Illustration: Sarah Grillo/Axios

With the iPhone's global dominance waning, there's a growing chorus of skeptics betting that Apple is headed the way of Blackberry and Nokia.

Why it matters: While Apple still generates ridiculous cash flow, the nearly $900 billion megacompany's growth is built on its ability to reinvent and dominate entire product categories, which it hasn't done lately. Doubters don't see evidence that Apple still has the innovative juice it needs to dominate not just tech but the global consumer marketplace.

The iPhone is Apple’s most important product and generates the bulk of its revenue. The App Store and various other offerings feed off the iPhone's ubiquity and popularity.

  • But the iPhone is fast losing market share, and Apple services like streaming music, streaming video and home speakers show no signs of generating similar cash flow.
  • Without Steve Jobs, Apple has struggled to keep up the pace and magnitude of innovations.; Apple Watch, AirPods and other "wearables" are buzzy, but account for a fraction of the company's earnings.
  • "There are just too many negatives," Richard Mathes, president of asset manager Mathes Company, who dumped all his Apple holdings earlier this year, tells Axios. "They’re going to be a slower growth company going forward."

Apple's biggest problem is China, where it is no longer seen as a trend-setting company and the new iPhone has stopped being a must-have, luxury product, says Linda Zhang, CEO of Purview Investments.

  • "The competition is getting fierce, with local brands coming a long way in innovation and quality, at competitive prices."

By the numbers: Globally, consumers are slower to upgrade, and they're switching brands.

  • Apple saw a 30% decline in shipments in Q1 2019 from last year, as "the iPhone struggled to win over consumers in most major markets," data from market research firm IDC shows.
  • It now holds just 11.7% of global smartphone market share, down more than 25% from a year ago.
  • The U.S., where Apple holds its largest market share, saw the biggest decline in shipments.
  • Shipments for Apple's iOS platform are expected to fall by more than 12% this year.

Investors have taken notice. Following the company's first quarter earnings report — which beat expectations, but revealed the steepest decline ever in iPhone sales — Apple has been by far the most shorted company in the world, according to data provided to Axios from data firm S3 Partners.

  • In April, short interest levels were almost double that of the No. 2 most shorted company, Tesla.
  • Its stock has posted solid gains in recent years, but critics point to Apple's growing reliance on stock buybacks — announcing more than $100 billion in repurchases last year.

Yes, but: This could all turn around — because we really don't know what Apple is cooking. The iPhone itself was a second act for Apple, which nearly died in the late '90s.

  • Apple has suggested it's got things in the works on the health/wellness front, leveraging the Apple Watch and its privacy reputation.
  • According to The Information, Apple is in talks to buy Intel’s modem business to boost its 5G capabilities, though it’s still expected to sit out of the first wave of 5G adoption.
  • Companies like Microsoft and IBM have found ways to age gracefully, finding new revenue streams and delivering shareholder value.
  • Overall, analysts have remained enthusiastic about Apple stock, with “buy” ratings edging out “holds.”

Apple representatives declined to comment.

Our thought bubble from Scott Rosenberg, Axios managing editor for technology: The iPhone was such a monster product that Apple is unlikely to repeat the success, and for investors that may be argument enough to see the company as overvalued. But in Silicon Valley, there's still plenty of respect for Apple's potential to keep innovating.

But folks outside Silicon Valley are starting to see a different story. Aija Leiponen, professor of applied economics at Cornell’s SC Johnson College of Business, told Axios in March she's been wary of Apple's new offerings.

  • "Maybe there will be another breakthrough, but I don’t see it right now."

Go deeper:

What Apple knows about you

The inside story of Apple’s new Mac Pro

Apple buys voice startup Pullstring

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