One thing you can pretty much "bet the bank on" is that Apple's stock in going to drop the day after any Apple's Earning Call. The call yesterday was no exception. The stock dropped over 8% in after hours trading. Why?
The "Why" is the topic of much speculation on numerous blogs, podcasts and news reports last night and today. The two top reasons seem to be the fact that Apple "only" sold 51M iPhones versus the street's estimates of around 55M. The other what that the forecast for the current quarter (Jan-Mar 2014) was lower than expected by the street.
I believe both guesses are "true" but for a possibly a different "root" reason.
All markets approach "saturation" at some point. Automobiles have been there for many years. TV's have been there for at least 3-5 years. As market saturation is reached several things happen. First, the number of manufacturers shrink. Think of the diminishing market presence of Motorola, HTC, Blackberry as examples. Second, the number of world wide unit shipments flatten. Worldwide smart phone unit sales from a number of analysis firms support this. Third, the usability life-span of the product being shipped gets longer and longer. Cars are now expected to be usable for 10-20 years. TV's are lasting 5-10 years. By the same token, many people who have iPhone 4s's or Samsung Galaxy S3's are still very happy with their phone and feel no need to go spend $200+ subsidized (or $600 to $900 unsubsidized) to buy the latest phone. Vendors need to supply a strong "emotional reason" to buy a new phone now. Both Apple and Samsung have so far failed to do this is a sufficiently strong manner to restore a strong upward unit growth rate for either company.
Many analysts and consumers have been unimpressed with Apple's iPhone 5, 5c and 5s. While the screen did grow from 3.5" to 4.0" from the iPhone 4s, it only grew longer, not wider. The switch to a metal back from a glass one was a positive step from a user breakage perspective and getting lighter was a nice plus, but Apples' sales would have grown overall regardless of either of these "improvements" as there were still large world-wide markets that Apple was not even selling in at the time of the iPhone 4s.
I applauded Apple's introduction of the iPad Mini with Retina last December for one key reason. They gave me hope that they had figured what many of us already know - consumers wanted a 7.9" iPad that had "exactly" the same processor, camera and other "internals" as the larger 9.7" iPad. Consumers didn't want to "step down" in features "just because" they were buying an iPad with a smaller screen. Most HD TV's that you buy have the "same internals" and feature sets, you are just picking your preferred screen size and the manufacturer is not forcing you to give up on features based on screen size. Samsung hasn't figured this "feature parity" importance out at all from what I see in their broad phone line. If you have smaller hands, or just want a smaller 4" screen phone for whatever reason, but with the "same internals" as their larger 5" Galaxy 4s, forget it! Samsung doesn't have it to sell to you. Neither does Apple.
I am still hopeful that what we have seen Apple do with the iPad line at the end of 2013 will carry over into the 2014 iPhone line. For this to happen, Apple needs to introduce a slightly larger screened 4.5" phone (in about the same footprint as the current iPhone 5s) and a larger "Phablet-sized" iPhone at around 5.5", both with identical internals and feature sets, so users are only deciding on which screen size they prefer - exactly as they do with the iPad Mini with Retina vs. the iPad Air. Doing these two screen size distinct iPhones will allow Apple to add the "sweet spot" of the larger "Phablet" sized iPhone to their product portfolio that Samsung has with their Galaxy Note series, that is sorely missing from Apple now. Both of these new iPhones will give more consumers a strong emotional reason to upgrade to a new iPhone in late 2014 through 2015. If Apple doesn't, I believe iPhone unit growth will flatten further, if not outright decline, even with China Mobile.
Some people will think that I'm suggesting that Apple needs to copy Samsung. I'm definitely not as Samsung has NOT done what I am suggesting. I'm suggesting Apple be "first" in the smart phone space to duplicate what Apple was "first" in the tablet space to do - give consumers their choice of screen size WITHOUT any change in electronic internals (other than battery size) or feature set.
What do you think Apple needs to do to return to a more rapid iPhone unit growth rate while maintaining their brand identity and margins?