By Therese Poletti, MarketWatch
The Macintosh Classic, one of Apple’s earliest personal computers.
SAN FRANCISCO (MarketWatch) — Could Apple Inc. be repeating the scenario it experienced in the 1980s, when cheaper personal computers started to take hold, and the Macintosh became a far smaller part of the PC market?
It’s an interesting question to ponder as Wall Street grows increasingly concerned over Apple’s
iPhone saturation, its higher premium prices and its current lack of presence in emerging markets, where many Android-based phones are becoming popular.
This occurred to me on a recent vacation, when I spent a few days in Miami. At the tech-infused New World Symphony hall, which had giant digital screens all around, a large number of people were taking photos or videos of the special performance with Samsung Galaxy smartphones and other devices using the popular Android operating system from Google Inc.
When will the next iPhone arrive?
Apple plans to begin production of a new iPhone, according to sources.
This is only anecdotal of course, but it seemed like a sharp contrast to the iPhone’s seeming dominance on the West Coast. And with Miami being a major gateway to Latin America, it may be another indicator of the strides that Android has been making outside the U.S., especially in emerging markets, where most analysts are seeing the biggest growth opportunities.
A possibly preposterous notion, some investors might counter, given the fact that Apple sold a record 47.8 million iPhones in the fiscal first quarter ended Jan. 31, compared to 37 million in the year-earlier quarter. Read: Why the new iPhone can’t lose.
Another statistic is more sobering — the Android platform accounted for about 69% of all smartphones sold last year, with unit shipments more than double from the previous year, according to IDC. Apple’s shipments rose a respectable 46%, but its global market share remained stuck at about 19%.
Analysts also remain concerned about Apple’s current product lineup not generating as much excitement among both consumers and investors as it has in the past. And as some press reports also noted in the last few weeks, March is often product launch time for the company, but this March went by without a peep from its Cupertino, Calif., headquarters.
A year ago in March, for example, Apple introduced the new iPad.
Wall Street, which has grown more negative with every dip the company’s once-high flying stock makes, is, as typical, obsessed with what’s next. Goldman Sachs analyst Bill Shope, who still rates Apple a buy, wrote as diplomatically as possible in a note where he removed the company from Goldman’s Americas Conviction List on Tuesday.
“The company’s most recent product cycle is not driving the near-term market share momentum and new user growth we had anticipated,” Shope wrote. “While we still believe these issues can be remedied with the upcoming product cycles in the second half of this year, these products need to be hits to reignite the stock’s momentum. Unfortunately, there is still considerable uncertainty around the timing and impact of these products.” Apple’s shares closed at $431.85 on Wednesday.
Also on Tuesday, Jefferies Co. analyst Peter Misek released a long analysis on Apple and the smartphone market, in which he concluded to clients that Apple’s “iPhone profits likely peaked in calendar year 2012.”
As the chorus on Wall Street could not seem to get much worse, The Wall Street Journal reported that Apple is planning to refresh the iPhone later this year, but dismayed investors with the possibility that the new iPhone will be similar in size and shape to the iPhone 5. Samsung and some of its Android rivals are now offering smartphones with even larger screens.
“We do feel that the screen size issue creates a major gap in Apple’s product portfolio, which likely will not be remedied until the iPhone 6 launch, which we expect in 2014,” Misek wrote in his analysis of the three tranches of the smartphone opportunity. He concluded that the developed markets are oversaturated, and that a lower cost iPhone, should Apple unveil one as many are hoping, would still be too expensive for the other two emerging-market arenas.
“The low-cost iPhone priced at $350-$450 may be too expensive to address tranche #2 with estimated ASP [average sales price] of $187, and that most of the incremental smartphone growth will come from tranche #3 with an $87 ASP,” Misek wrote. Tranche #2 refers to China, Russia, and Latam, and the third area is India, the rest of Eastern Europe, the rest of Asia and the rest of the Middle East. Read about why the Apple-China showdown isn’t over.
With Google’s lower cost licenses for Android, Apple the innovator is starting to see the typical disruption cycle that hits tech leaders, while rivals offer “’good enough’ smartphones at attractive prices to higher-end units with compelling designs and features,” he added.
Could this be Apple vs IBM Corp. and the PC clones all over again? It’s way too early to say, but it’s a point in history that may be worth revisiting.
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