Apple jumped the iShark, but it's going to get uglier in the future

The first iPhone, it really did change everything

iPhone. Nearly every single person in the civilized world knows of this name, as it has become a household name in such a short amount of time. Apple are brilliant marketers, and the iPhone has reached such meteoric heights that it has almost single-handedly destroyed most well-established smartphone makers.

Before the iPhone, we had huge companies such as Nokia, Sony Ericsson, Motorola and many others who had hugely famous devices, but no other consumer device has made such an impact on the industry as the iPhone.

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For what started out as such a basic device compared to what the iPhone is today, it has changed not just Apple completely, but the entire technology industry. People can deny this fact, but if you really sat down and thought about it, it is completely undeniable.

Before the iPhone, touchscreen phones were just toys - the iPhone came along and made touchscreens a reality. Now, nearly every single smartphone sports a touchscreen. Before the iPhone, the user interface was a jumbled mess between phones - now UIs are beautiful and carefully thought out.

I could sit here and write 'before the iPhone' for virtually everything - as it really did change everything we knew about technology. From touchscreens, to mobile operating systems, to App Stores, analysts' expectations of the industry, upstream and downstream suppliers, accessory makers, it created entire new industries and markets - the iPhone really did revolutionize the technology industry.

We've seen the absolutely mammoth growth of consumer technology devices in this time, the creation and domination of social networking sites Facebook and Twitter and their continued dominance on the mobile space, with Facebook only reporting last week that they had over one billion monthly active users. A large amount of these are on mobile. Billions of apps are being downloaded per year through various app stores, virtually all businesses creating apps, and so forth. Go out to dinner and ask every person at every table what their life was like pre-iPhone and post-iPhone, as it's the same as asking pre mobile Internet and post-mobile Internet. The iPhone made nearly everyone want a smartphone in their hands - a power that nearly no other company has ever been able command.

Not even Microsoft can say they had this power, as desktop PCs were quite expensive when they were first introduced. Smartphones can be thrown onto a two-year contract, making them quite a lucrative market for even middle-class families, or lower.

Since the original iPhone, we've seen five more generations - the iPhone 3G, 3GS, 4, 4S and now the latest, iPhone 5. The biggest changes seen in the devices were with the iPhone 3G and 4, with the 3GS and 4S were just subtle changes - but the new iPhone 5 has been built from the ground up, and represents a culmination of everything Apple has learnt from all of the previous iPhone's.

But, how much further can Apple get? Have they reached the end of their unstoppable journey? I think so, and I'll explain why I think that we're going to see the fall of not only Apple's empire, but a huge dark period for the technology industry.

The market and Apple' s performance so far

Apple are one of the most valuable companies in the world - valued at (the time of writing) 619.92 billion dollars. This is just mind boggling. Most of its success, profits, and thus, market cap, are all thanks to the iPhone. We could thank the iPod for starting all of this, but it was the iPhone that really drove Apple into the hands of the young, the teens, the hipsters, business users, and our grandparents.

The problem is, Apple have become a cult-like company, not just in products, but in its ability to constantly drive up higher priced shares. People feel safe investing their money into Apple, because they have just continued to rise and rise on the stock market ladder.

Apple's shares hit a record high on September 21 - the day the iPhone 5 was released. The iPhone 5 has been out for close to two weeks now, and those share prices are now floating back down. On September 21, they reached just over $700 per share, and now we're looking at $661 per share. This isn't a huge jump, but it's close to 10%, and for a company that just launched their biggest product yet, it's not a sign of confidence.

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If we take a look at Apple's stock from when the first iPhone was released, we were looking at $123 per share, by the end of 2007, those shares were worth $199. Apple was onto something, and while we may not have all known it at the time, but it was happening anyway.

On July 11, Apple released the iPhone's successor, the iPhone 3G. At the time, Apple stock was trading at $172 per share. But, its shares didn't spike up at all, they gradually fell and hit their lowest point in January 2009, of $82 per share.

Since then, Apple shares have been invincible. There's no other word - they haven't dropped to anywhere near that 2009 level and they've gone from $82 per share, to their record high of $700 per share. This is absolutely astonishing.

On June 13, the iPhone 3GS was released - where Apple shares traded at $139 per share. By the time the iPhone 4 rolled around, shares were hitting $266 per share. This was Apple enjoying the ride, and it doesn't stop there. The iPhone 4 was the phone that really solidified Apple as the power player in the market, and by the time the iPhone 4S dropped in October of 2011, Apple shares were trading at $422 per share.

I'm sure people were thinking that it can't get much better than that at the time, but we all know that it did. Between October 2011, and September 2012, Apple's shares continued to expand, rapidly. From $422 to the record high of $700 to be exact. This is where the problems start.

Growing issues and concerns for Apple

Apple, in the eyes of investors, can do no wrong. When the first iPhone came out, it took the entire market by surprise and sent most smartphone makers back to their drawing boards, more than once. Between then and now, we've seen some huge threats disappear, and some new enemies emerge - namely, Samsung.

Samsung aren't Apple's only threat as a smartphone maker, but we also have Google with its competing mobile operating system, Android. iOS was at the top of the playground for a while, but Android has really come into its own and there are a growing number of people tiring of Apple's mobile OS.

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This is where the issues come into play for Apple. We've seen shares go from $422 to $700 in a 12 month period, but where to from here? Can Apple hit $1000 per share? No, I don't think so.

Analysts had Apple pegged at selling eight to ten million iPhone 5's in the first week of sale, but Apple managed to only sell five million. This should ring alarm bells for everyone concerned. I had begun writing this late last week, and came back to it on Wednesday of this week, where Apple shares have dropped even more, from $661 per share to $638. This is huge - for a company that just released its biggest product ever, this can only be seen as a negative thing.

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The issues that Apple created with the iPhone 5 are huge - Maps, purple haze, share prices, analysts' expectations, consumer expectations, losses of sales to Samsung, increasing legal battles and less expenditure on research and development. Apple has spent more in the last two years on legal battles than they have on research and development - this should also ring huge alarm bells.

Apple ditched Google Maps in favor of its own Maps app with iOS 6 and it has received some very negative press, with customers just not happy with Apple's decision. There's a purple haze issue with the camera on the iPhone 5, with Apple Support claiming that it's not an issue, and nothing to worry about.

Do you see the trend that is expanding quickly? The iPhone 5 is receiving negative press, has issues, and didn't sell well - for a company who has been seemingly invincible until now, this is something that everyone should be watching.

In order for Apple to continue toward $1000 per share, they need to sell more iPhone's. In order to sell more iPhone's one of three things needs to happen. The iPhone 5 needs to be the undisputed champion of smartphones - which it's not.

There needs to not be any increased pressure from competitors, but there are already better phones on the market than the iPhone 5 and there are plenty of feature-packed smartphones coming out in the next couple of months. This isn't even taking into consideration next-gen Android handsets that will surely be released early next year.

And finally, there needs to not be any huge changes in the financial markets or economies of the world. Once people begin to feel panicked about the state of the world, they won't want to invest more money into a consumer-driven company like Apple. Consumers will also stop buying iDevices, which would cause Apple shares to drop, and once this starts happening, people will want to sell their shares, and the price would continue to skydive.

What Apple should be worried about

Samsung have the formidable Galaxy S III out, the Galaxy S II still stands up to the iPhone 5, the Galaxy Note II, the rumored Galaxy S IV and shrunken Galaxy S III. This is just Samsung. The best thing about Samsung is that they don't have just one phone - they have many. Don't want a 4.3-inch device? Grab the 4.8-inch device. Not big enough? Get the 5.3-inch Note. Still not big enough? Get the 5.5-inch Note II.

Increased threats from other competitors - HTC, Motorola, Microsoft and Nokia. HTC have some great Android-powered devices out and some great-looking devices on the horizon. Motorola are the same, and have even more power behind them now that Google acquired the device maker. Microsoft has Windows Phone 8 out soon, which I don't think will be a huge threat - but it's a threat nonetheless. Nokia now with Microsoft, are also someone else to watch out for. I think Samsung will take most of the market themselves, but whatever is left will be taken by the others.

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Google's constant refinement of Android. Ice Cream Sandwich propelled Google into a threat bigger than Apple anticipated, as its OS became easier to use, and more feature-packed. Jelly Bean ironed out what little bugs were in ICS, and gave us Project Butter - making the OS run at an eye-busting 60 frames per second. Key Lime Pie, Google's next Android iteration, should reach us early-2013, and should really drive Android home.

The above-mentioned market conditions - the US is fragile. The EU is fragile. We're staring at multiple wars in the Middle East, and countless other politically- or economically-driven factors which Apple should be obviously thinking about.

A huge issue lies in Apple's continued reliance on other companies such as Samsung, Foxconn, Intel, etc. If any of these companies were to suddenly start experiencing financial difficulty, or if the market were to suddenly drop, or there were to be a natural disaster or massive terrorist attack - Apple would be directly affected. They have their fingers in so many pies, that they need their gears to be constantly oiled or else they're in strife.

Consumers. Consumers are the biggest anomaly. Apple can have the best people in the world working for them, marketing, producing, creating and pushing out all of these new devices - but they can never predict how a product will be once it's out in the wild. Consumers are waking up to the cult-like status that Apple have built over the years, and are looking for alternatives.

Consumers are what Apple need most, but they seem to be leaving them in droves. The iPhone lost huge sales in the last quarter, dropping from 35 million sold, to 26 million - something Apple attributed to consumers waiting for the iPhone 5. This means that Apple's next quarter should be so mind blowing, that it is undeniable that the iPhone has sold huge numbers - so we should be looking for the 10 million sales down, plus the usual 35-or-so million sold. 45-50 million in the next quarter, or Apple are on a downward trend.

In the past 60-70 years or so, the economy of the western world and more particularly the United States has turned into a massively consumer-driven economy. This is mainly because it turned into a hugely debt-based economy, where people were no longer saving up for that car, or that house, or that new product they wanted - they were slamming down their credit or store card and having it right now, now, now.

This type of consumer has ruled the world, and without credit and debt, Apple would be out of business tomorrow, as consumers who didn't have money up-front would be left with no option. Telco's giving subsidies in order to reduce the price on a two year contract count on this, so without credit, Apple are finished.

Will Apple hit those numbers? No, I don't think so. I would be willing to place bets that they don't hit anywhere near 50 million sold in the next quarter - but what are Apple going to say if they don't hit anywhere near these numbers? Who or what will they blame? Will they blame the current patent case with Samsung?

What Apple could do to turn things around

Let's say that I'm right, and Apple are on a downward trend, what could the company do to turn things around, and meet the expectations of users and analysts alike, and hit the 45-50 million sales again.

Change up iOS. iOS is stale, and boring. It's the same styled look since the first iteration of iOS, and that is just sad. Android has evolved so much over time, into something truly beautiful. Moving backgrounds, widgets on your home screen, notification bar, and more. iOS is a very closed OS, and is one of the best things about it, but it is one of the biggest hindrances of the OS.

I think we're going to see Apple struggling from now on, and it could go a few different ways.

1 - Apple experience stock price decline for whatever reason, and panic sets in. Its share prices fall, similar to how Facebook's IPO went south, quick. People at first don't believe it, but it happens and stock drops to $300-$400 before Apple is forced to do something to stabilize it - restore consumer confidence. They would announce a huge price drop in the iPhone 5, which could see it drop to below $499 outright.

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If this didn't work, the stock prices would drop even more, where Apple would be forced to act out of character, dropping prices, or introducing a new product quicker than anticipated. We could see the iPhone 5S released before the usual twelve-or-so-month mark.

2 - Nothing changes and Apple stays dominant, releasing the iPhone 5S this time next year. This is one of the least likely options, as Samsung are really kicking Apple where it hurts right now. Windows Phone 8 is right around the corner, and we also have more releases from Google in the way of mobile OS', Motorola, Nokia, HTC and others.

3 - Apple release the iPhone 5S in five or six months' time. At the same time teasing us with the simultaneous announcement of the iPhone 6 running a built-from-the-ground-up iOS 7 that would reach us another six months later. The sheer excitement and build up would be worth it, if the product delivered truly was a change from its now tiring ways. This is a sure way to continue Apple's seemingly invincible dominance.

4 - Nothing changes, period. Apple continue baking small updates into new iOS 6 iterations, and in five or six months' time we begin the new cycle of iPhone rumors. Apple announce and release the iPhone 5S in September of 2013, and continue to dominate.

Final Thoughts

In closing, this is what Apple need to do to continue strengthening its brand. Notebooks will turn into Ultrabooks - meaning its MacBook Air line will sell more than its MacBook Pro line over years. Traditional desktop machines aren't needing to be replaced anymore - a dual-core machine with an SSD is a powerhouse of a system, and can be had for under $1000 these days.

Apple's only dominant market is with its iOS-based devices, the iPhone, iPad and iPod. Increased competition in the smartphone market, namely from Samsung, is hurting Apple, bad.

Apple is like no other technology company in history, and even if we were to compare them to other giants of the tech industry, we have all seen them fall from grace. Microsoft, Nokia, Sony, RIM, HP and many others. Apple really is a one of a kind in many ways.

The US and EU financial markets are not looking good, and haven't for quite a while. There is no relief in sight, and our current financial system is corrupt to the core and far past the option of repairing. It's currently on life support with multiple financial assistance packages, quantitative easing, and so forth - that is an entire argument in itself.

I feel that a lot of this is common knowledge, and I could've gone into far greater detail, but I'm simply one person with an opinion. Disconnect yourself and knowledge base, and think of how Apple can go from here to $1000 per share. What would they need to do? How much competition would have to roll over and not sell a thing for this to happen?

Are we looking at absolutely nothing coming up in the economy that could shake Apple, its partners, the stock market, the government and consumers? There are so many factors that could cause this, but quite simply it comes down to Apple. Since the iPhone, they really haven't innovated. The iPhone was such a revolutionary product that I think that Apple can't even beat themselves at their own game.

The next 12 months are going to be an interesting time for Apple, and the world. If I had Apple shares, I'd be quite worried about what to do, given the launch of the iPhone 5 didn't really explode like everyone thought it would - it went off with more of a limp, than a bang.

I think Apple's dominance is over and there is nothing they can do to stop it, short of releasing another product that has as much impact on the world that the original iPhone did. But with all of its on-going patent lawsuits, instead of innovating, Apple are just pushing out tiny changes to the iPhone hoping it will sell big, and those days are over for Apple, in my opinion.