iPhone Sales Slump: How Apple Can Fix It

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Apple CEO Tim Cook is optimistic about the company's future even though it just posted its first-ever drop in iPhone shipments during its latest earnings report.

Apple shipped 51 million iPhones during its most recent quarter. That's down 10 million, or about 16%, from the 61 million it shipped in the year-ago period. While most other smartphone makers would love to have numbers like these, Apple's figures worry investors. The year-over-year decline reveals weakness in Apple's smartphone business, which is its main money maker.

Apple is facing a few issues and it's not clear how the company plans to surmount them.

The smartphone market as a whole is still growing, but at a much slower pace than it did several years ago. IDC believes phone makers will ship about 1.5 billion devices this year, and as many as 1.9 billion by 2020. Apple will probably continue to own about 14%-15% of the market during the next four years, but the era of big growth is over -- despite the fact that much of the world remains unconnected.

During the company's call with press and analysts, Apple CEO Tim Cook lamented this macro environment as something that's out of its control. He also acknowledged that it will contribute to muted iPhone shipments during the current quarter.

Beyond the larger market issues at play, the company has failed to innovate with recent products. The new iPhone SE, for example, is a rehash of the iPhone 5 with updated internals. The iPhone 6s and 6s Plus are simply updated versions of the 2014 iPhone 6 and 6 Plus.

The new iPad Pro is a smaller version of the slate Apple released last year. The new MacBook has only modestly improved specs when compared to last year's model. For a company that claims to sink billions of dollars into research and development, the evolution of its products has been painfully slow.

The original iPhone was an innovative product, as was the original iPad. Apple has hardly innovated since. The company refuses to adopt the newest technology (NFC, wireless charging) and often chooses its own, proprietary tech (Lightning) over standards. It's also stingy and overcharges for what should be cheap add-ons, such as storage and LTE.

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Veteran tech watcher Walt Mossberg argues that the iPhone 7 "had better be spectacular." I agree. The iPhone is Apple's most important product line. Recycling designs without introducing innovative new features won't convince people to upgrade.

What can Apple do to reinvigorate iPhone sales? Plenty. Change up the design. Make the iPhone 7 waterproof. Switch to USB Type-C. Lower the price of additional storage. Do something interesting with the cameras, like adopt 3D. Truly improve battery life.

Add wireless charging, or, heck, just add rapid charging. Improve the screen to quad HD. Make iOS more flexible and more easily customized. Definitely change the home screen experience. Open up the NFC radio to functions other than Apple Pay. This list can go on and on.

If there's one thing Apple absolutely cannot do, it is to rely on past success to shape its future. Be bold(er), Apple. Follow your own advice: Think different.

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