Apple is Having a Very Bad 2016
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Apple’s biggest selling point is its brand. Whereas those more inclined to purchase an Android smartphone/tablet or a PC will typically acquaint themselves with their devices specifications, many Apple product users are simply satisfied with their devices bearing that famous half-chewed fruit logo. That logo has functioned much in the same way as Nintendo’s classic golden “Seal of Approval” from the 16-bit era of gaming, with it highlighting to consumers that what they’re purchasing is a quality, premium product from a trusted company with notoriously excellent customer service. Many other tech companies produce objectively better products, but the consistency of the Apple brand has carried them to greater success than their peers, peaking with the record-breaking launch of the iPhone 6.
But 2016 has been a difficult year for the company. With them recording their first year-on-year quarterly sales decline in 13 years back in April, the tech giant has had to suffer through more negative press this year than they have been accustomed to. Though their decline in sales wasn’t solely as a result of their products underselling, with the market downturn in China being held predominantly responsible, a muted response to the launch of the iPhone SE and the continued waning success of their products outside of the iPhone has been held up examples of how the Apple bubble may slowly be deflating.
Now the company has an enormous tax bill on its hands, with the European commission having ordered Apple to pay €13 billion ($14.4 billion, £11 billion) to Ireland as a result of an unpaid tax bill, with it having been revealed that Apple only paid Ireland 0.005% of its tax in 2014 in an “illegal state aid” deal between the country and the company, with Ireland’s corporation tax for other companies set at 12.5%. Apple had previously paid only 1% tax in the country, with many unfavorably branding it a “sweetheart deal” as a result.
Though the legalities of this deal are currently being debated by the US and the European Union, with the US treasury saying that it will damage “the important spirit of economic partnership between the US and the EU,” while Apple CEO Tim Cook said in a customer letter that “every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed” because of this ruling, it’s certainly not helped Apple with its growing image problem. Though it’s impossible to imagine many turning their backs on Apple because of this news – after all, the likes of Amazon and Starbucks continue rolling in cash despite their respective tax avoidance scandals – for a company that has worked so hard on keeping its brand name stain-free this will certainly be a major blow.
Let us also not forget that Apple has also struggled with a controversy surrounding its users’ privacy this year, when the FBI ordered the company to unlock the iPhone found in the vehicle of one of the San Berndardino shooting suspects. Cook released an open letter explaining how he would not comply with the FBI’s request, but then only a month later it was revealed that the government agency had found a backdoor regardless. All of this has accumulated to make this a difficult year for the company in terms of PR.
All of this has contributed to 2016 being a particularly difficult year for Apple, but its problems unfortunately don’t end there; the out look for the company’s future is also looking less bright than it has in previous years, with growing reports surrounding the iPhone 7 being a technically disappointing new flagship smartphone gaining increasing momentum, with the suggestion being that the company won’t truly release a major upgrade until the iPhone 8. Then there’s the company’s services such as Apple Music, which are being positioned as a business that will help offset the losses faced in a market less keen to upgrade their smartphones / weakening sales of the iPad and Mac, which have struggled to really resonate with their audience thus far.
According to a former Apple executive speaking to the New Yorker, Apple’s services suffers from a lack of good employees working in the division, with “no one wanting to work in the services business” as a result of the company’s power structure being based around hardware. Considering that Apple is making such a strong push into services, that Apple Music remains so user-unfriendly is troubling, with the likes of Spotify and even the beleaguered Tidal being leaps and bounds ahead of it in this regard. If Apple wants its services to experience the same success as its hardware, then they’ve yet to show how they will make this possible.
But despite this being a very bad year for Apple, the company is still hardly in the throes of death. Despite its 25% fall in profits year-on-year in its last quarterly finance report, the company experienced a 7% rise in its stocks on the very same day as a result of these profits not having fallen as much as analysts expected, with Apple still managing to stay strong despite various difficult factors in the tech market. However, with its brand having taken a beating throughout this year, and with the iPhone 7 reportedly set to underwhelm, it remains to be seen whether 2016 will one day be seen as the beginning of a period of radical change for Apple – for better or for worse.