What difficulties will Apple face in the first months of 2024?
(Baonghean.vn) - Right from the first months of 2024, Apple has faced a number of significant difficulties, which shows that 2024 is predicted to be a turbulent year for the technology giant that once dominated the global smartphone market.
Accordingly, technology giant Apple has been facing difficulties such as sharp decline in iPhone sales in key markets such as China; forced to cancel a decade-long electric car production project and is facing a penalty from the European Commission with a fine of up to nearly 2 billion USD.
In addition, Apple is said to have recently cut more than 600 employees after deciding to cancel its electric car project. Although it has largely avoided the wave of massive layoffs that are happening in the technology industry, this is Apple's third staff reduction this year.
Difficulties in the Chinese market
While Apple has a strong position in the US, the same cannot be said for the company in China where the iPhone 15 is struggling in the world's largest smartphone market.
Apple shares suffered two price cuts in one week in the first week of January, according to analysts at American multinational investment banking and financial services firm Piper Sandler and British multinational bank Barclays. Both cuts were due to concerns about iPhone sales in China, one of Apple’s largest markets.
The latest report from US-based global market research firm Counterpoint Research shows that iPhone sales have dropped significantly (24%) in the first 6 weeks of 2024.
Apple has tried to boost sales in China by offering rare discounts on its online store in January, with some online retailers slashing the price of the iPhone 15 by as much as $180. Despite that, Apple’s market share ultimately fell below 16%, down from 19%.
Apple's new iPhone 15 is not selling as well as its predecessor in China amid fierce competition from Chinese rival Huawei. In addition, Apple's relationship with the Chinese government has become strained after Chinese officials began to tighten restrictions on iPhone use.
Cancel electric car project
This past February, Apple finally decided to abandon its decades-long electric car project.
According to Bloomberg, Apple CEO Jeff Williams and Vice President of Electric Vehicle Project Kevin Lynch informed about 2,000 employees working on the electric vehicle project that the electric car production project has been canceled.
The project will begin to wind down and many of the electric car team’s employees will be transferred to the artificial intelligence (AI) division. Those employees will focus on innovative AI projects, an increasingly important priority for Apple.
Apple’s electric car team also has hundreds of hardware engineers and vehicle designers. They will likely be able to apply for jobs in other Apple teams. There will be layoffs, but it’s unclear how many.
According to Business Insider, the electric car project called Project Titan was born in 2014 with the goal of diversifying its product portfolio beyond the iPhone. The company spent hundreds of millions of dollars a year on the project and planned to sell each car for about $100,000. However, a series of technical difficulties and a declining electric car market caused the company to cancel the project.
Fined nearly $2 billion by the European Commission
In March, Apple was fined 1.8 billion euros, or about $1.95 billion, by the European Commission after being accused of abusing its market dominance.
The European Commission has found that Apple has restricted app developers from informing users about cheaper alternative music services.
Apple said in a press release that it would appeal the decision, while also attacking Swedish music streaming rival Spotify by claiming that Spotify was the “biggest beneficiary” of the European Commission’s decision.
Weeks after the fine was imposed, the US Department of Justice sued Apple, accusing the company of using illegal anticompetitive practices in the smartphone market to achieve iPhone dominance. The lawsuit argued that Apple's tactics limited the success of other smartphone companies.
Wall Street's worries and divisions over Apple stock
Apple's tumultuous start to the year has understandably worried investors.
Concerns that Apple is “losing its way” have weighed on its stock price. Apple shares have fallen 12% from their closing price at the end of 2023, wiping more than $300 billion off the company’s market value. This has analysts worried that Apple is losing focus and falling behind its rivals in the race to develop AI technology.
The tech company has lagged behind some of its major competitors in AI development, raising concerns from some stakeholders. Apple CEO Tim Cook has sought to reassure nervous shareholders that the company is committed to AI innovation.
Layoffs
Apple's decision to cut more than 600 jobs in California underscores the challenges the tech giant faces and weighs on its stock price.
According to Apple’s filing with the California state government and posted on the state’s website, the affected employees work at eight different offices in the city of Santa Clara. They were officially notified on March 28 and the work changes are expected to take effect on May 27.
It is unclear what Apple plans to do for the laid-off employees, but the company said it will help them find new jobs, including providing severance pay and career counseling.
Apple has not been forced to cut jobs as large as its tech rivals because the iPhone maker has grown more slowly than its rivals during the pandemic.
The layoffs mark a turning point in Apple’s strategy, shifting from its electric car project to focusing on AI. However, this also has a significant impact on the laid-off employees, especially in the current economic context.
