Apple unveiled a full-year sales slide for the first time in over a decade. How can the tech giant get its mojo back?

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Apple’s sales fell 8% over the past year as profits plunged 14% to $45.7bn in its year to September 24.

The sales decline is the first Apple has experienced in more than a decade – indicative that the iPhone creator “is no longer firing on all cylinders”, according to Conlumino chief executive Neil Saunders.

Vice president of global growth at the Foresight Factory, part of the Future Foundation, Kerry Rheinstein adds that the pace of mobile innovation that has driven Apple’s sales over the last decade is beginning to lose momentum.

“There isn’t a key new thing. We’ve been in such a golden age of innovation that you can’t have a new once-in-a-lifetime innovation every year,” she says.

In addition, tablet sales are in decline, growth from computers is weak, and consumers in some markets are saturated with products.

The Apple Watch has not yet become a mass market product and, in the meantime, the gap between Apple and its competitors is narrowing.

Saunders adds, however, that “Apple is being judged by its own incredibly high standards” and is “far from running out of steam”.

What’s next for Apple?

Apple is set to launch its new MacBook Pro computer later this week, along with an Apple Watch in collaboration with Nike.

But Saunders argues these iterations do not have the same impact as its brand new innovations.

However, he predicts that Apple has products in the pipeline that could put it on a better footing for growth.

Apple Regent Street store

Apple Regent Street store

Apple’s new, refurbished store on London’s Regent Street

This includes the iPhone 8, which Saunders says will be a very different model with a completely new look.

However, Apple is starting to look beyond the iPhone for new product ideas. Although no one yet knows what these will be, Saunders says it is likely to be something relating to virtual reality (VR).

“Virtual reality is a growing area that’s becoming increasingly important, but there’s a notable absence of Apple even talking about it. Everything that’s [VR related] out at the moment is fairly embryonic and not really optimised for people to use at home.”

Saunders predicts that Apple could come up with an entirely new VR product or something that works alongside other Apple products.

Connected device technology

The growing popularity of connected device technology could also give Apple an opportunity to give its users greater control over their home while out and about, such as being able to adjust the temperature or turn the kettle on.

However, Rheinstein warns that Apple must be sure there is a clear consumer appetite for this technology before ploughing investment into it.

“Sometimes there’s an overload of features and functionality and they lose sight of the consumer needs,” she says.

In fact, she says the “less than stellar sales of Apple Watch” are testament to an oversight by the retailer of exploring what their customers really want.

Apple Regent Street store  14

Apple Regent Street store 14

Apple driverless car

Rumours have also been swirling about the iCar – an Apple-designed driverless car – for a while, however, Saunders believes demand is limited for such a product.

“Buying a car involves an entirely different purchase route. Plus, it’s not like everyone will go out and buy one, and there is already stiff competition in this sector,” he says.

“A car is not going to be the mainstream product to revitalise sales; it’s not a near-term win.”

Rheinstein adds that Apple may be investigating the feasibility of driverless cars as a means of keeping up with competition.

“I think they have to be in it because it could potentially be such a big industry that you’d be a fool not to, but in terms of where the tangible strategic wins are it is harder to say,” she says.

What do Apple’s troubles mean for the retail sector?

The lack of a killer, must-have Apple product will mean a “pretty slim Christmas” for electrical retailers, according to Saunders.

“The iPhone 7 will have a better Christmas period as it becomes more widely available, but we’re seeing a much lower take-up compared to what we saw with previous iPhone launches”

Neil Saunders

“Tablets, which used to drive sales at Christmas, are still in sharp decline,” he says.

While he thinks health and connected fitness products will experience some growth, this will not be strong enough to offset this decline, he says.

“The iPhone 7 will have a better Christmas period as it becomes more widely available, but we’re seeing a much lower take-up compared to what we saw with previous iPhone launches,” he adds.

For Rheinstein, the future for Apple may be in its burgeoning services division, which reported a 24% sales jump in its fourth-quarter.

“There’s a really interesting dynamic between innovation and maintenance right now, and helping shoppers weather new innovations and add new benefits to their existing product could be a real opportunity for Apple,” she says.

Whether it’s futuristic driverless cars or good, old-fashioned customer service, it is clear that Apple has some thinking to do to ensure their offer remains relevant and tantalising.