Apple's secretive nature and status as the world's most valuable technology company always ensures that any upcoming event sends the rumour mill into overdrive, and next Monday, 21 March -- the date of the company's next announcements -- is no exception.
This time, the pundits' money is on an updated 4-inch iPhone (the iPhone SE or 5se, or 6c), an updated 9.7-inch iPad (the iPad Pro 2 or Air 3), and new wristbands for the Apple Watch. Macs, apparently, are not getting a look-in this time around.
We'll leave the discussion on the minutiae of the new products' design and features until they are actually unveiled, and instead examine the market dynamics that form the background to the announcements.
Apple's market capitalisation of $596 billion (at the time of writing) and $216 billion in cash reserves (in the company's Q1 2016 SEC filing) might give the company an air of impregnability, but, as is often noted, the company's revenues are heavily dependent on iPhone sales:
Although Apple shipped a record 77.8 million iPhones in fiscal Q1 2016 (ended 26 December 2015), year-on-year revenue growth was only 0.9 percent, compared to an iPhone 6-driven 57.5 percent for the same quarter in 2015. iPad revenue growth was -23.2 percent through fiscal 2015 and -21.2 percent in Q1 2016, with equivalent figures of 5.8 percent and -2.9 percent for Macs:
Little wonder, then, that in its latest (Q1 2016) earnings report, the company made much of its active installed base of 1 billion devices -- iPhone, iPad, Mac, iPod Touch, Apple TV, and Apple Watch -- and their potential to drive services revenue, which amounted to a record $6 billion in Q1 2016, representing 26.2 percent year-on-year growth.
When it comes to geography, the largest slice of Apple's pie remains the Americas, followed by China, Europe, Japan, and the rest of APAC:
The most notable geographical trend is the recent much-reduced year-on-year growth rate in China, which plunged from 84.3 percent through fiscal 2015 to 14 percent in Q1 2016:
Apple therefore appears to be facing low or negative growth in its major product segments, and a slowdown in its hitherto most buoyant geographical territory. The company's balance sheet may look like a CFO's dream, but Apple is not without its problems -- which of course include the ongoing dispute with the FBI over access to information on the iPhone 5c used by one of the San Bernardino terrorists.
But how is Apple doing compared to its main competitors in the smartphone and tablet markets, and what are the company's prospects for the rest of 2016 in these areas?
Smartphone shipments continue to rise worldwide, but growth rates are slowing as established markets mature:
As IDC research manager Anthony Scarsella explained the situation in a January statement: "With heavy saturation in many mature smartphone markets such as the US, Europe, and China, many vendors have placed a renewed focus on pushing premium-looking mid-tier devices as a new value proposition to consumers in both developed and emerging markets."
An affordable 4-inch iPhone SE/5se/6c might attract first-time iPhone buyers in mature markets and emerging territories such as India, and may also appeal to existing iPhone 5 users who don't want -- or can't afford -- a bigger-screen (4.7in. or 5.5in.) iPhone. A lot will depend on the price of the new handset, which is expected to fall between $350 and $450.
The other way to boost smartphone sales is to provide a compelling reason for existing users to upgrade to a new flagship model. That will be the task facing the next major iPhone update (probably the iPhone 7), which is expected to be unveiled in September.
If all goes according to plan, 2016's iPhone SE/5se/6c and iPhone 7 could write another chapter in Apple's phenomenal smartphone success story. What could possibly go wrong? The shape of the worldwide smartphone market at the end of 2015 offers a clue:
Market leader Samsung has already released its 2016 flagship, the Galaxy S7/S7 Edge, which along with premium handsets like the new LG G5 and imminent HTC 10, will provide stiff competition at the high end. Then there's a trio of Chinese manufacturers -- Huawei, Lenovo, and Xiaomi -- with a combined market share comparable to Apple's that may well frustrate the company's ambitions in China and emerging territories such as India by offering more affordable mid-range handsets.
The tablet market (slates and tablets with detachable keyboards) has been in decline worldwide since Q4 2014, reaching a new low of -13.7 percent year-on-year growth in Q4 2015:
It's not all bad news for tablets though, because, as IDC noted in a February statement: "Despite the market's negative trajectory overall, shipments for detachable tablets reached an all-time high of 8.1 million devices."
Apple's most notable contribution to the tablet market in 2015 was the 12.9-inch iPad Pro, which IDC classes as a 'detachable' despite the Smart Keyboard being an optional extra (as is the Type Cover with Microsoft's Surface Pro devices).
Although Apple doesn't break out numbers for iPad models, IDC estimates that Apple shipped more iPad Pros than Microsoft did Surface devices in Q4 2015 -- despite it only becoming available in November: "We believe Apple sold just over two million iPad Pros while Microsoft sold around 1.6 million Surface devices, a majority of which were Surface Pro and not the more affordable Surface 3," said Jean Philippe Bouchard, IDC's tablet research director, in a statement. Apple reported sales of 16.1 million iPads in Q4 2015, making IDC's 2-million iPad Pro estimate around 12 percent of the total.
Apple remains the worldwide tablet market leader, with Samsung -- which has an extensive tablet portfolio, recently strengthened by the Windows 10-based Galaxy TabPro S detachable -- in second place:
The next three places are occupied by Amazon (which saw 175.7 percent growth in Q4 2015 thanks to bargain-basement $50 pricing for its latest Kindle), Lenovo and Huawei. The latter two Chinese manufacturers have both recently launched interesting detachable Windows 10 tablets: the modular ThinkPad X1 Tablet and the MateBook respectively.
Although early signs are encouraging, it remains to be seen whether the iPad Pro, and the imminent iPad Pro 2/Air 3, will satisfy the market's evident demand for detachable tablets that can function as laptop replacements. If it turns out that 12.9-inch and 9.7-inch iOS slates with an optional keyboard (Smart Keyboard) and stylus (Apple Pencil) cannot match the Windows 10 competition in this segment, the clamour will continue to grow for a fully-fledged touchscreen-equipped Mac OS X detachable.