by We’re less than a month into the new year, but it feels like a lot longer for Apple ( AAPL ) watchers. The tech giant has been making headlines left and right as it pushes for a handful of downgrades to its stock price, addresses major changes to its App Store policies, and prepares for potential antitrust litigation that could target on a large number of his business.
All this comes as Apple prepares to launch its $3,499 Vision Pro headset. Apple’s most ambitious product in recent years, the Vision Pro puts the company into a product category that even established players like Meta ( META ) have struggled to achieve.
It’s quite a lot to say the least.
But it’s not all doom and gloom for Apple. AI-equipped next-generation iPhones and a re-acceleration of the company’s services business should help boost growth in the coming years. And if the Vision Pro were to succeed, it would provide a whole new revenue stream across both Apple’s hardware and services divisions.
“I don’t think Apple is in any way under any existential threat right now that wasn’t there before,” Deepwater Asset Management managing partner Gene Munster told Yahoo Finance. “It’s just that they are participating in markets that are [have] growth is slower and they are looking for ways to try to absorb that growth.”
The slowdown of China’s Apple
China is Apple’s third largest market, generating $72.6 billion of the company’s $383.3 billion in total revenue in 2023. North America, Apple’s largest market, generated $162.6 billion, while Europe generated $94.3 billion.
All of this makes Apple’s biggest and most pressing news are reports of slowing iPhone sales in China. A slow economic recovery along with the resurgence of Huawei, which has succeeded in putting out smartphones in the United States with modern processors and features, is expected to restore Apple’s market share in the country.
According to Counterpoint Research, the iPhone maker controlled 15% of the Chinese market in Q3 2023. That was slightly better than Huawei’s 14%, but behind Vivo’s 16% and Oppo’s 19%.
Analysts at Barclays, Piper Sandler and Redburn Atlantic cited the region as a potential problem for Apple with Barclays’ Tim Long saying the firm had seen “incrementally worse” iPhone 15 data from China. He added that he does not predict any “features or upgrades that could make the iPhone 16 more powerful”.
Redburn Atlantic’s James Cordwell also called out China in a January 10 note, saying he remains concerned about Apple’s competitive position in the country.
Piper Sandler’s Harsh Kumar and Robert Aguanno said the deteriorating macro environment in China could weigh on Apple’s handset business.
“We highlight in our expectation that China will be a key driver of sales next year,” Aguanno told Yahoo Finance. “Any recovery in iPhone growth prospects will be underpinned by the resurgence of the Chinese consumer along with strong growth in other emerging markets such as India.”
Antitrust concerns and App Store changes
Apple is also contending with reports that the Department of Justice is preparing to file an antitrust lawsuit against the company. According to the New York Times, the department could file the lawsuit, which would focus on Apple’s strategic hardware and software moots, as early as March.
Critics have long called on antitrust enforcers to take action against Apple to institute policies that prevent users from accessing apps from third-party app stores or that keep device and app makers from hardware features to use certain items of Apple’s iPhone, such as its mobile payment technology.
The European Union is also trying to force Apple to loosen restrictions on its App Store, including allowing third-party app stores on the iPhone. The company has also established new App Store rules in the United States that allow developers to advertise third-party links to purchase apps outside of the App Store. Apple will still charge a commission on those sales but will reduce the amount from 15% or 30% to 12% or 27%.
That has drawn sharp rebuke from longtime rivals like Spotify who say Apple’s changes don’t go far enough.
The Vision Pro is a risky bet
Apple’s new Vision Pro AR/VR headset is also a big part of its 2024 equation. The device, which is available for pre-order and hits the market on February 2nd, is a huge gamble for Apple as it looks to enter a whole new market.
With a starting price of $3,499, the Vision Pro won’t reach the kind of sales volume as the iPhone. And while early reports say pre-orders are sold out, there’s no guarantee interest in the space computer will remain high.
“We are encouraged by the initial sales data on the launch of the device but would remain cautious about the long-term prospects for the device,” said Aguano. “It’s too early to tell here.”
That said, Apple’s long-term prospects remain strong, the analysts said. Bank of America analyst Wamsi Mohan told Yahoo Finance Live that he has high conviction that Apple will continue to move higher in the coming years.
“It’s mainly generational AI on iPhones,” he said. “We think that will be a big catalyst.” Mohan added that he believes the Vision Pro will have long-term potential in terms of hardware and services.
Aguano offered a similar view of the company’s future outlook, saying that Apple’s market position and product line are solid.
We’ll get our first taste of Apple’s 2024 performance when it reports earnings on February 1.
Daniel Hawley He is the technology editor at Yahoo Finance. He has been covering the tech industry since 2011. You can follow him on Twitter @Daniel Howley.
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