iPhone Fever Is Fading
Apple's once unwavering grasp on the smartphone industry is showing more signs of weakening, as it cuts iPhone orders by about 50 percent "due to weaker-than-expected demand."
Apple's once unwavering grasp on the smartphone industry is showing more signs of weakening, as it cuts iPhone orders by about 50 percent "due to weaker-than-expected demand." Citing unnamed sources, The Wall Street Journal reported the news on Sunday night after fan boy blogs had been buzzing about the waning enthusiasm for Apple's magical glass and aluminum device for weeks. "Apple's orders for screens for the January-March quarter, for example, have dropped to roughly half of what it had previously planned to order, two of the people said," explained WSJ's Juro Osawa. "The U.S. company has also cut orders for components other than screens, according to one of the people [familiar with the situation]."
News of the iPhone's decline comes as Samsung continues its bull run on the industry. As the Galaxy line of smartphones gains in popularity and the company cements its dominance in the TV business, Samsung suddenly finds itself making more money than Apple, and its earnings from smartphone sales have doubled in the past year. Android devices in general are trouncing Apple in terms of market share, too. A November study from Gartner showed that Android's market share has jumped to 72 percent, while iOS devices sunk to just under 14 percent. Even though Apple sells fewer iPhones than Samsung sells Galaxies, it makes more money off of each unit. But then when you realize that Apple's selling half as many iPhones as it expected, the profit margins don't seem nearly as impressive.
Faced with a daunting reality of sinking sales, Apple is also coming to the realization that its very expensive patent litigation escapades against Samsung might be for nought. Even though the company won a billion dollar settlement by convincing judges that Samsung ripped off its interface design, a judge in December denied Apple's request to ban the sales of Samsung devices. And while Samsung certainly won't be thrilled to pay the massive settlement to Apple, as long as it keeps its smartphones and tablets in stores, its profits will erase the loss. There's also evidence that Samsung is emerging as the most popular smartphone brand for youths, meaning that Apple might miss out on a generation of potential iPhone users.
Let's get real, though. Even if Apple is losing steam, and the iPhone isn't the best-selling, most popular gadget on the market, the company will be fine. The company's lost almost $200 off its stock price in the past four months, but it's still the most valuable company in the world.
Update 2:00 p.m.: The Wall Street Journal report about waning demand has since pushed the company stock down below $500, a sign of Apple's rumor economy turning against it.