The Strong Dollar Might Take a Bite Out of Apple

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By Jacob Maslow

macbook air
Apple Macbook Air on a desk

It’s easy to get excited about Apple. After all, who in their right mind wouldn’t get inspired by the record profits that the Cupertino, California company reported for the last quarter? According to some estimates, Apple’s profits last quarter is the biggest profits ever recorded by any company in history. Last quarter was one for the history books.

With that said, there are serious clouds on the horizon as far as Apple’s fortunes for the rest of the year are concerned. While Apple might do well this coming Chinese New Year and maybe rack up great sales with the smartwatch, it has some worries down the road. One key worry is the increasing strength of the US dollar. The stronger the dollar gets; the more expensive American products become. Since Apple is priced in US dollars, this can be a serious problem.

Even if strong dollar doesn’t impact smartphone sales all that much, the iPad is looking extremely vulnerable. According to last quarter’s earnings report, Apple saw iPad sales drop for the fourth straight quarter. This is bad news. It reveals a weakness in Apple’s overall strategy as far as the tablet segment of its business line is concerned.

The global tablet industry is actually evolving into a race to the bottom. The whole consumer mindset regarding tablet products is beginning to focus less on brand but more on price. This is bad news for Apple because Apple can’t compete on price. It competes on brand value and brand impression. If the global tablet market truly becomes commodified, expect the profit contribution of Apple’s iPad business to continue to sink further.

While CEO Tim Cook can say that he believes in the iPad all he wants, the verdict is out: The global tablet market is vastly different from the smartphone market. This leaves Apple as a one-trick pony: the only real winning product that it can reliably depend on is the iPhone. Who knows how long that would last? The strong dollar is definitely not going to help its tablet business.

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