Apple Inc. (NASDAQ:AAPL) no longer has the ability to captivate the market with its new products according to new research on the company’s iPhone sales. A report from Consumer Intelligence Research Partners quoted on Appleinsider.com reveals a trend that could leave Apple Inc. (NASDAQ:AAPL) quite poor on the margin.
According to the report, estimates suggest that 52 percent of the smart phones Apple Inc. (NASDAQ:AAPL) sold in the quarter ending June 30 were iPhone 5 models. The model’s sales appear to have solidified at around half of all iPhone sales, a poor comparison to the near 75 percent share the iPhone 4S commanded during its tenure at the top.
Apple Inc. (NASDAQ:AAPL) charges a lot more for its premium smart phone than it does for the couple of older models it continues to sell. The increased presence of older models in the product mix explains some of the pressure on the firm’s gross margin in recent earnings reports. Apple Inc. (NASDAQ:AAPL) faces a large amount of problems, the changing product mix is just one of them.
Across the entire Apple nexus, product mix is becoming a problem. The release of the iPad mini last year resulted in increased cannibalization of the company’s main iPad line. This is one of the reasons it is often argued that the release of a budget iPhone would be bad for Apple Inc. (NASDAQ:AAPL). The company already sells cheaper phones, and it looks like they’re taking away from the company’s major line.
Race to the bottom
The causes of the Apple Inc. (NASDAQ:AAPL) change in product mix are difficult to discern. Perhaps it’s because of the increased presence in developing markets, disappointment with the iPhone 5, perhaps the perceived quality difference between the models isn’t as great as it was in the last generation.
The problem is that whatever the cause, none of these trends appear to be changing. It seems there are few revolutions left in the smart phone world, with the iPhone long after introducing most of the big differentiators. Smart phones are stagnating, and Apple Inc. (NASDAQ:AAPL) is going to see its margins crushed.
Apple Inc. (NASDAQ:AAPL) is set to release its earnings report for its third fiscal quarter on Tuesday after the market closes. The company’s product mix is likely a contributor to the lower guidance the company is bound to give in the release..