Apple iPhone 5 orders cut in half

[Keith_W]

As far back as the launch of the iPhone 5, I said that it was massively underwhelming and predicted that this would be the end of Apple.

By December, industry pundits were agreeing with what I said all along, with rumours that the iPhone 5 was not selling so well. The share price drop in AAPL was precipitous, wiping off more than a quarter of the value of the company.

A few days ago, the Wall Street Journal more or less confirmed that demand for the iPhone 5 was weaker than anticipated, with a report that Apple has slashed orders for LCD screens by half:

Apple Inc. has cut its orders for components for the iPhone 5 due to weaker-than-expected demand, people familiar with the situation said Monday.

Apple's orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order, two of the people said.

The Cupertino, Calif., company has also cut orders for components other than screens, according to one of the people.

Apple notified the suppliers of the order cut last month, the people said.

The move indicates that sales of the new iPhone haven't been as strong ...

I would like to point out to forum members who kept telling me that the share price would go up ... that I have been right all along. Who was it who told you to sell your Apple shares when they were $700? You do expect a few little blips where the share price rallies, but everyone now sees that the emperor has no clothes. The share price will slide below $500 and go even lower, until Apple shows some signs that it can compete outside the court room.

 

[XV-1]

Ha ha Keith.

You must be loving this. Can't say I am a fan of Apple as I type on my wonderful Google nexus 7.

Apple must be getting desperate in having the William's sisters as part of the advertising for the iPhone 5.

 

[audioguy]

Apple must be getting desperate in having the William's sisters as part of the advertising for the iPhone 5.

Because .........?

 

[amirm]

I am buying whatever stock Keith suggests from here on.

 

[Steve Williams]

I am buying whatever stock Keith suggests from here on.

I'd still buy Apple

 

[amirm]

I'd still buy Apple

I do too. Everyday. Mine looks like this though:

I am trying to keep the doctor away.

 

[Steve Williams]

buy low, sell high

 

[audioguy]

buy low, sell high

Oh!!! So THAT'S what I have been doing wrong.

 

[KBK]

buy low, sell high

Plant your corn early.

 

[amirm]

http://www.usatoday.com/story/money/markets/2013/01/14/apple-shares-plunge/1832291/

Apple's stock plunged below $500 on Tuesday as investors worried that the premium prices the gadget maker has enjoyed are under attack amid weaker-than-expected demand for its latest smartphone.

The latest drop in Apple stock, falling to $487 a share, was triggered by news that orders for parts that go into the iPhone 5 have been cut because demand for the phones is weaker than expected, according to a report in The Wall Street Journal. The brutal stock decline, putting it down nearly early 30% from its high, is the latest sign that Apple's untouchable position is under attack as consumers buy products from competitors or don't rush to upgrade to the latest version of an Apple product.

The WSJ report, which cited unnamed people familiar with the matter, said orders for iPhone 5 screens for the January-March quarter are about half what was expected. Orders for other types of components have also been reduced, the WSJ article said. The Journal said it was told Apple notified the suppliers of the order cut last month.

Apple didn't immediately return an e-mail seeking comment Monday.

Meanwhile, analysts aren't all that upbeat on Apple's earnings announcement, due later this month. Analysts expect the company to earn $13.46 a share in the December 2012 quarter, down 3% from the $13.87 a share it earned in the December quarter of 2011, says S&P Captial IQ. And some analysts think those expectations might be too high.

Apple's reputation as a fast-growth company appears to be waning. Apple has missed earnings estimates in three of the past five calendar quarters, including the past two straight, says FactSet. And Apple might come up short on revenue forecasts on weak iPad demand, says Mizuho Securities analyst Abhe Lamba in a report to clients.

Apple's woes come as the company has been facing increased competition from Samsung Electronics and other makers of smartphones that run Google's Android operating system. Meanwhile, shares of Nokia, the Finnish maker of the Lumia handset that runs the Windows Phone operating system, have rocketed 17% this year.

South Korea's Samsung, which sells Android-based phones at various price points, has already overtaken Apple as the world's largest smartphone vendor by market share. Over the weekend, Samsung revealed global sales of their line of Galaxy S smartphones topped 100 million. The Galaxy S III sold particularly well, topping 40 million in sales in seven months.

Android devices accounted for 75% of smartphone shipments the three months ended in September, up from 58% at the same time in 2011, according to research firm IDC. The iPhone's share stood at 15% in September, up from 14% the previous year.

Google says more than 500 million Android devices have been activated since the software's release four years ago. By comparison, Apple had sold about 271 million iPhones through last September.

Contributing: USA TODAY's Kim Hjelmgaard, The Associated Press

 

[amirm]

It was hard to imagine headlines like this just a year ago:http://www.wpcentral.com/teenagers-apple-no-longer-cool-microsoft-surface. Not sure about the optimistic view for Microsoft but the Apple bit could be damaging long term if true.

Teenagers: Apple no longer cool, Microsoft Surface is in

Apple is done and Microsoft's Surface is now down with the kids, according to a report by Buzz Marketing Group. The company specialises in youth marketing and has discovered that younglings are more into Microsoft's Surface tablet than Apple's competing hardware. This might be proof to show just how similar new generation of hardware is to predecessors, with little to excite consumers - teens in particular.

Microsoft has innovated with Windows 8 and its Surface RT tablet, which sports an attractive design and boasts an array of features. It has been a hit with both consumers and ourselves. But why has the younger demographic shown more interest in Microsoft's product than the trendy Apple? Buzz notes that Apple is now too popular to be popular and teens are into replacing iPhones and iPads with Samsung Galaxy smartphones and Microsoft Surface tablets.

"Teens are telling us Apple is done. Apple has done a great job of embracing Gen X and older [Millennials], but I don’t think they are connecting with Millennial kids. [They’re] all about Surface tablets/laptops and Galaxy."

The teenage demographic is an important one, which Nokia highlighted back when the company was joining forces with Microsoft on supporting Windows Phone. Should Apple be losing such mindset with young consumers could prove to be a slight dent in the company's sales numbers, with Microsoft picking up some points.

The software (and now hardware) giant has been jabbed by Apple in the past for being dull and not cool with consumers, particularly with the Mac vs PC commercials. With the refresh of Windows and other products and services, it's reports like these that will progress being made by Microsoft to rejuvenate its brand. Windows 8 is now alive with Live Tiles that update with real information, as well as improved user interfaces that incorporate bright colours and clever use of typography.

Could Windows and Microsoft be the new cool? We certainly believe so, and it would seem younger consumers are on the same wavelength.

 

[asiufy]

Crappy journalism, that's what that headline is.
The iPad outsold the Surface 20-to-1 last Christmas shopping season.


alexandre

 

[amirm]

Crappy journalism, that's what that headline is.
The iPad outsold the Surface 20-to-1 last Christmas shopping season.

alexandre

The study is widely reported. Here is Forbes:

Is Apple's iPhone No Longer Cool To Teens?

On the sliding scale of coolness, teens place most adults firmly on the uncool side. It goes without saying that no teen wants to show up dressed identically as the science teacher.

And unfortunately for Apple, this teen logic may also apply to smartphones. They don’t want to same device as their mom, dentist, and coffee barista. They want the latest, greatest phone that speaks to their generation. Samsung’s Galaxy and Microsoft’s Surface have recently introduced new and never-before-seen devices, whereas the first iPhone came out in 2007 (though new models are released each year).

Also working against Apple’s iPhone is the popular parent tradition to give their teens the old model when they upgrade their devices. Samsung and Android devices are less expensive, which makes it more likely that parents are willing to buy a new one for the teens, versus handing them a new iPhone. “There was quite some negative buzz about the iPhone 5 and the lack of a real incremental innovation, except for the screen size and weight, when compared to the 4S. So this has an effect on the originality component of coolness,” says Insites-Consulting’s Joeri Van den Bergh.

Ultimately, in the eyes of today’s youth, massive popularity has watered down Apple’s coolness. “Teens are telling us Apple is done,” says Tina Wells of the youth marketing agency Buzz Marketing Group. “Apple has done a great job of embracing Gen X and older [Millennials], but I don’t think they are connecting with Millennial kids. [They’re] all about Surface tablets/laptops and Galaxy.”

The signs that youngest smartphone audience has cooled on Apple have been steadily accumulating over the past few months. Apple, for instance, dropped several spots or remained flat on several teen brand opinion polls, including marketing agency’s Smarty Pants’ Young Love survey. And while 67% of affluent teens still say they intend to purchase an iPhone as their next upgrade, reports Piper Jaffray, Samsung pulls in second with a strong 22%. Perhaps more importantly is the fact that it was unthinkable a mere 12 months ago that any teen would prefer any phone to an iPhone if given the option.

There are several influencing factors contributing to this cool-off. “It’s really been a perfect storm,” says Wells. As Apple devices experienced several technological glitches, competitors have stepped up their game by offering innovative and cool products at lower price points. Samsung, in particular, has been assertive, including shipping 56.9 million units in the third quarter of 2012, nearly double the 26.9 million shipped by Apple, according to Strategy Analytics. The company is also playing hardball in the court of public opinion, according to an advertising executive who works with Samsung, “The litigation floodgates are open and Samsung definitely wants to go to war, so they’re more aggressive than ever with their media for that prized [youth] demographic.” To this end, Samsung has spent millions of dollars over the past few months on an advertising campaign that paints the image that the iPhone is for old people (parents and late adopters) and teens should move onto the “next big thing.” Another key strategy used by Samsung has targeted Apple culture — rather than the brand itself — to illustrate how absurd it is to wait in line for a smartphone.

Meanwhile, Research In Motion (RIM) is attempting to move back into the youth space, and has aligned with a few youth-oriented brands, including Extreme International, to develop Blackberry-specific apps and mobile programs aimed at 16-20-year-olds.

Still, teen marketing analysts say Apple’s fate lies more with itself than with what its competitors are up to. “Everything moves in cycles and you can’t rest on your past glory. You’ve got to evolve to maintain relevance. Apple just needs to focus on innovation and teens will come back,” says Wells.

Matt Britton of the youth marketing agency Mr. Youth adds, “Samsung and the Android platform is indeed a formidable competitor. But the interwoven ecosystem and flawless nature of Apple’s products will make its growth prospects pretty much a sure thing for the foreseeable future. Remember, the entire U.S. smartphone market has just passed 50% penetration, so both platforms have nothing but growth ahead of them.”

 

[asiufy]

Let me quote this interesting bit out of this last article

"And while 67% of affluent teens still say they intend to purchase an iPhone as their next upgrade, reports Piper Jaffray, Samsung pulls in second with a strong 22%"

67%, as in, 2 out of 3, would like an iPhone. Sure, Apple is not cool anymore, they're not selling to 100% of the population!
And c'mon, "strong 22%?". Ridiculous.
But it's easy to prey on the leader. Microsoft went through this (deservedly), and now Apple is getting much of the same attention. The press lives by articles such as this.


alexandre

 

[JackD201]

I've been observing one of my brothers who is a gadget freak. Basically just observing what features he is enjoying. From what I see, Samsung's new implementation of the stylus is THE factor. Who would'a thunk it? The stylus is cool again.

 

[rblnr]

A couple of counterpoints:

http://www.forbes.com/sites/markrog...t-punkd-on-apple-or-is-it-rotten-to-the-core/

http://m.seekingalpha.com/article/1002601

And a number of analysts have disputed the claim. Further, the iPhone apparently managed to outsell all other phones at the three major carriers in the recent quarter -- so they're in dire straits? We'll see Jan 23 when the numbers come out. The Forbes articles is definitely worth a read in any case.

I'd still buy Apple too.

 

[Steve Williams]

A couple of counterpoints:

http://www.forbes.com/sites/markrog...t-punkd-on-apple-or-is-it-rotten-to-the-core/

http://m.seekingalpha.com/article/1002601

And a number of analysts have disputed the claim. Further, the iPhone apparently managed to outsell all other phones at the three major carriers in the recent quarter -- so they're in dire straits? We'll see Jan 23 when the numbers come out. The Forbes articles is definitely worth a read in any case.

I'd still buy Apple too.

Buy low, sell high is what KeithW needs to know. I bought my Apple stock way back almost 20 years ago so I have a whole bunch of wiggle room so yes I would buy the stock