Apple’s iPhone 5 revived sales of the Apple smartphone segment with sales at a mammoth 43.5 million units in 4Q2012, y/y growth of 22.6%. A sign of worry for Apple investors can be consumer preference for the low value iPhone 4 and 4s. This can be either because consumers favor the iPhone 4/4s over the iPhone 5 or the iPhone no longer warrants the high margins it used to. I believe it is a combination of both factors with consumers’ disinterest in the lackluster iPhone 5 being the dominant reason. The iPad mini saw a lot of favor from consumers, but according to the research firm this could have also come at the cost of an iPhone 5 upgrade. The slow economy has significantly hampered luxury spending in Europe and America, so consumers were at times left with a choice between an iPhone 5 upgrade or the iPad mini. The lower margins on the mini are already a sign of worry for unrealistic Apple margins.
Nokia has gained some momentum with its Asha and Lumia series, but there is still a long way to go. Microsoft’s Windows 8/WP8 platform will be the key to the long term market share of Lumia. This is because the strength of the entire ecosystem is fast becoming a key requirement for hardware success. Apple remains a global force in the smartphone industry but faces threats from declining margins and competition from high performance and lower priced Galaxy devices. The company will have to choose between a lower priced smartphone and launching new products, such as the much rumored Apple TV, to drive future growth.
The article What These Numbers Mean for Investors originally appeared on Fool.com and is written by Mohsin Saeed.
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