Apple Inc. (NASDAQ:AAPL) will be happy to put 2016 behind it. Yes, AAPL stock registered double-digit gains and slightly outperformed the market (with one day of trading to go in 2016), but the year was hardly a stellar one.
Sales are down in key product lines like the iPhone. Its long-awaited MacBook Pro revision faced a barrage of criticism. The iPhone 7 was derided for looking too much like the iPhone 6 and for lacking a headphone port. And to cap it off, AAPL is closing out 2016 facing a series of issues with iPhone 6 batteries.
And while Apple inc. has struggled, opponents have made hay.
Microsoft Corporation (NASDAQ:MSFT) has seized the premium PC mantle with its Surface Studio and Surface Book. Amazon.com, Inc. (NASDAQ:AMZN) made an end run around Siri and HomeKit to make the Alexa-powered Echo smart speaker a contender to control the smart home. Alphabet Inc. (NASDAQ:GOOGL) entered the premium smartphone market with its Android flagship Google Pixel Phone.
AAPL doesn’t necessarily need to detonate everything and start all over from scratch, but it could use a turnaround or two in key categories.
Apple Did OK in 2016, But …
Again, short of something crazy happening Friday, Dec. 29, AAPL stock will have returned at least 10% for 2016. That’s not bad. In fact, it’s downright great compared to last year’s 3% losses.
Then again …
In 2014, AAPL returned 47%. In 2012, it was about 25%. Don’t forget the heady days of 2009, when the iPhone was gaining in popularity and rumors were flying that the company was about to release a new tablet device (the iPad would be unveiled the following January) — and the market was rebounding out of the cellar. Apple stock gained 115% that year.
AAPL is spending increasingly more on stock repurchases and dividends, so there’s less of an expectation of rampant growth … but there’s still some sort of expectation for outsize growth. Apple is, after all, a consumer tech company.
And it’s not just stock performance. Apple needs to return to form in many aspects, such as re-emerging as an innovator and a designer of world-class premium products.
To accomplish these goals, there are three key objectives that Apple needs to nail in 2017.
#1: The iPhone 8 Needs to Be Hit
There are no two ways about it: The single most important product release in 2017 for AAPL is the iPhone 8.
Sales of iPhones are Apple’s single largest source of revenue — 60% of Apple Inc. revenue in the last quarter. If the iPhone 8 is a big hit, it will reverse the slide in sales, and AAPL stock will be off to the races.
To get there, Apple needs to release a product that wows consumers. It must look nothing like the iPhone 6/6s and 7 — and the Android rivals that have adopted a similar form factor. It has to make them forget about headphone jacks and unreliable batteries.
The iPhone 8 needs to have the must-have appeal that makes iPhone owners clamor to upgrade, with line-ups outside Apple Stores once more.
At this point, rumors have AAPL going to an all-glass iPhone 8 with a curved display and wireless charging.
It’s a start.