Apple Inc. has abandoned Imagination Technologies, subsequently causing a massive drop in the shares of the company. What does this spell for the near futures of both companies?
The tricky thing to consider here is that both companies relied heavily on one another, before the divorce. Apple utilized the mobile processors and graphics technology of Imagination Technologies and integrated them into every bit of mobile tech they’ve ever produced since the first iPod dropped onto the market.
Imagination Technologies, on the other hand, heavily relies on Apple as a stream of income as reported. If this divorce is permanent, Imagination Technologies could face a drastic reduction of revenue leading to many internal complications for the company.
Shares in the technology company have bottomed out, seeing low levels that haven’t been witnessed since 2009. While Imagination Technologies has certainly permeated the cracks of other technological beneficiaries, they hadn’t been able to reduce their reliance on Apple, even before they were dropped.
A more staggering view of the situation shows Imagination Technologies in quite a dismal position; The company’s technology is present, in some way, in over half of the high-end smartphone market. This sounds good until you realize that almost all of their market position was brought about by apple products.
While Imagination Technologies may face a bleak future, there is some hope regarding negotiation between it and Apple. Moreover, it’s difficult to imagine how a company such as Apple would design their own graphics processors from the ground up since they haven’t historically done so. This puts the likelihood of renegotiation between the two companies in a lighter perspective since they both seem to have a lot to lose without one another.
That isn’t to say that Apple couldn’t seek out a new processor and graphics manufacturer for its phones, but the process certainly would be difficult, as well as demanding, seeing as Apple has released new lines of each of its products on an almost annual basis since its beginnings.
Imagination Technologies’ stock is down the drain, due to their split with Apple Inc. While both companies rely heavily on one another, it’s clear that Imagination Technology is the ultimate victim of the separation. Will negotiations between the two companies be a thing of the foreseeable future? It seems smart for both Imagination and Apple. Only time will tell…