Apple, one of the world’s largest tech giants, is embarking on a year fraught with challenges that could shape the company’s trajectory in the ever-competitive tech landscape. From sales woes in China to an ongoing patent dispute, here are the five major hurdles Apple is set to confront in 2024:
1. Sales Problems in China
Apple’s largest obstacle this year lies in China, the world’s second-largest economy. The company is grappling with fierce competition from Huawei’s successful Mate 60 Pro smartphone. In an unexpected move, Apple recently discounted its iPhones and other products in China by approximately $70, raising questions about its performance in this critical market.
China accounted for about 20% of Apple’s sales last year, and iPhone sales reportedly dropped by 30% in the first week of 2024 due to pressure from Huawei. However, analysts believe that China still presents a significant opportunity, with roughly 100 million iPhones ready for an upgrade.
2. Ongoing Patent Battle
The popular Apple Watch remains banned in the United States as a complex patent dispute unfolds. A US federal appeals court reinstated the ban on select Apple Watch models, stemming from a violation of medical company Masimo’s pulse oximeter patent.
Although Apple sold 49 million smartwatches in 2022 and approximately 26.7 million in the first nine months of 2023, the ban could impact both sales and Apple’s reputation. The duration and resolution of this dispute remain uncertain.
3. Lagging in Generative AI
While major tech competitors like Microsoft, Google, Meta, and Samsung continue to introduce generative AI features, Apple has been notably reticent on the topic. Apple is rumored to unveil new Siri features powered by AI in the iOS 18 release later this year. However, competitors like Google’s Pixel 8 and Samsung’s Galaxy S24 already offer advanced AI features.
The push towards AI is part of a broader effort by smartphone manufacturers to stand out in a saturated market. Apple’s ability to catch up in the AI race will be closely watched, even though its strong iPhone adoption remains a significant asset.
4. Revenue Concerns
Apple faces mounting pressure to boost sales across various product categories, particularly as it posted year-over-year sales declines in the fourth quarter of 2023, with Mac and iPad sales struggling.
While iPhone revenue grew by 3% to $43.8 billion, concerns loom over the upcoming iPhone 16, expected to bring only incremental upgrades. Furthermore, Apple’s foray into the Vision Pro headset market, combining virtual and augmented reality, is a risky venture that must prove itself in the tech world.
5. A Regulatory Target in the EU
Apple, alongside other tech giants, has been labeled a “gatekeeper” by the EU, requiring the implementation of new platform rules under the Digital Markets Act (DMA). This may necessitate relinquishing exclusive control over iOS app distribution, potentially impacting Apple’s revenue model, notably its app store commissions. Recent developments in the US Supreme Court related to app distribution underscore the importance of Apple’s compliance with these new regulations.
As Apple navigates these substantial challenges in 2024, industry observers will be closely monitoring its strategies and actions to maintain its position in the competitive tech ecosystem. While the road ahead may be daunting, Apple’s loyal user base, brand value, and commitment to quality are assets that could help mitigate the impact of these challenges.
