Experts believe that the blows suffered by the leading Apple company from several fronts are the main reason behind this decline, between the decline in demand for its products in China, and the exposure of its application store to extensive criticism from the European authorities, all the way to stopping its car project, on which the company had pinned many hopes.
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Microsoft Becomes the Most Valuable Company in The World
Apple’s stock valuation was noticeably damaged at the beginning of this year, after reaching $3 trillion, recording its highest historical levels in 2023. Its market value fell by hundreds of billions of dollars in early 2024. This allowed Microsoft – Apple’s strongest competitor – to replace it as the most valuable technology company in the world.
Microsoft shares rose by more than 3% last January, bringing the company’s market value to $2.89 trillion, while Apple shares fell by more than 3%, reducing its value to $2.87 trillion.
Main Reasons Behind Market Value Drop of Apple Before Rivals
1. Lagging Behind in Catching Up With Artificial Intelligence
Despite the race that technology companies in the world are waging since the widespread spread of the GBT Chat application developed by OpenAI during 2022 to add more features of generative artificial intelligence, it seems that Apple has been largely absent from the scene.
Apple is seeking to integrate Google’s Gemini artificial intelligence engine into iPhone devices, where the company can obtain a license to use Gemini, which is a set of Google’s generative artificial intelligence models, to enable some of the upcoming new features in iPhone software.
2. Decline in Apple Sales in Chinese Markets
Apple’s iPhone sales in China fell by 24 percent year-on-year in the first six weeks of 2024, according to market research firm Counterpoint, as the American company faces increasing competition from local rivals such as Huawei.
To stimulate demand, Apple offered rare discounts on its online store last January. Local sellers reduced iPhone prices by up to $180.
3. US Department of Justice Lawsuit
The US Department of Justice filed a lawsuit against Apple for allegedly practicing monopoly and undermining competitors. The lawsuit alleges that Apple imposed software and hardware restrictions on iPhones and iPads, making it difficult for other companies to compete with it.
Representatives of Apple met with officials at the Ministry of Justice last February in a final attempt to persuade the ministry not to continue procedures for resorting to the judiciary.
4. European Union Pressure
The new digital markets law, which has been in effect since the beginning of this March, affects Apple’s fortified castle in what is known as Apple’s Walled Garden. It is an ecosystem that forces Apple users to be confined within its digital environment, with limited or no access to services provided by other platforms.
Customers will be able to download software from outside the Apple Store for the first time, a process known as app sideloading, and take advantage of alternative payment systems and choose a new default web browser more easily.
5. Apple’s Electric Car Project Has Been Halted
After Apple decided to abandon its dream of completing the electric car project, analysts expected that the company would be deprived of a new source of revenue, as Apple was expected to offer the car at a price of $100,000.
Last February, the company announced the suspension of its unique project, the Apple electric car, which would have been considered an expansion of the company beyond the boundaries of the world of smartphones, stressing that it prefers to focus its investments on the field of artificial intelligence.
6. Disadvantages of Vision Pro Virtual World Glasses
Apple entered the production of a new product category during 2024, which is the mixed reality market through its “Apple Vision Pro” product, which dazzled the early users, but its price was exaggerated, and some defects appeared when used, such as the heavy weight of the glasses. It makes many software development companies reluctant to create custom applications for it.
Experts believe that the appropriate technology for the new product is not yet ready, so Apple had to resort to a compromise by offering a larger headset that mixes augmented reality with virtual reality.
7. Legal Battle Over the Smart Watch
The blood oxygen measurement feature that Apple added to its smart watch led the company to engage in a legal battle with Masimo, a health technology company. Which prompted Apple to stop issuing this generation of smart watches.
Watches represent a core piece of wearables, home appliances and accessories for the company, a business that contributed more than 10% of revenue last year, or roughly $40 billion.
8. iPad Stagnation
Tablets in general no longer have the status they once did, as most consumers shift to using larger phones or go back to using a laptop. Which led to the decline of the iPad, especially considering the company’s reluctance to release a new model of the device during the past year.
Apple is currently preparing to launch the updated iPad Air in two sizes for the first time, and the Pro model will be equipped with OLED displays, which is an abbreviation for organic light-emitting diode.
9. Excluding Competencies
Changing executives is a frequent issue at Apple, as the company has lost some of its most distinguished leaders recently. Analysts believe that the absence of some competencies, such as Bart Andre, who has the longest tenure in the company and one of the largest holders of Apple patents, is one of the reasons that led to the decline in the company’s functional performance.
10. Difficult Quarterly Period
Under these circumstances, Apple’s next quarterly report is about to reveal unsatisfactory data for investors, and indeed, the company has warned that the numbers will not constitute a good comparison with the same period of the previous year.
Analysts expect sales to decline by about 4% during the current quarter, which extends until the end of March. As a result, Apple’s revenues will have decreased during 5 quarterly periods from the past 6%.
The question now is: Does the technology giant seek to regain its leadership position and market value again by focusing investment efforts during the coming period towards the world of artificial intelligence? Share your opinion with us.
Source: Bloomberg
