Apple underperformed its mega peers in 2023 due to lower revenues

But Apple has also dealt with some company-specific issues. Apple is launching no new iPad models in 2023, the first time it has done so in a calendar year since the product launched in 2010. Without new models, Apple has little to promote, and older versions of the product do not see the official price cuts that Boosts sales.

Earlier this month, all current iPads shipped from Apple's website in one day, according to Morgan Stanley analysts. This is a sign of weak demand because with the most popular products, Apple doesn't have enough supply to ship them that quickly.

In fiscal 2023, which ended in September, Apple's iPad revenue fell 3.4% to $28.3 billion. On a unit basis, iPad sales were even worse, down 15%, according to a recent estimate from Bank of America analyst Wamsi Mohan. Apple does not report unit sales.

To make matters worse, new Apple Watch models were removed from Apple Stores in the US days before Christmas due to an intellectual property dispute. After an appeal in late December, the devices were returned to store shelves, but Morgan Stanley analysts estimate that Apple lost about $135 million in sales per day during the short ban.

Even for new Apple products, such as Mac computers, consumers have shown less interest in opening their wallets for devices with minor upgrades. Sales of Mac computers and laptops fell nearly 27% to $10.2 billion in fiscal 2023. Unit sales fell 11%, according to Bank of America estimates.

Apple shares still managed to jump 49% for the year as of Thursday's close, outpacing the Nasdaq's 44% gain. However, investors would have been better off betting on any of the other more valuable technology companies. Nvidia shares have more than tripled this year, and Meta shares are up nearly 200%. Tesla shares more than doubled, Amazon shares rose 83%, Alphabet shares jumped 59%, and Microsoft shares rose 57%.

In order to return to revenue growth and support the $3 trillion market value, Apple needs some new products to succeed and rebound global demand for smartphones and laptops.

A big test will come early next year, when Apple's first mixed reality headset — the $3,499 Vision Pro — hits the market.

“We believe success with Vision Pro is less about 2024 and more about its long-term potential,” Morgan Stanley analyst Eric Woodring wrote in a note this month.

Assuming Apple ships 400,000 headphones, Vision Pro revenue could reach about $1.4 billion next year, according to an estimate from UBS analyst David Vogt. He described the amount as “relatively intangible.”

Enthusiasm will be key. The Vision Pro is Apple's first brand new device since it announced the Apple Watch, and it will be sold across Apple Stores. Headphones can generate traffic and buzz for Apple's existing products. There's a chance it can accomplish enough to show that Apple has the lead when it comes to the future of computing.

Looking outward, Apple would like to see an easing of tensions between the US and China.

In 2023, Apple has made significant progress in diversifying its production centers away from mainland China and into countries such as Vietnam And India. But its moves to expand its supply chain appear to have awakened a drive in the Chinese government to classify Apple as a foreign company. The White House called out reports that Chinese government agencies have asked their employees not to bring iPhones to work.Revenge“.

The Chinese government has denied these accusations. However, analysts are starting to worry about declining Chinese demand for iPhones, especially in the current quarter. The iPhone remains Apple's most important hardware product, accounting for about half of the company's total revenue.

“With the holiday season approaching, iPhone unit demand remains the key near-term discussion amid economic woes and concerns about a potential stock loss in China due to Huawei’s return,” Citi analyst Atif Malik wrote in a note this month.

Despite its difficulties, Apple remains a formidable force. The company recorded $383 billion in total revenue in fiscal 2023 and generated nearly $97 billion in net income.

Because the smartphone and computer markets were declining, Apple Gained market share And in some countries, competitors have seen steeper declines. In February, Apple said it had 2 billion devices in use, a closely watched metric that investors consider an indicator of future sales of software and services.

Apple is preparing new iPads for next year, which could boost demand, According to Bloomberg. The company has submitted an update to its watch software to the US government in hopes it will resolve an intellectual property dispute that briefly blocked sales. iPhones still have a speed advantage over newer Huawei devices, thanks in part to import restrictions on chips and chip equipment.

In November, Apple CFO Luca Maestri said the company's December quarter — the largest of the year — would be flat compared to last year. He warned that Macs, wearables and iPads will see sales decline.

But according to analyst estimates, overall sales declines are in the rearview mirror, with moderate growth expected in the first half of the year and an acceleration thereafter.

“Overall, the downturn appears to have ended, and we believe it is time to see moderate growth,” Bank of America analyst Simon Wu wrote in a report this month.

He watches: Apple's Vision Pro is not expected to be a huge success