Tag Archives: smartwatches

Why Apple Should Delay The Apple Watch- Updated- Better, But Still A Wait and See

I’m writing this updated post to my Apple Watch post yesterday due to the fact that there are reportedly two main updates to the Apple Watch prior to the event on Monday that were just revealed today:

1. The Apple Watch will reportedly have better battery life than was reported before, supposedly up to 5 hours with fairly moderate app use (via this 9to5Mac article).

2. The Apple Watch WILL be able to monitor heart rate (beats per minute) via its Heart Rate Glance (via the same 9to5Mac article).

Both of these bode well for Apple Watch’s immediate success, particularly #2.  That is because this should help to make the Apple Watch more appealing to millennials and for them to see it as being valuable enough and useful enough to where they’ll want to buy it sooner rather than later.

Thus, I do think the prospects for Apple Watch’s immediate sales are better with these developments and previously unannounced capabilities, though I still think there is enough uncertainty there in regards to battery life (how much do specific apps drain the battery, for instance), limited apps, limited capabilities, lack of general enthusiasm in the smartwatch industry, and phone users who are not Apple users (Android, Windows, etc.) that it will likely cause the Apple Watch to not quite have the impact some are predicting when it comes to the smartwatch industry.

Will the Apple Watch do enough to move the smartwatch industry and the wearables industry in general? Over time, and with better advancements and capabilities, it’s possible, but I still don’t think this first rendition will move the industry as much as some are expecting.  As I said yesterday, there will be Apple fans who will go out and “have to have it” right away either because they want to be part of the “in” crowd or because they want to be one of the first who had the very first Apple Watch, but I still think that expectations might be out-of-whack, even with these two positive developments for the Apple Watch.

There are still questions on how popular wearables, particularly smartwatches, will become overall- it still comes down to how useful these devices will be, especially in regards to the relatively high cost (especially with the Apple Watch).  The health monitoring will especially be the key, particularly when it comes to the Apple Watch (as I said yesterday, don’t expect the Apple Watch to replace your iPhone- Apple can’t afford that, so that’s not happening, certainly not in the foreseeable future)- if that health monitoring feature is useful enough, that may be the biggest key for the Apple Watch and for the smartwatch industry in general to take off and become as part of mainstream society as the smartphone and tablet (or is that “phablet”?) has become.

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Why Apple Should Delay The Apple Watch

As you probably know, Apple is planning to unveil its Apple Watch to the world this coming Monday, March 9.  This will be the final version that will ship in April.  Via the Wall Street Journal, at an event earlier this year, Apple CEO Tim Cook said, “… one of the biggest surprises people are going to have when they start using it is the breadth of what it will do.”

The Breadth of What The Apple Watch Can Do? Or What It Can’t Do?

However, there have been several developments since that statement that seem to indicate that the Apple Watch is underwhelming tech experts and the public at large, thus hinting that the public may not be so amazed at what it can do, but MORE AMAZED at what it CAN’T do.

1. Apple Watch will not have advanced tracking of health signs (via PCMag article), including ability to measure blood pressure, heart activity, or stress levels.

2. Apple Watch apps will be extremely limited, especially in the early going, because Apple wants a successful launch and wants to preserve battery life of the device (via Business Insider article).

3. Speaking of battery life, even with the limited apps and their capabilities, the battery life of the Apple Watch may only provide up to 3.5 hours of app usage between charges, and just 2.5 hours if you are constantly checking sports scores, stock quotes, or social media accounts (via PCMag article).

All of those limitations, and the starting price for the Apple Watch will reportedly be $349?! Why am I not surprised that most are less than impressed or are concerned about the longevity of the Apple Watch?

Here’s what the Apple Watch will reportedly be able to do when it’s released in April:

1. Provides quick, easy-to-read notifications from your iPhone.

2. Enables you to make mcommerce purchases right from your Apple Watch.

3. Tracks your daily activity (such as how many steps you take, but as mentioned, no advanced health metrics, including blood pressure).

Who Is The Apple Watch For?

Most Apple experts and tech insiders are even confused over what market Apple is going after and what problem it will solve with the Apple Watch (via this Business Insider article).

This is probably why there was great debate within Apple itself to even create and release a smartwatch, as it does not seem everyone is in agreement with CEO Tim Cook, Head of Design Jony Ive, and Apple executive Bob Mansfield on the success and longevity of the Apple Watch.

As that last Business Insider article mentioned, this is an important product launch for Apple due to the fact that it’s the first new product line for Apple since the iPad five years ago, as well as the first new product line since the death of co-founder and former CEO Steve Jobs.

Thus, it makes sense for Apple to proceed cautiously in terms of what the Apple Watch can do right off the bat.  However, the fact that Cook mentioned that “people will be amazed by the breadth of what it can do” seems to be at odds with that cautious approach, being that it implies that the Apple Watch will impress in terms of its features.  That is especially true when you consider that other smartwatches have those advanced health tracking capabilities the Apple Watch will lack at a much smaller price point.

This is all the more reason why I really think Apple should have held back the launch of the Apple Watch.  Of course, that’s likely not going to happen, being that the event is just four days away, but it will be amazing if the Apple Watch can really be the hit it is expected to be at this stage.

Let’s look at why the Apple Watch COULD be a hit at this point:

1. Apple made what I consider a smart marketing move (but with a caveat I mention below) to have it appear in Vogue in an effort to have it appeal to affluents (via this Recode article).  This was after it appeared on two notable models, Liu Wen and Candace Swanepoel, in both Vogue China and Self Magazine, respectively.

2. It is the first wearable product created and marketed by Apple, which is synonymous with tech.

3. It is an Apple product.

While the third reason is a cited reason by many Apple Watch supporters who think it will be a hit, it may take more than Apple’s noted reputation to ensure its smartwatch will be an actual hit and stand out from the increasingly crowded smartwatch market.

Let’s look at the many concerns of why the Apple Watch may not be a hit in the smartwatch industry, and why it might not even have that long of a life:

1. I mentioned that it was a smart move by Apple to have its watch appear in Vogue in an effort to get affluents interested in it and see it as a “must-have” item.  However, this also shows what might be Apple Watch’s greatest weakness: What is Apple Watch’s target market?

Personally, it seems to me that Apple is trying to target everyone who is the owner of an iPhone and get him/her to buy the Apple Watch.  This approach, what seems to be the “let’s throw everything against the wall and see what sticks” marketing approach, rarely ever works to great success.  Even a company like Apple has to have a solid marketing approach in order for its products to be successful, and, truthfully, the marketing for this product seems haphazard and all-over-the-place.

What was originally being marketed as a “product that will amaze people on the breadth of what it can do” (i.e. the mainstream crowd) and that will have great health tracking abilities (i.e. the millennial crowd, especially), now is being marketed in a very prestigious magazine in two different countries to appeal to the affluents.

Granted, there are three different versions of this watch: Classic, Sport, and Luxury, but I have serious questions on the “need” for this product.  As I mentioned in my post, “The Lack Of Perceived Value: The Missing Link in Smartwatches” what will a smartwatch do that a smartphone can’t do? Why would the mainstream public want this item when the smartwatch does nothing more (and far less, actually) than a smartphone can do?

This is the major reason why the smartwatch industry hasn’t taken off as many experts thought it would, and based on the lack of features and the higher cost of the Apple Watch, I can’t see where Apple’s entry is going to have more success either.

Yes, some of the diehard Apple fans will probably buy it because it’s Apple.  Yes, some affluents may have to get the Luxury version to show that they have the “latest and greatest device” from Apple.

But, it’s not likely that the Apple Watch will be deemed a “success” or a “mover” in the smartwatch industry if it’s just some members of those two groups, as it doesn’t seem there are a great majority in either category that are convinced they must have that Apple Watch.

2. Most of the mainstream public is not fond of the price point (especially when an iPhone is anything but inexpensive, costing $300+ to $400+ to start), nor are convinced they need it (especially without the advanced tracking features, a key importance to millennials in particular).

3. As for the affluents, I think many are not convinced that Apple is elite or chic enough when it comes to the watch industry for them to just buy the Apple Watch immediately when it is up for purchase.  This is why, though, Apple was smart to introduce the Watch to the affluent group by advertising in Vogue in both the United States and China, to at least give themselves the chance to gain more of this market.

Still, the lack of groundbreaking features, the high price point, and the uncertainty of how affluents will perceive the Apple Watch all indicate that the Watch will likely fall below expectations rather than meet or exceed them.

Apple’s History Suggests You May Be Better Off Waiting To Buy The Apple Watch

Plus, a few things about Apple’s history that indicate why waiting may be a good idea if you are considering purchasing the Apple Watch:

1. The Apple Watch will likely never be able to handle phone calls on its own (something I mentioned in my “Missing Link in Smartwatches” post); to do so would take away from iPhone sales, something Apple can’t afford, as it’s the one product line that is really doing well for them. The iPad line has fallen for four consecutive quarters now, and while Macs are holding their own and even growing slightly of late, it’s not expected that that trend will continue, especially since Macs can’t double as tablets due to the lack of touchscreens.

2. Speaking of lack of touchscreens, Apple has a tendency to never have its products multi-task.  In other words, Apple will not (or rarely) add another feature to a product that will hurt another product line.  This is a major reason why Apple was against increasing the size of the iPhone for so long; to do so would hurt the iPad line, and trends suggest that part of the reason why large tablet sales are falling off is because of the presence of phablets, something Apple only got into with its recent iPhone 6 Plus model, a few years after other smartphone manufacturers (including Samsung, HTC, Google, and others) had released phablets.  Having their Mac laptops have touchscreens and become hybrids like Windows’ PCs would have also hurt iPad sales, a major reason (in my opinion) that they were (and are still against) having their Mac laptops become hybrids.

(And, Windows hybrids are becoming more plentiful on the market because there IS a demand for them- this again shows that Apple has a tendency to keep their product lines separate from each other when it comes to features so they don’t eat into the respective revenue lines from each product line, even when there is a demand for such a “hybrid” product).

3. Based on #2, if the Apple Watch stays around long enough, chances are strong that the Apple Watch will only be able to do the advanced health tracking features in a future Apple Watch model.  It seems unlikely that they would add the necessary software and apps for it to be able to track those features on this specific model, as the hardware doesn’t seem able to withstand many apps running at the same time.  Thus, it would seem likely that Apple would create a newer, more robust Apple Watch within the next six to twelve months (just as they do with their iPhones and iPads) that is more energy-efficient and more capable of tracking advanced health statistics.  Thus, that means the consumer would need to shell out ANOTHER $350+ to get the Apple Watch he/she thought he/she would be getting with THIS Apple Watch version.

It remains to be seen if I’m right on #3, but the history of Apple product launches, releases, and cycles would suggest that that is the path Apple is going to take with the Apple Watch.  Thus, getting the Apple Watch now when it is largely devoid of the main selling points the public was waiting for would only be for those who want to say, “I was one of the first few to own the very first Apple Watch.”  In other words, it would be a status symbol, which would be fine and enough for some affluents to purchase, but probably not enough for other affluents.  The same would hold true for the mainstream population: The most diehard Apple fans that camp out for hours and days at a time might be willing to go for it (though, as I’ve said before, the Apple Watch would not do what the iPhone does, so maybe they won’t even be willing to camp out for the Apple Watch), but the vast majority would probably not be convinced to shell out enough money that would purchase the next iPhone model with a 2-year agreement on a smartwatch that really can’t match other smartwatches in the industry when it comes to advanced health tracking features or even apps.

Why I Would Have Waited To Release The Apple Watch And Why I Think This Model Will Underwhelm And Even Disappoint Analysts And The Public

Thus, if I were Apple, I would have delayed this product launch until later this year or even early 2016 to ensure that the watch had long battery life, had the ability to measure and track advanced health metrics (one of the main selling features that was either mentioned or strongly rumored to have), and had a more defined target market in terms of what problems or issues it would solve.

Yes, it’s a common practice to deliver a product that is short on features in order to gain traction in a marketplace and to get feedback to make improvements for future releases (this happens often in the digital software industry), but those added features are usually offered for free or at reduced cost to customers who help to iron out those “bugs” and provide that feedback for added features that are missing.  As mentioned above, based on Apple’s history, it’s more likely Apple will present an upgraded Apple Watch within six to twelve months from now with those features (provided the Apple Watch gains enough traction in the marketplace to achieve longevity to necessitate a more advanced version in the first place), features that were either mentioned or strongly hinted at when the Apple Watch was first presented and promoted.  In essence, a person would have to purchase the Apple Watch twice if he/she purchases the Watch now in order to get the Watch he/she thought he/she would be getting based on the publicity surrounding the product when it was first announced.

In addition, I am not convinced about the clarity of Apple Watch’s target market. While the Apple brand name carries a lot of weight and has a lot of fanfare and publicity behind it, when the product itself is relatively expensive to much of the population and doesn’t provide a defined solution or benefit to most of the population, the odds are against it that it will be considered a “hit” or a “mover” in the smartwatch industry.

It’s possible Apple could create a smartwatch that could do that, but from what I have heard, read, and seen, this Apple Watch is likely NOT that revolutionary smartwatch experts and the public expect to see from a noted tech company like Apple.  That is why I think this Apple Watch will likely underwhelm and “surprise” us by the breadth of what it CANNOT do rather than by what it can do- thus, I think it may “surprise” some on how much it underachieves compared to Apple’s previous product launches, including the iPhone and the iPad.

Feel free to leave your thoughts on Apple, its upcoming Apple Watch,  and if you’re eagerly anticipating it or not below.

 

 

The Lack Of Perceived Value: The Missing Link in Smartwatches

 

If you’ve been paying attention to the tech world for the last year or so, one of the big topics has been about the smartwatch.  This device would allow you to take calls and messages, check the weather, and more, all from the comfort of your wrist.  It was purported to be the next “big thing” in the tech world, especially when it came to wearables.  Yet, smartwatches are still pretty much grounded, even though there have been more and more of them flooding the market.  Even Apple is purported to release their “Apple Watch” in 2015.

So, “what happened”?  Why have smartwatches not taken off like most experts expected them to?

The reason is because of perceived value, or more specifically, the lack thereof.

When a consumer is considering a purchase, he/she has to consider the following:

– What’s in it for me? (What is commonly referred to as “WIIFM” – which you can also define as the benefits of the product).

– The price of the product.

– How much value the product brings to me. (In other words, how much value does the consumer perceive to receive when he/she purchases that product?).

Thus, when a person considers a smartwatch, he/she will ask what that smartwatch can do for him/her (WIIFM).

– It can handle phone calls and messages.

– It can tell the time.

– It can give a weather forecast.

– It can browse the Web (though, as you can imagine, due to its tiny screen, it’s not a comfortable browsing experience by any means).

The problem is, how is this different from a smartphone, a tablet, or a computer?  In reality, it really isn’t.  Thus, there is no new value that is created, certainly no more value than what any of these other devices can give to you.  The consumer will not perceive any new value that makes him/her shout, “I’ve got to have a smartwatch!”

Even worse, almost every smartwatch currently on the market needs a phone in order for it to handle the phone calls and messages it can handle (i.e. a smartwatch alone cannot be used to handle phone calls and messages).  This means that a person has to purchase a smartwatch AND a smartphone in order to benefit from the watch.

Thus, why would a person be willing to pay a few to several hundred dollars for a smartphone, then be willing to pay a few to several hundred dollars MORE for a smartwatch when the watch really doesn’t do anything that the smartphone doesn’t do.

Some proponents of a smartwatch will say, “But you can carry the watch right on your wrist and don’t have to pull out your phone.”

Really, though, is pulling out your phone that difficult?  Most phones are not heavy, and virtually everyone is carrying it on them nowadays, so it’s not that difficult to pull it out, not when we rely on them so much.  The few instances where this might have been an issue, such as when you are jogging, companies have come out with convenient ways to mitigate this issue.

Have you seen that new waistband product that you can put around your waist and carry products such as your smartphone in it?  It’s even moisture-resistant, so even if you have no pockets in your athletic wear, you can still have your cell phone on you, ready to grab at a moment’s notice.  Thus, the smartwatch’s perceived advantage and value over a smartphone is largely mitigated even in this rare instance where a smartwatch could have an advantage over a smartphone.

Thus, most people are not going to look at a smartwatch and think, “I’ve got to have that.”  There is no perceived value and advantage to any other mobile device that a person currently has.  This is especially true in light of the fact that the smartwatch can’t handle phone calls and messages without a smartphone to go with it.

In fact, look at some of the main advantages of the three main Internet-enabled devices in use today: Smartphones, Tablets, PCs/Laptops

Smartphones

– Smartphones can take and make phone calls, keep messages, keep important contact information, and dial a person in a split second.

– Smartphones enable people to browse comfortably enough on the go to do online research and compare prices and items from various retailers.

– Smartphones enable people to pass the time when they have a few minutes, such as playing games, text messaging, listening to music, or watching video.

Tablets

– Tablets can enable you to comfortably browse the Web, such as conducting research on various products you may want to buy. Research has also shown that tablets, more than smartphones, in fact, are the preferred mobile device to make purchases on.  Thus, consumers like larger screens in order to make purchases.

– Tablets enable you to easily watch television programs, listen to music, or watch movies/video via the larger screen. Again, the larger screen of the tablet works well for people to consume content (especially when it comes to video).

– Tablets have more processing power to where they can handle more complex apps and tasks; with an added keyboard, even light to moderate word processing tasks can be done.

PCs/Laptops

– PCs/Laptops enable you to have the richest Web browsing experience, since the screens are the largest.

– PCs/Laptops enable you to watch your favorite programs and movies, listen to music, and more via the largest screens available.

– PCs/Laptops have the most processing power so that they can handle virtually any app (that can be used via a regular computer, and most apps can now); with their own keyboards, they are also the best choice for the heaviest word processing tasks.

Now, when you compare all of those features to a smartwatch’s features, tell me what a smartwatch can do better? That’s right – nothing (one possibility that could exist is mentioned below).

Thus, can you see why smartwatches have failed to take off?  With a lack of perceived value, consumers are not motivated enough to be rushing to the stores and pick up a smartwatch.

This is likely not changing even with the Apple Watch – again, it comes down to a lack of perceived value.  I feel that this lack of value and the higher price tag is why some analysts are now thinking that the Apple Watch may also be a “flop.” While fans of Apple products are strong supporters of the Apple brand, they too will think, “Why do I need an Apple Watch when my iPhone can do everything I need it to do? The Apple Watch won’t work without the iPhone, so why do I need to pay an extra $350 or so to get a product that won’t do anything extra that will benefit me?”

There is nothing a smartwatch can do that any of the other Internet-connected devices can’t do.  This includes the smartphone, and virtually everyone has their smartphone on them at all times, thus largely negating the convenience and advantage of having a smartwatch on your arm.

So, what can smartwatch manufacturers do to add perceived value so that consumers are willing to rush out and buy one?

If these smartwatch manufacturers can get it to where a smartwatch can handle calls and messages with no smartphone needed, that could appeal to a part of the market that isn’t interested in paying out a few to several hundred dollars for a smartphone.  If the smartwatch is priced competitively enough to offset most smartphones (i.e. $100-$200 at most), people who have wanted a smartphone but were turned off by the cost and only went with a basic cell phone, might be willing to upgrade to a smartwatch if it does virtually everything a basic cell phone does, plus a little more.

One feature that smartwatch manufacturers could emphasize is its ability to play audio.  Being that watching video on a smartwatch is impractical due to its tiny screen, listening to audio could be a viable benefit to emphasize.  Whether that’s music or audiobooks (a growing market in the digital publishing world), smartwatches could even be a viable addition to those who already have a smartphone, as they might be more willing to activate the watches on their wrists to listen to audio rather than pulling out their smartphones, especially since most people use smartphones’s calling and texting capabilities, whether via the phone itself or via apps (such as Facebook, etc.).

Using such capabilities on the smartphone consumes precious battery life; especially for people on-the-go all day and coming home from work who want to listen to audio content, listening on their smartwatches might be more amenable to conserve on the small amount of battery life left on their phones.

The one barrier that would need to be overcome when it comes to emphasizing smartwatch’s audio capabilities (besides the fact that the audio needs to be crystal-clear in clarity and volume) is the ability to transmit the sound directly from the watch to the person’s ears, as it ‘s likely most people near them do not want to hear the book the person is listening to, etc.  I would think this would be doable, either by enabling the ability to plug in headphones, or better yet, via a wireless transmission, such as Bluetooth headphones or ear pieces, etc.

Bottom Line

Unless smartwatch manufacturers increase the perceived value of smartwatches, it is unlikely that people are going to see them as essential, must-have mobile devices.  Right now, people do not see smartwatches as more than accessories to smartphones, and being that they do nothing more than what smartphones (and tablets and computers) do, they are seen as nothing more than superfluous purchases, and relatively expensive purchases at that.

Most will not be able to justify paying $100-$500+ dollars for a smartphone, then have to pay another $100-$500+ for a smartwatch, just so that messages can be transferred back and forth and so that a person doesn’t have to reach into his/her pocket, handbag, or waistband for his/her phone that is always with him/her.  Unless that smartwatch can do something specific that a smartphone cannot do or cannot do as easily to provide a perceived value that a smartphone cannot, it is very unlikely smartwatches will take off and sustain themselves as an established subsection of the mobile market.

 

 

Why Apple Has Gotten Rotten In The Tech Industry (Part 5- Apple’s Future)

This is Part 5, the Final Part of the Series “Why Apple Has Gotten Rotten In The Tech Industry.”

To read the other four parts in this series:

Part 1 (Google)

Part 2 (Samsung)

Part 3 (Amazon)

Part 4 (Other Competitors and Challenges)

Having gone through the challenges that Apple is facing from equally capable companies such as Google, Samsung, Amazon, and Pebble on several fronts, including the smartphone, tablet, and smartwatch categories, what does the future hold for Apple?

As was mentioned earlier in this series, expecting Apple to widen the gap to where they were far ahead of their competitors is unrealistic; those days are gone.  For Apple fans and investors, one must accept this fact: the rest of the industry has caught up, and in some ways, the rest of the industry is outdoing Apple in the tech industry, especially in terms of innovation.

Does this mean that Apple is finished in terms of being a profitable company in the tech sector?  No; Apple just needs to raise its game when it comes to innovation, both in the tech industry and beyond.  The good news is that there are rumors of them doing just that.

There are more rumors by the day that Apple is looking to connect its impending iWatch to the health industry.  As this 9to5Mac article points out, specifically, it’s the mobile healthcare industry that Apple is targeting.  That would certainly explain why Apple has taken a long time to release its iWatch, and it is an industry that the other main tech companies have not targeted.  That, alone, should appease Apple fans and investors, as this could be the impetus Apple needs to get some of its value back closer to its all-time high of $700+ (currently under $550 as of the time of this blog post).

Reportedly, the new iOS 8 operating system will include an application called “Healthbook” that will enable the iWatch to monitor one’s fitness (weight lost, calories burned, steps taken, etc.) and one’s health (heart rate, blood pressure, hydration levels, etc.).

While that is exciting, there are still some hurdles to take care of.  As this CiteWorld article points out, Apple is entering a different playing field that is more tightly regulated in virtually every country than either the music or entertainment industry.  Thus, Apple will not be able to easily and quickly differentiate themselves from other competitors in the field as they did for a long time in the tech field.

In addition, Apple likely would have to gain the proper clearance from such regulatory organizations as the FDA and the Department of Health and Human Services in order to be able to market the iWatch as a medical device.  Note that this is just at the U.S. Federal level; many states and some cities have their own regulatory rules when it comes to health devices.  This doesn’t even take into account the European Union and other regulatory bodies in the countries of Europe and Asia.

Thus, the iWatch’s ability to penetrate the health industry is far from a done deal, and any roadblock could seriously hinder or even derail the full plans for the iWatch to disrupt the health industry and give Apple some much needed momentum for the company.

Apple introduced iRadio in June 2013 after years of rumors that Apple was going to get into the online radio market.  Many were predicting that Pandora, whom many considered to be the online radio leader, would suffer irreparable damage as a result, possibly leading to its collapse.

However, despite iRadio being in existence for over six months now, Pandora, as well as Spotify, are still kicking out the tunes.  In fact, Google also got into the act with its All Access Streaming Music service.  While iRadio added a nice feature to iOS7, it really didn’t distinguish itself from the other services, and in fact lacked features that Google All Access and Spotify provide – the ability to stream virtually any song any time the user wishes.  Surprisingly, iRadio is cheaper than Pandora (the most similar service to iRadio) – $24.99/year versus $36/year.  Of course, there are free versions in both, supported by ads.

This is another example of where Apple took a long time to develop a product, finally deliver it, but not distinguish itself from its competitors.  When it comes to Internet radio, it’s likely that most still think of Pandora or Spotify before Apple or Google (I know I do – and I use my iPad every day, but have only had iRadio on two times total in the last few months), showing the importance of being a first or early mover in the market.

At one time, most stock analysts and fans thought that Apple was the model company when it comes to tech, but that is no longer the case.

Ben Reitzes, analyst at Barclays, just downgraded Apple to “equal weight” from “overweight.”  That’s significant because, he has had Apple as “overweight” for 10 YEARS. Yes, 10 YEARS! As he states in this Benzinga article, he believes that iPhones will become more costly to make due to such new features as Sapphire glass, curved glass, and new batteries.  This will lessen Apple’s margins on its flagship smartphone product, thus leading to less profitability.  Reitzes doesn’t believe that AppleTVs or smartwatches will help to raise Apple’s valuation either.

This type of judgment on Apple is something that has not been seen in quite some time.  Even when Apple’s stock was dropping like a rock in 2013, most analysts brushed it off and thought that Apple would immediately come back in terms of value.  I know some analysts were even predicting that Apple would rise to $800, even $1000+ during 2014.

While that may still be possible, current evidence would suggest otherwise, as Apple is currently trading above $520, down about $1 (2.2%) on the day as of the time this post is written (about 12:15 PM ET on Monday, February 24, 2014).  While it has gained from the $385.10, the low it hit on April 19, 2013, it’s also a good margin away from the recent high of $575.14 on December 5, 2013, never mind the fact that Apple hasn’t been above $600 for over a year now.

Thus, more people are starting to realize that Apple is facing a much tougher tech environment, and Apple has been slow to adapt.  Every time Apple has more negative news about it or a positive development about a competitor surfaces, it does more damage to Apple than in the past.

Add in the fact that Apple has admitted that it has a “bug” that fails to encrypt sensitive data on iOS and Macs, and this just further intensifies the black cloud hanging over Apple.  This type of bug sounds more typical of Microsoft and Windows, yet the former tech leader is experiencing such a “bug” and is still working to resolve it on Macs (they have issued an iOS patch for iPhones and iPads).  Worse than that, as this Reuters article reveals, this bug has been present for months, but has only been identified very recently.  Thus, many Mac users may have inadvertently exposed their sensitive data on public WiFi without even knowing it until now.

This is another reason why Apple is being looked down upon, especially amongst the younger generation; Apple is not the most transparent company in terms of its operation, a quality that younger generations look more for than older generations do.  That is one problem Apple is facing.

Another problem Apple is facing is one that I mentioned earlier in this series: More and more people are looking at paying less for their technology.  This is likely to hold true in China, which is why most don’t think Apple will ever lead in market share there (they were up 1% in Q4 2013, a total of 7% market share, good for fifth place, 12% behind market leader Samsung – source).

Whereas at one time people thought that Apple was THE only choice in getting quality tech, even at higher prices, the competition has shown that that is no longer the case.  Add in the fact that the competition’s tech is cheaper, and it’s not surprising that other companies have more market share in places such as China, Android dominates the world (and leads in the U.S.), and times don’t look that bright for Apple right now.

So, what can Apple do about this downtrend?

Two things:

1. They need to be more adaptive to the competition – they can’t take as long in coming out with new products.  I pointed out both the delays in producing the iRadio and in the smartwatch.  Just as the iRadio didn’t do a whole lot for Apple or that much against its competition, I don’t expect the smartwatch to do much either, even if it is targeted more toward the health sector.  As mentioned earlier in this post, Apple has many governmental hurdles and restrictions to deal with before the smartwatch can even become a medical device reality, and that’s across many government levels.

2. Apple also must be more innovative in its product line.  While the health industry is one that its competitors aren’t in (yet), the delays aren’t helping Apple’s cause to be more innovative in the health industry.  As for its other products, the iRadio wasn’t that innovative, as noted above, and new models of the iPhone and iPad aren’t innovative enough anymore to outdo or even match its competitors.

Further proof that Apple has to pick up its “tech” game to make a comeback: I just seen in the latest Best Buy weekly flyer that Samsung has released its new, larger tablet, the Samsung Galaxy Note PRO 12.2.  Apple has plans to release a 13″ iPad, but that won’t be until later this year or 2015, again leading to them being behind the ball when it comes to innovation.  Apple does plan to target more of the enterprise industry than the main consumer industry, but the innovation behind such an idea has again been taken away from Apple thanks to Samsung coming out with such a product first.

In essence, Apple must improve the innovation in its product lines and its ability to get them to the market quickly (preferably first).  It is no longer good enough for them to just release a product and have everyone look upon Apple positively; it must now react to competition that wasn’t really present even a few years ago, and certainly not five years ago.  This is the only way, in my opinion, that Apple will start to gain value in the eyes of its fans and investors again.  Apple isn’t going away in the tech industry, but it’s no longer the tech leader, and it won’t be again either without it being more innovative and being more efficient in getting its technology out to the market before its competitors do.

I hope you enjoyed this series.  Feel free to post your comments below.  I will keep an eye on Apple and the tech industry in the coming months, delivering a few posts here and there.  If you have questions or would like to see an expansion of this series, looking at another specific aspect of Apple and/or the tech industry, feel free to leave a comment below.  Thanks!