The Debate: After Apple reported disappointing profits and sales, is it doomed to relative decline?

YES

Julian Birkinshaw

Apple’s latest results were spectacularly good by any standard – except their own. The company has been hyped up so far, and for so long, that failing to meet expectations was almost inevitable. But the real problem for Apple is that now the top has been called, the markets are looking to justify their new-found scepticism. Every future statement will be picked over for signs of weakness. If prices are raised, Apple will be accused of abusing its powerful position; if lowered, they are scrambling to retain market share. Too many products will mean the company has lost focus; too few and Apple’s executives are resting on their laurels. All this negative publicity will be overstated, but it affects the way customers behave, so has a self-fulfilling quality. The bottom line is that Apple’s share price will never fully recover. It has lost its mojo, and it won’t get it back.

Julian Birkinshaw is professor of strategy and entrepreneurship at London Business School.

NO

Dominic Sunnebo

Apple is far from finished. Although its recent results disappointed, iPad and iPad Mini sales were good. Apple still has a big future. It is excellent at creating strong brand loyalty – a powerful resource that its competitors struggle to emulate. There is no doubt that if, as expected, Apple released a TV, it would see mega sales because its customers are linked into its mature and developed ecosystem – another strength. Importantly, consumers perceive that the App Store is superior to its competitors, and that is a huge barrier to Android. Although there are more Android devices on the market, Apple customers are more likely to actually spend money downloading applications. And in terms of profits and development, Apple is way ahead. Its shares may have fallen from their peak, but they still represent an incredible buying opportunity.

Dominic Sunnebo is global consumer insight director at Kantar Worldpanel.