Apple's CEO Tim Cook failed to reassure its investors after its earnings dropped in the first quarter for the first time in 13 years, according to the Economist.
In hours of the quarterly announcement, Apple's share price dropped by 8 percent, and nearly $46 billion of its company value evaporated.
The news report said the immediate concern of Apple's investors is the popularity of iPhone. It accounts for a bulk of Apple's sales but the figure dropped by 18 percent in the first quarter compared to the same period of last year. Although Tim Cook said the company would unveil its iPhone 7 with new features in September but the company is likely to face sales drop until then, the Economist said.
The magazine said the most important question that Tim Cook should answer now is whether the company would be able to make another product like iPhone, which has brought the most profits in the tech industry.
Apple Watch, for its part, was rolled out in the market a year ago. Although it sold more than iPhone did after it was launched in 2007, the watch should be sold more considering that consumers now are more familiar with buying digital devices than in the past, according to the news report. It said, the price of Apple Watch, which starts from $300, makes people hesitate to buy and it is predicted to sell around 8 million units this year.
Apple's most promising business is the service sector, which has seen a gradual increase, according to the Economist. As Apple sells more devices, it can create more revenues from contents, music and app stores. The service business generated around $6 billion in the second quarter, higher than revenues from Macs and iPads.
The magazine picked Apple's another new business as electric vehicles, but the latest conflicts with German automakers over users' data control appear to have brought a friction among the alliance. .
The Economist said the biggest problem of Apple is the past success. The reason why Apple's company value is the highest is that investors have expectations that it could make another innovation like iPhone. However, since the late Steven Jobs died, the doubt over the new innovative product has remained lingering.
