Flat iPhone revenue does not mean that Apple is dying

Via a Google Plus share, I ran across a ZDNet article that is guaranteed to anger the Apple fanbois. Author Adrian Kingsley-Hughes notes the following:

There's a problem facing Apple that the fanboys want to ignore and that the executives in Cupertino won't acknowledge: Stalled revenue growth.

Not stalled revenue, but stalled revenue growth. Kingsley-Hughes refers to a report from Guggenheim Securities that looks at five sectors of Apple - iPhone, iPad, Mac, services, and other products. Of those five sectors, only services revenue is growing consistently.

Fair enough. But then Kingsley-Hughes spends the rest of the article talking about the anticipated iPhone 8.

But does the iPhone 8 have enough to restore revenue growth? Is AR, face unlocking, wireless charging, and an OLED display really going to get people to part with more than $1,000 for an iPhone?

In my view, Kingsley-Hughes made a mistake here by concentrating on an older product. And yes, the iPhone is an old, mainstream product - one step above the iPod.

Now the article does state that Apple has "nothing new on the horizon that is going to pick up the slack." And perhaps this is correct.

But perhaps it isn't.

In a longish post on Google Plus (that I'll reproduce below in case Google Plus bites the dust before Blogger does), I noted that it's not necessarily correct to analyze the future of a company based upon its current offerings. After all, what would be the result of an analysis of Apple Computer circa 1983, before the Macintosh was released and changed computing forever? (Admittedly with a few bumps along the way.)

One thing that I didn't state in my Google Plus post is that all companies that exist for a long time go through changes. Nokia no longer depends upon wood pulp. IBM no longer makes meat slicers. Microsoft no longer depends upon BASIC - or MS-DOS - for its revenue. And "Apple Computer" hasn't manufactured an Apple II in over twenty years.

And someday, Apple will no longer offer an iPhone. Yet there's still a chance that the company will survive. It's certainly survived many downturns in the past.

OK, here's the text from my Google Plus post:

Yes, the fanbois are being overly optimistic - and yes, the naysayers MAY be overly pessimistic.

The Cliffs Notes version of the +ZDNet article reads as follows:

1. The only growing sector in Apple is services.
2. The iPhone isn't growing.
3. The iPhone 8 isn't earth shaking.
4. This is bad.

This is accompanied by a chart that shows revenue growth (and lack thereof) since 2010.

However, I counter that a seven-year time horizon may or may not predict future growth of a company.

Let me give you an example of another seven-year timeframe - the time between Apple's founding (April 1, 1976) and 1983. And how did Apple look in 1983?

1. The Apple II was doing great, but it had been around for a while.
2. Its new product, the Apple III, was running into problems.
3. Apple was facing competition from the increasingly popular IBM PC.
4. Its new-new product, the Lisa, was incredibly high priced.

So at that juncture in 1983, an argument could clearly be made that Apple's time has passed. Sure, the two Steves had a bit of success, but now that experienced companies like IBM were moving in, there was absolutely no way that Apple could turn the Apple II into a long-term success.

"You stupid idiot," you're saying to me. "Good companies always innovate, and Apple was at that time readying the Macintosh for delivery. The Mac had its ups and downs, but it eventually became a viable product. And a couple of decades later, Apple revolutionized the world again, morphing from its "Apple Computer" past to offer the iPod and iPhone. Anyone who would judge Apple's success based upon its 1983 product line is completely clueless."

Exactly.

So why are people judging Apple's post-2017 success on the anticipated feature set of the iPhone 8?

Yes, it's quite possible that the iPhone will go the way of the iPod. And if Apple makes the mistake of putting all its eggs in the iPhone basket, Apple will go away also.

But if Apple has its smarts, it's doing all sorts of development activities inside its spaceship - development that has nothing to do with iPhones.

Now some of those development efforts will probably fail. But perhaps some of them will be insanely great successes.

So much so that ten years from now, when everyone is busily using Apple's latest gizmo, one teenager will turn to another and say:

"Did you know that Apple used to make phones? You know, those things for voice calls? My mom used to have one."

And the teenager's friend will reply:

"You think that's wild? My grandpa said they used to make something called a computer."