On Tuesday, Apple reported its first-quarter earnings, and financial analysts are expecting dire results. Virtually every facet of Apple’s reputation for innovation, quality, and desirability has been tarnished in one way or another. And at a moment when it appeared to be building its brand as the choice for privacy, it’s suddenly found itself embroiled in an embarrassing privacy scandal.
The past few months have not been kind to tech stocks as the market began its unsettling swings. Unlike other tech giants, Apple doesn’t have the weight of unpredictable regulations or fines hanging over its head. But its core business is still facing a lot of uncertainty as a trade war with China hurts its sales and threatens its supply chains. Making its phones more expensive while adding nothing exciting is certainly not helping matters. While the company is still pulling in bucket-loads of money, a lot of damage is being done to its most valuable asset: its reputation.
In October, Apple fulfilled years of prophecy and became the first publicly traded company with a trillion-dollar market cap. Earlier in 2018, it finally got a huge tax break that cleared the way for it to bring home an estimated $252 billion (£191bn) it was hiding from Uncle Sam overseas. Things should’ve been going great. But the holiday season was not so kind, and in early January Apple took the extraordinary step of temporarily halting trades of its stock to warn investors it would miss its revenue estimates by somewhere between $5 billion and $9 billion. On top of its troubles in China, Apple admitted that a cheap battery replacement it offered as an apology for throttling older iPhones with degraded batteries had hurt sales because users suddenly didn’t feel like they needed a new phone.
Of course, it didn’t help that Apple’s new phones weren’t all that different from the old ones and came with a big price bump. Sure, Apple always makes the “best iPhone ever,” but the latest batch of models was so unimpressive that it almost immediately started offering deals through a sweetened trade-in promotion. That put CEO Tim Cook in the uncomfortable position of having to talk about profits when he was just in the midst of a big push to dunk on Facebook and position Apple as the tech company defined by its respect for user privacy and security, as a did with an overconfident ad campaign in Las Vegas during CES.
Apple has a stellar reputation for security. The iPhone has long deserved to be known as the most secure smartphone in the world. But it’s seemingly become more common to find malware-riddled apps in the iOS app store, and its struggle to prevent unwanted users from breaking into the iPhone has become a neverending game of whack-a-mole. That’s why it’s generally a bad idea to brag about security. All software has bugs and holes, it’s just a matter of time before someone finds them.
All of which brings us to Monday evening, when word of a bug in iOS spread across the internet. The creepy flaw allowed users to call someone via FaceTime and listen into their microphone before they even answered. If the recipient of the call chose to hit the power or volume button to ignore it, the caller could even see video without the recipient’s knowledge. While it’s not the most elegant way of spying on someone, it’s incredibly embarrassing for Apple. When you have the Governor of New York issuing a cybersecurity warning and giving citizens IT advice on how to avoid a bug, you’ve really fucked up. A fix won’t be ready until later this week, and for now, Apple has disabled Group FaceTime on the server side.
What really makes the FaceTime bug egregious is that the latest iteration of iOS was supposed to be all about fixing the problems of iOS 11 and putting new features on the back-burner. We got the addition of some new emoji and the aforementioned Group Facetime that turned your phone into a potential eavesdropping machine – otherwise, iOS 12 was mostly about making under-the-hood fixes. But hey, the iOS “feature” that throttles the processor on older models is apparently still working great.
These days, nice guy Tim Cook is busy doing photo ops with Ivanka Trump and eating dinner with Brazil's homophobic president now. It’s a tough job dealing with geopolitical crises and nationalist leaders when your company is the epitome of globalisation. It’s also tough positioning yourself as the anti-Google when Google pays you billions of dollars every year to make its search engine the default on Apple devices.
However difficult those facets of the job are, Apple fans are really only concerned with what the company will do next to blow their minds. Unfortunately, there’s not a whole lot to look forward to. We’ll get some new iPhones and iPads, sure. The updated Mac Pro is supposed to ship in 2019 if you’re ready to spend the equivalent of a down payment on a house for a power machine. Its AirPower charging mat is rumoured to finally be coming this year. That’s only notable because it was announced with iPhone X back in 2017 and is now very late. I don’t know anyone who really gives a shit about AirPower.
Other than that, Apple is focused on its services business. It’s streaming TV service is expected to launch in the spring – it’s also expected to totally suck. On Monday, Cheddar reported that Apple is working on a “Netflix for video games” service. That will be good news for the people clamouring to pay a monthly fee to play Angry Birds on their Apple TV.
As far as moonshot projects go, it appears that Apple has two big things in the pipeline. Its augmented reality headset could certainly be a game-changer if it succeeds where others have failed – i.e. making a useful augmented reality headset. And it’s working on some sort of secretive project for self-driving cars. Last week, 200 people were laid off from that division as Apple reportedly initiated what it called “anticipated restructuring.”
Apple’s earnings today are expected to disappoint investors, and analysts are projecting its second-quarter in 2019 to be lacklustre as well. It will also be reporting something like $84 billion in revenue this afternoon. That’s a big, successful company. Apple isn’t anywhere close to being on life support. It is, however, running a long-term risk that poses a greater threat than any trade war. It’s becoming a boring company that’s shedding users’ trust.
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