The market wasn’t impressed by Apple Inc. (NASDAQ:AAPL)‘s WWDC powwow with developers this week. Investors wanted more than a predictable iOS update, a Pandora knockoff, and a toilet paper roll-shaped Mac Pro.
Apple stock closed lower on the week in response, but then things got interesting. Reports surfaced later in the week that Apple Inc. (NASDAQ:AAPL) was working on the kind of the stuff that could eventually move Apple stock higher. We’re talking about bigger, cheaper, and more colorful iPhones.
If that’s true, Apple Inc. (NASDAQ:AAPL), you have my attention.
After more than five years of iPhone loyalty, I switched last month. I bought the Samsung Galaxy S4. I wanted the bigger screen that would make my smartphone more functional. I wanted the features that Apple was complacent enough to let someone else introduce first. Just the sheer joy of not having to toggle between two different keyboards to peck out text with letters and numbers made it an easy decision.
However, buyer’s remorse has started to creep in over the past five weeks. Google Inc (NASDAQ:GOOG)‘s Android has taken global market share at everyone’s expense, but it’s not perfect. I do miss iOS, and while at first it seemed like I was merely facing an awkward learning curve — like getting to know the nuances of a new lover after growing comfortable in a five-year relationship — I would have no problem returning to my old flame if I could get an iOS brain in the body of an S4.
I would apologize profusely, and by that I mean I would pay the early-termination fee to my wireless carrier for the switch if Apple Inc. (NASDAQ:AAPL) could give me the form factor of a larger phone with the iOS 7 updates promised later this fall.
I strayed, but largely because Apple Inc. (NASDAQ:AAPL) wasn’t listening anymore.
The “one size fits all” and black-or-white approach that may have served Apple well in its days of market domination no longer works. Apple has a fierce competitor that has emerged as the operating system of the masses. Google Inc (NASDAQ:GOOG)’s Android commands 52% of the smartphone market in this country, according to comScore’s latest tally. Android’s market share is even greater overseas.
Apple can’t rely on these prolonged stretches between devices anymore. It’s no longer ahead of the pack. It’s no longer putting out iPhones and daring everyone else to catch up in the coming year. Apple is the one behind the trend where size — and price — matter. Apple stock has fallen 39% since the last iPhone hit stores. Do you think that’s a coincidence?
There had to be nothing more embarrassing for Apple in its most recent quarter to find that just half of the smartphones it sold were iPhone 5 devices. Buyers were more interested in saving $100 or $200 by going back a year or two in the iPhone family tree. Investors lamented the margin contraction, but there was something far more damaging making itself evident. It was a brazen one-two punch of a statement by the marketplace that let Apple know money matters and that its evolutionary upgrades aren’t enough.