Apple: Time to Think Very Different?
The. This is tech news briefing im Tanya Bustos reporting from the newsroom in New York coming up after a headline making week about these state of the iphone. It's staying power. A look get why apple might need to think very differently in the future. The journal writes that defending its profit margins may now be coming at a significant cost to it's no longer the world's most valuable company heard on the streets. Dan Gallagher is back with dose of harsh reality. Or at least a case for why it's time to think very differently moving forward. Is it a turning point for apple? We'll talk about it after these tech headlines. Marietta. International said fewer customers were affected in a massive data breach. That initially feared, but confirmed that hackers had compromised, the passport numbers of millions of people in what security analysts have described as a potential foreign intelligence gold mine, the hotel chain said a total of about three hundred eighty million records was the upper limit for the record potentially compromised in the incident Marriott disclosed in November that the hack in the reservation database for its Starwood properties may have exposed the personal information of up to five hundred billion guests, the F B I is leading an investigation into the Marriott hack. US officials familiar with the probe of said, they increasingly view China as leading suspect in the breach. Basing this off of forensic clues and Beijing's history of pilfering large American data sets for intelligence purposes. The company gave no further guidance on who may have been behind the hack. And privacy minded, Germany, a massive leak strikes the political class. The Wall Street Journal's Ruth bender reports from Berlin that German authorities are investigating the leak of private data belonging to hundreds of politicians in one of the country's largest cyber leaks. The league affected Chancellor Angela Merkel, according to German authorities the country has among the toughest privacy legislation in the world and has experienced repeated attacks in the past including a vast theft targeting lawmakers in twenty fifteen which thirty since blamed on Russia. Facebook begins the new year in fixer upper mode, and the journal reports at the top of the twenty nineteen to do list is to find a balance between its deeply-held drive for growth, and it's heightened commitment to improving safety across its many platforms. CEO Mark Zuckerberg said in a post late last week that fixing the company was quote more than a one year challenge and per tradition. Mr. Zuckerberg is expected to announce his specific annual goals later this month coming up why it's time for apple to think very differently. What a new era means for the fate of the iphone? Last week slowing iphone sales triggered a nearly unprecedented. Warning from apple about lower than expected revenue for its fiscal first quarter the world became very concerned. No one more than Wall Street and now that the dust to settle let's talk about what apple does moving forward heard on the streets. Dan Gallagher has a couple of ideas. And he joins us to talk about these state of apple and how it sees itself out of challenging times Dan joins us now via Skype from San Francisco ident- rear so keyword that keeps popping up in this conversation about apple is China. So bottom line, if you could is I'm sure you've been doing a lot since Applebrook this news. Explain why things didn't exactly go right in China for apple and how we kinda landed here. Well, I think you know, based on I went the company said has gone that, you know, seems a traffic into retail stores is down. You know, the Chinese economy is going through Shen contraction. Nhs. Apple's devices are among them are are the boasts expensive smartphones by a long shot over there. So obviously a slowing economy, you know, expensive products tend to not sell as well, they also team hinted that the trade war. I mean, they didn't hit. They actually said the trade war was having an impact it's not clear that means, you know, the train war is kind of hurting Chinese customers. They have less money to spend. They also seem to hit that there would say some of those customers may have been may be going to Chinese phones for kind of patriotic reasons, we don't get the sense that is a a major factor, you know, but you know, eventually the Chinese smartphone market overall. It's been going through some contractions anyway because apple is kind of at the top end of that in price. I think they're feeling the brunt of and bottom line something's got to change. And that's what you write about. Basically how apple has two little bit differently. So as far as an approach to fixing the China situation. What what's being said, you know, the people that talk. About this the analysts that you speak to how do people think that this needs to get resolved? Well, a lot of the analysts covering apple are still very optimistic about the, you know, realize the iphone is slowing business in a mature market in a lot of analysts were really optimistic that the company's services or the growth engine of the future for the company. And that's that includes things like app store and apple music and all kinds of things in there. But you know, my problem without view is that the iphone businesses is so large still more two-thirds the company's revenue that even with some really optimistic growth prospects services. Not is not going to be really big enough to offset even in the next three years. And that's and that's if things go really well for that business. So it's from I think apple needs to consider kind of different approaches to its business. Among them might be the kind of rethink this whole pricing strategy. They've been doing over the last couple of years where they're raising the prices on their phones. Because they have apples long had the best margins in the business in they liked to protect those. But I think trying to try to protect them starting to cost the company and speaking to that the ones trillion dollar company, certainly took a hit, you know, just judging by last week's market happenings. How big was this of a hit for apple? Apple shares went down ten percent just on that warning. But they were down. I think about twenty seven percent already between since they reported their last range report on November first up before the warning that they gave that they gave all in the damage they've lost. I think a little over a third of their market value. Now, you know, and in just a more numbers they were valued at over the market value was over trillion dollars when they last reported their earnings it's now in the mid six hundred in the mid six hundred billions in relatively speaking. They've gone from being the most valuable company in the world to now they are ranking. Fourth behind Microsoft, Amazon and alphabet, which is Google's parent certainly puts it into perspective. Dan gallagher. Thanks, so much pleasure. For more head to wsJcom. That's it for the tech news briefing. Im Tanya boost does reporting from the newsroom in New York. Thanks for listening.