Partners Say Apple's Future Lies In Its Services Portfolio As Shares Drop To Two-Year Low

Apple shares dropped nearly 3 percent Thursday, falling below $90 for the first time since June 2014. Partners, however, remain positive about the company’s future.

’We’re still bullish on Apple but, as a channel partner, our outlook is long term,’ said Michael Oh, chief technology officer and founder of TSP, a Boston-based Apple partner. ’We don’t need Apple to have the next hit product of 2016 to be a channel partner that is worth investing our time, effort and business into.’

The Cupertino, Calif.-based company’s shares tumbled as its component suppliers -- including Foxconn, Sharp and Sony -- reported weak earnings and cautious forecasts this week.

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Apple faced an additional blow Thursday. According to the Nikkei Asian Review, Taiwan’s tech suppliers will be getting significantly fewer orders due to the continuing slump in demand for Apple premium smartphones and a lack of what it sees as groundbreaking features in the upcoming iPhone 7.

Apple’s struggles come weeks after the company reported fiscal second-quarter earnings of $1.90 per share on $50.56 billion in revenue -- a 13 percent drop year over year from the same quarter in 2015. That was below Wall Street's expectation of $2 a share on $51.97 billion in revenue, according to Thomson Reuters. Over the past six months, Apple shares have fallen more than 20 percent.

On the channel’s side, partners like Oh are still optimistic about Apple -- but continue to diversify their offerings so they don’t depend solely on the smartphone company.

’For the last 20 years Apple has delivered. We expect it to continue delivering for some time to come. That being said, we diversify our offerings,’ Oh said. ’We’re not just about Apple. We’re heavily invested in other partners like Savant and Lutron -- companies doing more in the IoT space today. So, like investors, it’s always good not to just have one horse to bet on."

For Douglas Grosfield, founder and CEO of Five Nines IT Solutions, a pioneering Kitchener, Ontario-based strategic service provider, Apple’s strength in the future will lie in its services portfolio.

’I believe Apple is on a path that diverges from their historical one. This is actually a good thing, and something that stakeholders need to embrace,’ he said. ’Strong partnerships with companies like IBM have positioned Apple well in a market that focuses on services and recurring revenue, independent of things like hardware refresh cycles. Their services business will be an area of increasing focus, and will represent a significant profit center for Apple in the coming years.’