Sci-Tech-Talk: Apple to release financial results as it battles stiff competition

By JIM ALGAR, United Press International  |  Jan. 20, 2013 at 6:31 AM
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With recent reports Apple may have cut back on orders for some iPhone 5 components, rumors ran rampant of a less than healthy demand for what has to be considered Apple's flagship product, raising a nagging question: Has the most valuable company on earth finally stumbled?

Analysts weighed in with estimates sales of the iPhone could see a drop of 5 million units a quarter in 2013, with a follow-on drop in Apple's stock price, currently hovering around $500 after topping $700 last year.

Once acknowledged as the leader in the smartphone and tablet arenas with the iPhone and iPad, competitors have begun to successfully claim a large chunk of market share in both areas.

Lower-priced tablets running Google's Android have undercut the expensive iPad to sell well while Samsung's Galaxy S line of smartphones has recently overtaken the iPhone as the market leader.

With Apple set to report its fiscal first quarter earnings this week, a consensus view of Wall street analysts' estimates has settled on a 3 percent decline from last year.

Many analysts have been talking of lowered expectations for some time, and if Apple does report a drop in profit, it will mark its first decline in nine years.

Higher costs incurred in its new products, including the iPhone 5 and the iPad mini, are reportedly taking a toll on Apple's profit margins.

Both devices were brand new designs requiring new components while the previous iPhone 4S and the larger iPads were evolutionary versions of existing Apple products.

And as if competition on the hardware front wasn't enough, Apple this week found itself in a new battle in the digital content arena, as Amazon announced an assault on iTunes, long a cash cow for the Cupertino, Calif., company.

Amazon is offering up a version of its MP3 music store accessible to owners of Apple iPhone and iPod devices.

Previously, users of the Apple devices could not buy Amazon's MP3s but the new version of Amazon's digital store makes that possible, putting Amazon and its frequent discounts in direct competition for music downloads with iTunes.

That competition could weaken the loyalty of Apple users used to buying their music from iTunes, one analyst said.

"If Amazon breaks the link between iTunes and Apple hardware, much of what ties these devices gets eliminated and it makes a Samsung phone or Android device or Microsoft device a much more compelling choice," Rob Enderle, principal analyst at the Enderle Group, told MacNewsWorld. "The problem here isn't the loss of music revenue. It's the fact that Apple's customer base may become more and more willing to split."

That loyalty of the owners of Apple devices, at times seemingly approaching fanaticism, has long been a linchpin of Apple's success -- and to its financial health.

But with ever increasing choices and sophisticated alternatives in both the hardware and content areas, Apple's financial health and performance are being watched -- and discussed -- more closely than ever.

All eyes will be on Wednesday when Apple is set to roll out its latest financial figures and analysts put away their crystal balls in favor of their Monday-morning-quarterback hats.

Has Apple stumbled, or is it inside the 10 and threatening to score yet again?

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