Apple revised its revenue guidance for its fiscal 2019 first quarter. This is the first time they’re cutting this since 2002. Apple lowered its sales outlook to $84B from the projected $89-$93B blaming it on China and emerging markets and also on the less than expected iPhones upgrades. China is a huge market for Apple and the Cupertino based company says that over 100% of their year-over-year worldwide revenue decline occurred in Greater China. The real problem is that people are buying less new iPhones.

The smartphone plateau has been obvious for those paying attention. Apple wasn’t taking note of this and the ignorance finally caught up. The days of iPhones generating major revenue for the company are outnumbered proving that Apple and the iPhone are not immune to the larger smartphone market forces.

Apple will need to pivot to a services company much more earlier than they had planned – this is going to be challenging as nothing will ever top the iPhone business, it was too good. It will be interesting to watch how Apple navigates through this transition though.

This is good news for both Apple and its consumers. In the short term, this puts downward pressure on the iPhone prices. In the letter, Tim Cook defended the longer replacement cycles iPhone users get. This is a good sign as customers are given what they want – reliable phones that don’t become outdated as soon as newer models arrive so you get to use your phone for longer without bothering to buy another iPhone much to the anger of investors.

Apple will now have to dig into its enormous pile of cash on hand it has to bring forward plans for new products from its R&D.

This isn’t just a wake-up call for Apple, other tech companies will now have to come up with a new cycle of innovation and hurry up while at that.

Tech companies, not just Apple need to resume to true innovation, and they need to do it now.

Is this a demise to Apple’s premium brand?

No, this is not an end to Apple or at least according to history. After the 2012 holiday season when Apple’s iPhone 5C and 5S underperformed in the markets, analysts said the same thing they’re saying now. Apple rose up again with the launch of the iPhone 6 and 6 Plus in 2013 – these were two of the most successful iPhones in Apple’s history. So maybe we shouldn’t just write Apple off, not just yet. 2019 is going to test Tim Cook and define his career just as it did Steve Jobs – how to take Apple forward when its top device has lost its candescence with customers.

HTC had a not so great 2018

2018 wasn’t so kind to HTC, they just brought in $770 million in revenue, a 62% drop compared to last year’s revenue. For context on how bad this is, the company made more money in May 2013 than the whole of 2018.

2013 was the year HTC released the One M7, One Mini and One Max and they made $941 million. HTC is still releasing devices such as the U12+ and the blockchain phone that get overshadowed by its competitors.

In early 2018 and for $1.1 billion, HTC offloaded a portion of its business to Google as it pivoted to VR and consequently laid off more workers. HTC hasn’t broken down its VR revenue yet as that’s up till February but things aren’t looking so great. 2019 has been predicted to be tough for the AR, VR, XR industry whose interest is now subsiding. A lot of companies invested in this tech will have to work harder to be even taken seriously in 2019. With HTC decreasing its smartphone production, it’s going to be difficult to generate revenue especially since VR is their long-term play and it’s going to take a while before they bounce back to their glory days.

Microsoft begins the year as the most valuable corporation in the world

As the first company to hit the trillion dollar market cap, Apple is beginning the year on a bad note. It’s now the fourth most valuable company in the world. After Tim Cook’s letter to Apple’s investors, its stock went down nearly 10% with tens of billions of dollars haven’t off the tech company’s market cap overnight.

Hopefully, Microsoft’s clear vision, drastic market sell-off of its competitors and aggressive sustained growth will keep it afloat throughout 2019 and also probably hit the coveted $1 trillion in market cap.

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