is not the first that we have heard about Apple using the automotive market as a pivot.
Since the inception of the iPhone in 2007, it has never seen a drop in sales. Last quarter it was down 16% from the previous year. Over the course of time, other top tech companies have been able to begin catching up and producing popular products to rival the iPhone. Also, other app and music delivery companies are making great strides.
Analysts are dropping stock estimates as Apple is set to see another iPhone sales decrease this quarter. Goldman Sachs lowered the target from $136 to $124. Analysts said:
“We are trimming our Apple estimates to reflect lower growth expectations for the smartphone industry. Our reductions [in iPhone sales] are driven by lower market growth, as well as lower average selling prices on a greater shift from developed to emerging markets.”
Apple has an extreme amount of free capital, but $155 billion of the company’s $234 billion in yearly revenue came from the iPhone last year. Having two-thirds of the company’s revenue tied up in one product, that is currently suffering, is not healthy for Apple.
Aside from iPhones, Apple doesn’t have any other current products that are rising up to fill the gap. Mac sales and iPad sales are down too. Predictions don’t show anything becoming Apple’s new “key” product.
Promoting the “other” products or revamping the iPhone again aren’t likely enough to turn the situation around for Apple. It needs to move into something new and something very big. Hype much like that of Apple’s past unveils or that of the Tesla Model 3 could do wonders for the company.
With all of the secrets being discovered, facts revealed, and rumors outpouring, Apple is obviously on to something and is practically compelled to produce the Apple Car.
Source (Motley Fool)