Microsoft Surpasses Apple in Valuation, Over 30% iPhone Sales Drop In China And Longtime Directors Retiring From The Board, What to expect from Apple in 2024?

Microsoft has emerged as the world’s most valuable publicly traded company, surpassing Apple by the end of Friday’s U.S. trading session. 

The transition occurred after a brief period of intraday trading on Thursday when Microsoft momentarily exceeded Apple. 

Microsoft’s market capitalization reached $2.89 trillion, propelled by a more than 3% increase in its shares throughout the week. 

On the other hand, Apple experienced a 3% decline in its stock, resulting in a valuation of $2.87 trillion.

Analyst James Cordwell from Redburn Atlantic Equities downgraded Apple from buy to neutral, expressing concerns about limited growth potential in iPhone sales over the coming years and an anticipated underwhelming March quarter.

Simultaneously, Microsoft received a vote of confidence after showcasing its artificial intelligence capabilities to developers in San Francisco. 

Piper Sandler analysts expressed encouragement, noting the positive momentum around mature AI products and the sustained increase in GitHub website traffic.

Apple’s China Problem

Having held the title of the most valuable public company for over a year, Apple faced challenges, particularly in China, where iPhone sales plummeted over 30% in the first week of 2024. 

Jefferies analysts reported that competitors like Xiaomi and Huawei maintained stronger positions with stable sales, projecting a double-digit decline in Apple’s iPhone volume in China for the year. 

They anticipate heightened revenue pressure for Apple in the Chinese market in 2024.

The shift in market dynamics follows Apple’s rocky start to the year, marked by share downgrades from Barclays and Piper Sandler, warnings from supplier Foxconn regarding first-quarter revenue decline, and reports of an impending U.S. government antitrust lawsuit. 

Huawei gained significant smartphone market share in China in 2023, while Apple’s market share declined by around 4% year over year.

To counteract market challenges, Apple has reportedly increased iPhone discounts in China, with rising discounts observed on some iPhone 14 models. 

The company aims to defend its market share amid increasing competition from Huawei, Xiaomi, and other players.

Longtime directors Al Gore and James Bell To Bid Farewell

In yet another development that could impact Apple, the company announced the retirement of longtime directors Al Gore and James Bell from the board. 

Former Vice President Al Gore, serving on the board for more than two decades, will step down in February along with former Boeing CFO James Bell. 

Both retirements are in compliance with Apple’s policy, which prohibits board members from being reelected after reaching the age of 75. 

Wanda Austin, former Aerospace CEO, has been nominated to replace them, pending shareholder approval.

Gore, who contributed significantly to issues such as user privacy and environmental concerns, owns over $87 million worth of Apple shares according to the proxy filing. His total board compensation for 2023 was about $377,000, which included cash of $100,000 and stock awards of around $275,000.

Bell, with extensive expertise in audit and finance, holds shares valued at over $7 million. 

Apple CEO Tim Cook expressed gratitude for their contributions and announced plans for executive succession, emphasizing the company’s commitment to picking the next CEO from within its ranks. 

Cook, 63, has stock units scheduled to vest through 2026 and has begun discussing retirement and succession planning in public forums.

Apple’s Impressive Offerings in 2024

Apple has an extensive lineup of new hardware and software slated for release in 2024.

Foremost among them is the imminent launch of Vision Pro, a groundbreaking product set to make its mark in Apple’s portfolio. Additionally, updates to existing hardware, including the iPhone and Apple Watch in the fall, alongside fresh iterations of iPads and Macs, are expected.

Apple’s commitment extends beyond hardware, with a focus on releasing new software enriched with AI enhancements, incorporating changes aligned with regulatory requirements in the EU and other regions.

Apple Vision Pro

While Apple regularly introduces new products annually, the introduction of an entirely novel product category is a rare occurrence.

Some of the notable instances include the iPhone in 2007, the iPad in 2010, the Apple Watch in 2015, AirPods in 2016, and the HomePod in 2018.

This year, Apple is poised to launch its latest innovation: the Apple Vision Pro. This AR/VR headset, set to debut in the U.S. on February 2, represents a significant leap in Apple’s technological offerings.

Apple’s approach involves refining existing concepts of virtual reality (VR) and augmented reality (AR) goggles. The visionOS platform, described as “spatial computing,” builds on the spatial audio technology that has been integral to Apple devices in recent years.

Priced at a substantial $3,500 (excluding custom reading or corrective lenses, priced at $100 or $150 for glasses wearers), the Vision Pro may initially cater to a select demographic.

While Apple envisions more affordable versions in the future, the widespread adoption of this 3D computing form remains uncertain. Initial reports suggest Apple plans to sell a limited quantity at launch, with expectations of potential sellouts on the pre-order day, starting in January, despite the high price tag.

IPhone

Every year, Apple unveils new iPhone models, and 2024 is no exception.

The iPhone 16 and iPhone 16 Pro are expected around September, with potential camera realignments to enhance support for spatial videos, catering to the 3D capabilities of the Vision Pro. Apart from these enhancements, details about the iterative iPhone updates remain scarce.

In addition to the iPhone lineup, Apple is likely to introduce a new iPhone SE (4th generation) around March or April. Anticipated to feature Face ID and Dynamic Island, aligning it with other models, this iteration marks the end of Touch ID on iPhones in 2024.

iPad

Unlike the iPhone, Apple’s iPad updates lack a regular schedule. Following a hiatus in 2023, potential major changes are speculated for iPad models since October 2022.

Apple may simplify its product line, possibly removing one of the larger iPad models, aligning the iPad lineup with the iPhone strategy: iPad and iPad Pro. The fate of the iPad mini remains uncertain, with rumors suggesting updates in the spring.

Mac

Apple’s successful transition to Apple silicon continues, with possible updates to top-of-the-line Macs like the Mac Pro and Mac Studio expected at the Worldwide Developer Conference in June.

Speculations include the introduction of a 30-inch iMac to bridge the gap between existing display options, offering a more affordable choice for users.

AirPods

AirPods Max, untouched for over three years, may or may not see updates in 2024. With competition from more affordable alternatives like Beats Studio Pro, the appeal of upgrading for current AirPods Max owners remains uncertain.

Apple Watch

The Apple Watch follows an annual upgrade cycle, with the Apple Watch 10 expected alongside the iPhone 16.

Rumors hint at a redesigned Apple Watch 10 with thinner cases, a new band connection method, and potential health features like blood pressure detection and sleep apnea notifications.

A premium model might incorporate a micro-LED display, possibly in 2024 or 2025.

Software

Apple’s major operating systems—macOS 15, iOS 18, iPadOS 18, watchOS 11, and tvOS 18—will debut at the Worldwide Developer Conference in June, with releases slated for fall 2024, around September.

The introduction of visionOS, in conjunction with the Apple Vision Pro launch, may also be highlighted.

Artificial Intelligence (AI)

To address the growing popularity of generative AI tools, Apple may make announcements at the Worldwide Developer Conference, leveraging tools like Ferret for on-device AI actions, aligning with the company’s privacy-focused approach.

AI enhancements might extend to operating systems and Apple’s iWork apps.

Third-Party App Stores

Complying with EU regulations, Apple is expected to introduce third-party app stores to iOS and iPadOS in 2024. Anticipation looms over whether this functionality will be limited to the EU or extended globally, pending potential security implications.

RCS Text Messaging for Android Compatibility

To improve compatibility with Android devices, Apple is set to adopt the RCS standard for its Messages app in 2024, allowing for higher-resolution media exchange and potential security enhancements.

The Last Bit, As Apple ventures into 2024 with an exciting lineup, challenges include AI market competition, regulatory scrutiny, and the risks associated with the Vision Pro computing platform’s introduction.

As Microsoft takes the lead in market valuation, Apple grapples with a complex set of challenges, notably the sharp decline in iPhone sales, particularly in the crucial Chinese market. The company responds by increasing iPhone discounts in China, aiming to protect its market share against formidable competitors.

Still analyst downgrades, warnings from suppliers, and the looming threat of an antitrust lawsuit add to Apple’s early-year woes. 

Simultaneously, the retirement of longtime directors Al Gore and James Bell signals a change on Apple’s board.