5 obstacles for Apple in 2024

On January 24, Microsoft's market capitalization hit $3 trillion, putting it close to Apple in the race to become the world's most valuable company. Microsoft's stock has surged largely due to its early bets on artificial intelligence (AI), an area where Apple has remained quiet.

David McQueen, an analyst at research firm ABI, believes that given Apple’s position, the company will do its best to mitigate the negative effects. Thanks to its extremely loyal user base, Apple’s quality, value and brand recognition will not be affected.

Competition in China

To cope with fierce competition in the Chinese market, Apple has launched a promotion program for iPhone, iPad and Mac from January 18 to 21.

It’s common for retailers to slash prices to attract customers, but Apple’s move comes as a surprise, as it’s rare for the company to cut prices. According to a Reuters report, iPhone sales in China fell 30% in the first week of 2024 due to pressure from rival Huawei.

Dan Ives, an analyst at market research firm Wedbush, believes that China is Apple's biggest challenge and opportunity. Despite increasing competition, there is a large number of iPhone users in the country of a billion people who still want to "upgrade" to a new iPhone.

Apple is trying to compete with domestic rivals such as Huawei and Xiaomi.

Patent disputes

Apple Watch - one of Apple's most popular products is in trouble in the US due to a patent infringement lawsuit with health technology company Masimo. Apple sold 49 million Apple Watches in 2022 and about 26.7 million in the first 9 months of 2023.

A US federal court reinstated the sales ban on the Apple Watch Series 9 and Watch Ultra 2 on January 17. According to CNN, Apple will disable the blood oxygen level measurement feature to continue selling the two smartwatch models in the US market.

Late to AI

While tech giants like Microsoft, Meta, Google, and Samsung continue to add generative AI features to their products, Apple remains tight-lipped about its AI plans.

This isn’t the first time Apple has fallen behind in emerging areas like 4G, 5G, and foldable displays, but none of these have had a significant impact on the company.

Moreover, the iPhone's appeal remains strong. According to data from market research firm IDC, Apple surpassed Samsung to become the world's largest smartphone maker in 2023, with a 20.1% global market share.

Many believe that Apple will introduce AI-powered Siri in iOS 18 by the end of 2024. The iPhone 16 is also expected to feature some exclusive AI features.

Revenue concerns

In November 2023, Apple reported a fourth consecutive quarter of declining sales, particularly in Mac and iPad sales. But iPhone revenue rose 3% to $43.8 billion.

In early January, research firm Barclays downgraded Apple shares, citing missed-expected iPhone 15 sales in China, weak iPhone demand, and expected minor upgrades to the iPhone 16 later this year.

The Vision Pro, which is due out in February, is seen as the company’s riskiest product launch in years, with the pricey $3,499 glasses unlikely to appeal to consumers in a recession .

Facing the Regulator

Apple is set to allow iPhone users to install apps outside the App Store and use its own payment system to comply with Europe's Digital Markets Act (DMA), the company announced on January 25.

The company argues that opening up the operating system will lead to users unwittingly downloading more malicious apps. The majority of App Store revenue comes from the 30% fee it collects from apps, so the rule could directly impact the company's business model.

Also in January, the US Supreme Court rejected Epic Games’ antitrust complaint and Apple’s appeal, forcing Apple to modify some of its developer terms.

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