It's starting to look like the once-infallible Apple may not reign supreme alone anymore. Apple seems to have disappointed Wall Street by reporting iPhone sales that were lower than predictions last quarter. The result? Apple (APPL) shares took a 10 percent hit, resulting in a loss of around $50 billion of the company's value.
Apple reported that it sold 47.8 million iPhones, around 29 percent more than the same quarter a year a before. On top of that, Apple stated that it earned a profit of $13.1 billion, and sold 48 more iPads as well. Despite all this, the iPhone sales were short of the 50 million that analysts had expected, which caused Apple to fall. Now, even more are predicting lower future iPhone sales.
Why is that? Apple still puts out innovative, sleek products with very high appeal - so why the lack of confidence?
There are two reasons for this: Apple itself, and its competitors.
Apple has enjoyed the kind of growth and success that most companies can only dream of. Fueled by its popular iOS lineup, Apple stock surged to $700 last year, leading many to believe that it could become the first trillion-dollar company. With that kind of growth, and expectations where three-million less iPhones can translate to a "disappointment," it becomes increasingly difficult for Apple to maintain its high growth levels, especially given how aggressive competitors have become.
"Overall, compared to other companies, it's impressive. But for Apple's standards, it's not great," said Patrick Moorhead of Moor Insights & Strategy said in an LA Times article. "I do think this somewhat fuels the perception that Apple is slowing down a bit.... And it's driven by the fact that some of its competitors are catching up, and in some markets have already caught up."
The iPhone is no longer the only viable high-end smartphone choice, and plenty of Android smratphones are now considered more hip by the very same youth that initially embraced Apple. Samsung's Galaxy S3 proved that a non-Apple smartphone can not only compete with the iPhone, but outsell it, and Google's Nexus 4 smartphone is an incredibly attractive, cheap, contract-free smartphone that has enjoyed the notoriety of being a recluse. The fact is that there are an incredible amount of options out there, and consumers are embracing that.
Apple does seem to have taken notice of its declining position, as the Cupertino-based company looks poised to introduce some drastic changes to the way it does business this year. Apple will be looking to launch more than one iPhone in 2013, in more than two colors, and shoot for more product launches with new iPads expected as early as March. We'll have to wait and see if this is enough, since its competitors will be just as aggressive, if not more, now that they've tasted the top.
On the bright side - it does looks like Apple is miles ahead of everyone else in the orangutan market.