Apple Inc. (AAPL) and Alphabet Inc., parent company of Google (GOOGL), have historically set the bar for innovation and development in the tech world. Known for pioneering flagship products and services that change the dynamics of global technology, both have demonstrated unprecedented growth over the years. However, recent market trends suggest a weakening in their dominance, flashing signals of ‘pure weakness’.
Firstly, let’s dissect the situation around Apple, a company established based on the vision of Steve Jobs and his mission to ‘think different’. The company’s standing has been largely tied to its star product, the iPhone. The successive series of iPhones have been instrumental in shaping the smartphone revolution. The problem, however, lies not in its past victories but in the seeming erosion of its innovative prowess. While its newest models still boast top-of-the-line features, the iterative updates leave a question mark and flash ‘pure weakness’. Put plainly, the iPhone isn’t the trailblazer it once was. This lack of a distinct innovative edge might be indicative of an early decline phase in its product life cycle, a concern genuine enough to worry investors.
Adding to this concern are other segments of Apple’s operations showing slow down as well. Although Apple’s service sector, including the App Store, iCloud and Apple Music, has shown robust growth, the recent antitrust suits and magnifying scrutiny can affect its growth rate adversely. Simultaneously, Apple’s wearables segment, while rising, is yet to achieve a size significant enough to compensate for any potential declines in the iPhone sector.
Moving on to Google, under the umbrella of Alphabet Inc., there’s a similar pattern of struggle. Known for its revolutionary impact on the world of internet search and online advertising, Google seemed invincible. But just like Apple, Google is also flashing signs of ‘pure weakness’. Despite its dominance in online advertising, the growth rate has slowed substantially. One cause is stiff competition from rivals such as Facebook and Amazon, both devouring considerable pieces of the digital advertising world.
Google’s other arenas such as the Cloud and YouTube are still growing, however, they lack the explosive growth that once characterized its advertising business. Acquisitions such as Fitbit and Looker appear promising, but they are yet to contribute significantly to overall revenues. The company’s attempts to penetrate the hardware sector with devices like Google Home and Pixel have been met with limited success.
While it would be premature to discount these tech titans due to a slowdown phase, these signs of ‘pure weakness’ cannot simply be ignored. It’s a call for these giants to reinvigorate themselves with fresh ideas and breakthrough innovations, to push the boundaries and redefine their success narratives, or risk being out-innovated by ambitious, nimble competitors.
Taking this into account, for current and prospective investors, instead of simply arriving at an inference based on these signs of weakness, it would be more prudent to evaluate the long-term strategies these behemoths are planning to adapt, the latent potential in their pipeline of innovations, and their ability to bounce back from challenges.
