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Apple Fans Fret that iPhone's Lost Its Luster

Apple Fans Fret that iPhone
January 24, 2013 2:32PM

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"The slowed growth does signify that Apple's [iPhone] shipments are becoming increasingly dependent on replacements and upgrades and less so on finding new customers," said analyst Mike Morgan. "It is difficult to capture new customers from those that are loyal to other platforms such as Android, and this will only get worse" for Apple's iPhone.

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Apple's eagerly awaited fourth-quarter earnings report seems to have confirmed what many analysts see as a problem in Cupertino, as the iPhone starts to show signs of consumer fatigue. The technology giant, still easily one of the world's most profitable companies, sold 47.8 million smartphones in the quarter, less than the average Wall Street projections as reported by the financial press, though still up 28 percent from the same quarter last year, when 37 million were sold.

The iPhone 5 was released in September with a larger screen size, better camera and faster processor, but perhaps lacking enough virtual bells and whistles to go head-to-head with an army of rivals including Samsung's leading device, the Galaxy S III. News of Apple's supposed component-order reductions earlier this month created worry in advance of the earnings.

More iPads, Fewer Macs

In other good and bad news, the company saw record sales of its iPad tablets, 22.9 million, up year-over-year from 15.4 million, but sold about a million less of what was once its signature product: Mac computers fell from 5.2 million units to 4.1 million. Record profit for the quarter was a not-too-shabby $13.1 billion, indicating no short-term problem.

"We're pleased to have generated over $23 billion in cash flow from operations during the quarter," CFO Peter Oppenheimer said in Apple's earnings statement. "We're very confident in our product pipeline as we continue to focus on innovation and making the best products in the world."

But there's no denying that to keep on top of its game Apple needs to keep iPhone users from defecting to Android, Windows Phone 8 or BlackBerry 10 while at the same time picking up new smartphone customers in the remaining emerging markets. Investors showed their concern by deflating Apple's share price 11 percent on Thursday when the results were released.

Mike Morgan, senior mobile devices analyst at ABI Research, told us the iPhone sales represent "a respectable showing."

"Apple was able to keep its mix of new versus old in line with previous launch quarters, which implies that its latest device has added enough meaningful technology to meet the needs of those looking to upgrade to the latest version," Morgan said.

But Morgan noted that total iPhone shipments for the year show that Apple growth slowed to 46 percent, down from 96 percent in 2011.

"The slowed growth does signify that Apple's shipments are becoming increasingly dependent on replacements and upgrades and less so on finding new customers. It is difficult to capture new customers from those that are loyal to other platforms such as Android, and this will only get worse as Android OEMs continue to improve the devices they are making," he said.

Unfilled Shoes?

Consultant Rob Enderle of the Enderle Group told us that without a complete picture of supply, demand and the realism of analyst estimates for the quarter, "you can't determine whether it is a transitory problem or a trend. However the decline in margins is clearly a trend and the rate of decline appears significant."

He sees Apple plagued with the unique problem of having needed to replace, in the late Steve Jobs, "a CEO who has created and driven a very unique company but avoided training a successor for fear they would actually succeed" in replacing him.

Tell Us What You Think
Comment:

Name:

tims:

Posted: 2013-01-31 @ 3:17pm PT
Nonsense on iPhone.

At&T and Verizon reported that iPhone accounted for 85% and 65% of total activations in the Dec. quarter. That means that Android is seeing a lot of defections.

It is impossible for those kinds of percentages (which are shockingly high) to come from new smartphone users (the market is not grwing anywhere near that much) or iPhone owners upgrading. Obviously I don't have the actual figures of how many defections there were but I can't see how you get to 85 out of 100 ATT activations being iPhones without a material portion of those coming from other smartphones.

More Power Scotty:

Posted: 2013-01-24 @ 10:22pm PT
I love my Apple products for the most part... but c'mon Apple... you've got to do something about the ridiculously short battery life on the iPhone and MacBook Air.

How is it possible that a phone can be so popular and not be able to hold a charge for even a full day? Not to mention how pathetic it is that my MacBook Air can barely last until lunchtime.

I mean, these are supposed to be WIRELESS, PORTABLE products, Apple. What gives????

Pete W:

Posted: 2013-01-24 @ 10:17pm PT
If you read all the comments about people wanting to switch from Windows 8 to Apple, you'll see that Apple's going to be getting a whole lot of new users REAL soon!

Apple's Overrated:

Posted: 2013-01-24 @ 10:13pm PT
I used to like Apple, but the more they keep bringing out new versions of the same old thing (iPhone 3, no 4, no 5).... and having the Apple fanboys hype it to death... the more I say Apple's going down.



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