Apple's cart could use refilling with some fresher products. The tech giant's modest quarterly results highlight the risks of relying on just a few aging mega-hits. The iPhone and other top offerings have made the firm worth more than any other in the world. But eroding market share and $40 billion in vapourised value suggest things are growing a bit stale.
The numbers are far from rotten. Revenue grew six per cent compared with the same period last year, and earnings were flat. Apple's huge buyback programme also nudged earnings per share up five per cent. But the company has few products, so there's little room for disappointment. And, its warning that revenue could shrink next quarter didn't help. The iPhone accounts for more than half of Apple's sales and an even greater chunk of its profit. But the Cupertino-based firm sold only 51 million of the devices in the quarter, about four million fewer than expected. The company blames the shortfall in part on a failure to produce enough flagship iPhone 5s.
The figures, though, confirm a worrying trend. While selling more phones, Apple is losing market share to rivals like Samsung. Competition is also growing. The Korean giant warned last week that 2014 would see increased price competition among smartphone makers. And, Apple's muted revenue expectation for the next quarter means its long-awaited deal with mega-carrier China Mobile may not live up to the hopes of the bullish masses.
Sales of the aging iPod, meanwhile, shrivelled by about half, as customers turned increasingly to smartphones for their music-listening pleasure. More than $1 billion of iPod revenue was cannibalised as a result. That's not so bad, considering Apple makes a lot more selling iPhones. But it does underscore how central that device has become to the company's success.
Apple could, of course, generate some excitement among shareholders by increasing its stock buyback program, as Carl Icahn is demanding. The company now has over $150 billion of cash and investments on its balance sheet. But until Apple introduces a new product - whether a watch, TV or other gadget - investors will continue to probe for soft spots.
