Timothy D. Cook, Apple’s chief executive, is suddenly facing a number of challenges. Jim Wilson/The New York Times
Do not pity Timothy D. Cook. He has made hundreds of millions of dollars as Apple’s chief executive. He is regarded as one of business’s best bosses, and runs a company with a beloved brand and $130 billion in cash.
Even so, he is hitting what could be the toughest time of his tenure in Apple’s corner office, and his legacy as heir to Steve Jobs will be on the line. Here are five reasons:
1. His bet on China may be backfiring.
The signature innovation of Apple’s late co-founder, Mr. Jobs, was the iPhone. Mr. Cook’s has been his ability to crack the Chinese market. That strategy delivered hundreds of millions of new customers and helped make Apple the first private company to surpass $1 trillion in market value by August last year.
But now it might be backfiring. The Chinese economy is sputtering, and the trade war between the United States and China isn’t getting much better. With most adults — even children — in the developed world now owning one if not two smartphones, Apple has relied on China to keep growing.
On Wednesday, Mr. Cook announced a potential drop of 25 percent in sales in China, Hong Kong and Taiwan in the most recent quarter. A sharp falloff like that suggests that Chinese consumers are following a trend in other emerging markets like India and Indonesia, where consumers have long passed over iPhones for cheaper, almost-as-good devices from Apple’s competitors.
Apple’s share price dropped nearly 10 percent on Thursday, but bounced back about 4 percent on Friday.
2. People are sticking with their old iPhones.
People aren’t buying iPhones the way they used to. With smartphones now in nearly every pocket in the developed world, new customers are hard to come by. So Apple has increasingly relied on enticing existing customers to toss their old iPhones for faster, slimmer, pricier successors.
The problem is, many people aren’t.
Mr. Cook said this week that customers were waiting longer to replace their iPhones, with many instead swapping in new batteries to extend their life. Apple fueled that trend when it cut the price of battery swaps to $29 from $79 in response to revelations that its software slowed down iPhones with old batteries.
That presents a dilemma for Mr. Cook. Apple wants iPhones to be durable and long lasting so consumers will see them as worthy investments. (Many now cost more than a refrigerator.) Apple also knows that the longer consumers use their iPhone, the more they pay for apps and Apple services, a rapidly growing and increasingly important part of Apple’s business.
But the ugly truth might be: Longer-lasting iPhones are bad for business.
3. President Trump knows where iPhones are made.
Apple’s sophisticated supply chain is among the great wonders of modern business, incorporating hundreds of suppliers in a complex web of factories and shippers to keep up with global demand for one…
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