Apple CEO Tim Cook has a lot to be proud of going into his big announcement Wednesday. He’s also got plenty left to prove.
As he likes to do, Cook will probably spout off the big numbers that show why Apple is so dominant: zillions of apps, gajillions of Apple Music minutes streamed, a handful of beautiful new Apple Stores and more happy customers served than McDonald’s.
But behind the song and dance of Apple’s big upcoming announcements are six looming question marks about Apple’s core products.
1) How much longer can demand for iPhones grow?
iPhone demand is off-the charts, and the iPhone 6S’ rumored new features like Force Touch and an improved camera seem compelling enough to keep the momentum going.
Those who have predicted the end of the iPhone’s stunning growth have been wrong every time (including, ahem, one CNNMoney reporter). But there’s reason to believe this historic run of constant growth might be coming to a close.
Apple has entered just about every remaining smartphone market (China? Check. Giant phones? Check.) Meanwhile, growth in the overall smartphone market is flatlining, and the last remaining growth segment is in super-cheap phones for emerging markets (an area Apple has avoided).
Also, U.S. carriers are doing away with two-year contracts, and customers may begin to hold onto their iPhones longer. Apple noted during last quarter’s earnings call that it hasn’t yet seen upgrade behavior change, but it’s watching the market closely.
2) Can Apple TV ever become more than a ‘hobby?’
After selling 20 million Apple TVs over seven years, and after customers bought $1 billion worth of programming on their Apple TVs in 2013, Cook said the Apple TV had officially graduated from the “hobby” status Steve Jobs granted it in 2007.
Call it what you want, but it’s still a niche product. Just 6% of American adults with an Internet connection use an Apple TV, and only 13% have even expressed interest in giving one a try, according to a recent Forrester Research study. There are cheaper, more powerful competitors on the set-top box market, including the Amazon Fire Stick, the Google Chromecast and the Roku.
To give the Apple TV a boost, Apple is rumored to be unveiling a new version on Wednesday that features games, Siri and an app store. That’s just not enough to overcome the competition, according to James McQuivey, digital media analyst at Forrester.
“They’re joining the program already in progress thanks to the likes of Amazon and Netflix,” he said. “Siri hasn’t taken over the phone and it won’t take over the TV, either.”
3) Can the ‘iPad Pro’ juice moribund tablet sales?
IPad sales have fallen for six straight quarters. The downward trend for the iPad follows an overall slump in tablets.
That’s where the rumored “iPad Pro” could come in. A device that fits between the iPad and a Mac could be a compelling gadget that the iPhone couldn’t cannibalize — and particularly interesting to a segment of customers that Apple has been targeting lately.
The iPad remains Apple’s second bestselling product — all the more reason why the iPad Pro needs to be “big” in every sense of the word.
4) Is the Watch the Next Big Thing or just a curiosity?
Industry analysts say Apple sold about 3 million Apple Watches last quarter (Apple has been mum on Watch sales). Cook is urging folks to hold off judgment until the holiday season, saying it will be a big seller during the fall and winter.
Apple defenders point to the fact that the Apple Watch likely performed better in its first quarter of sales than the iPhone, iPad or iPod, all of which became huge success stories.
There were certainly questions about the utility of all those products when they were announced (particularly the iPad), and Apple proved those doubters wrong. But the Apple Watch just hasn’t captured the attention that Apple’s other iGadgets have. Apple may have overestimated the appeal of the fledgling wearables market.
5) Can Macs ever go mainstream?
Macintosh sales are growing, and they have recently been a shining beacon of hope in an otherwise downtrodden PC market. Apple has lately been among the only companies with growing PC sales.
Yet much of that PC market sluggishness has been due to customers holding out for Windows 10. Microsoft’s new operating system is here now, and PC sales are expected to soar this fall. In fact, Microsoft predicts that Windows 10 will be installed on 1 billion PCs in two to three years.
To compete with Windows, Apple has partnered with Cisco and IBM to get Macs into the workplace. Yet Apple refuses to sell PCs for less than $900, it has an increasingly miserable security record, and its latest innovations (cutting out standard USB ports) aren’t exactly what you’d call IT-friendly.
6) Will Apple Music make up for lost iTunes sales?
As fewer people download music and more folks listen on streaming services, iTunes music downloads have fallen. That’s a big part of the reason Apple bought Beats for $3 billion and relaunched the Beats Music streaming app as Apple Music.
The company has combated reports that Apple Music is underperforming expectations. A survey conducted by research company MusicWatch found that only 52% of Apple Music customers are still using the service after subscribing to the introductory three-month free trial. Apple has put that figure at 79%.
It’s left to be seen whether Apple Music can make up for lost iTunes sales. It has received mixed reviews. It has the advantage of being preinstalled on people’s iPhones — but the disadvantage of having no free, ad-supported version to compete with services like Spotify and Pandora.