“In business, as in life, there are things you can try to control, and things you can’t control at all. Apple’s third quarter fiscal report on Tuesday demonstrated the dichotomy,” Tiernan Ray reports for Barron’s. “”
“Apple sold 31.2 million smartphones in the quarter, up 20% year over year, and more than Wall Street had projected. Also very nice. But the average price declined 4% from the prior-year quarter, and fell from the fiscal second-quarter level, as many buyers sought out the cheaper iPhone 4 and 4S, versus the more expensive iPhone 5,” Ray reports. “Apple sold fewer iPads than expected, 14.6 million versus expectations of about 17 million. That was in part because the company didn’t refresh the iPad this spring as it had a year earlier with a high-resolution model, according to CEO Tim Cook. That was clearly a case of Apple just failing to come up with the goods necessary to spur another upgrade wave that would ensure the kind of cadence that Wall Street desires.”
Ray reports, “An especially dour report from Citigroup’s Glen Yeung on Thursday suggested in fact that there is nothing Apple can control. The market for smartphones will be completely saturated by next year in the U.S. and other developed markets, he opines… One thing was missing in Yeung’s grim assessment—the same thing many miss because they are focusing on Apple’s hardware units. Apple controls a platform, one of the two dominant platforms in mobile computing, its iOS software, which is an effective duopoly with Google’s Android. In the category of software and services, Apple sold $3.99 billion last quarter, which was up 25% from the year-earlier quarter. That was slower than the 37% growth recorded last year, but still impressive for a business running at $16 billion annually.”
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