Five major challenges facing Apple in 2019

Selling iPhones in 2019 is going to be a lot harder than previous years, and Apple knows it.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

2019 looks set to be one of the toughest years that Apple has faced this millennium. It's bad enough that Mac sales are pretty much flatlined, and iPad sales are on a downward trajectory, but what makes Apple's predicament much worse is that iPhone sales – along with smartphone sales in general – are weakening, and investors have become agitated now that Apple has said that it will no longer report on iPhone unit sales.

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Before looking into 2019, let's begin by looking at where Apple was at the beginning of 2018.

Dominating the Apple news cycle a year ago was that Apple had put code into iOS that it used to actively throttle older iPhones in order to mitigate the effects of battery wear. It was a clever technical solution for sure, but a poor one from a user experience perspective.

Apple did, however, manage to dig itself out of this hole. It was, after all, a technical problem, and one that it had created for itself.

But the problems facing the company in 2019 are quite different.

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Can Apple make the iPhone exciting again?

Despite all the media and pundit hype around new iPhone launches, the feeling that I'm getting from ordinary people – you know, the folks who buy these things – is that the new iPhones are increasingly seen as pedestrian upgrades. It feels that people are not buying them for the new features, but more just to upgrade an older, tired iPhone.

Sure, if you've not upgraded for a few years then features such as the fingerprint reader or Face ID will be new and novel for a few minutes, and an OLED display is the closest thing to having your eyeballs upgraded, but there's nothing here that blows your hair back.

Smartphones have become dull, and if Apple wants to reinvigorate the market, it needs to make them exciting again.

Can Apple calm investor's fears over not disclosing unit sales?

Investors took the news that Apple would no longer report on iPhone unit sales pretty badly, and saw it as a sign that things weren't good.

If revenues remain strong, then this could be enough to quell fears (for now), but if there's even a hint that the iPhone is no longer the cash cow that it has been for the past decade, things are likely to go from bad to worse in 2019.

Can Apple keep pushing users towards more expensive iPhones?

The trick that Apple has used to weather stagnant iPhone sales so far is to push up the Average Selling Price (ASP) by persuading buyers to opt for more expensive versions.

Apple's iPhone portfolio alone covers an exceptionally wide price spectrum, from $449 to $1,449, so focusing on units doesn't really tell the whole picture. But if it wants to keep revenues buoyant in the face of declining unit sales, it's going to have to figure out how to convince people to spend more on an iPhone.

One trick that I expect Apple to turn to is even more expansive iPhones. It wouldn't surprise me if 2019 was the year of the $2,000 iPhone.

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Can Apple navigate around Trump's tariff landmines?

Would you pay 10 percent more for your iPhone? Back in December, President Trump pondered slapping Chinese-made iPhones and MacBooks with a 10 percent tariff, claiming "people could stand that very easily." While that threat appears to have been put on hold for now, this is bound to raise concerns over at Apple HQ.

Apple's plan to spend $1 billion and add 5,000 new jobs in Texas, plus more jobs in Seattle, San Diego, and Culver City might be its way of trying to prevent these tariffs from becoming reality, but if the tariff war between the US and China continues into 2019, the likelihood of Apple getting caught in the crossfire increases.

What's next for Apple?

Nothing would give Apple a boost like the hype that surrounds a brand new product. The last totally new product that Apple unveiled was the Apple Watch, which first went on sale back in April of 2015.

Will we see something new in 2019? Maybe smart glasses, or dedicated VR goggles? I'm not holding my breath!

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