OK, Can We All Now Please Agree That Apple Screwed Up With The iPhone?

Mary DeckerApple, a year ago, comfortably in front…

Three things went wrong in the disappointing quarter Apple just reported:

  • Economic weakness in Europe and other countries hammered sales in those regions
  • Apple’s “average sale price” (ASP) for both iPhones and iPads is dropping, because the company is now selling a bigger percentage of the low-priced version of each product versus the state-of-the-art high-priced version, and
  • Sales of the iPhone declined for the second straight quarter because customers are already waiting for the new iPhone to be released this fall.

Of these problems, Apple really only has control over the last one.

And given what happened this quarter, can we all now please agree that Apple has made a mis-step in the past year with respect to the iPhone?

Last year, you will recall, two critical things happened with respect to iPhone product releases.

  • First, Apple switched (or delayed, depending on who you listen to) the launch of that year’s new iPhone to the fall instead of the June releases it had had in prior years. This “delay” took many people by surprise, and it also kept the then-current version of the iPhone, the iPhone 4, on the shelves for three months longer than people had expected. This contributed to a sharp fall-off in iPhone sales in the summer months, as the “4” began to feel stale and customers waited for the new version of the iPhone, which almost everyone assumed would be the “iPhone 5.”
  • Second, when Apple finally released the new version of the iPhone, it was not the iPhone 5–it was the iPhone 4S, which didn’t look or feel much different than the iPhone 4. Although the iPhone 4S was a great phone and sold very well initially, it was soon leap-frogged in some respects by new, bigger phones from Samsung and others. And now, with Samsung’s very-well received Galaxy S3 out there, the current iPhone looks decidedly small and old. So much so that the “air pocket” in iPhone sales appears to have started one full quarter early this year and will therefore wallop both the June quarter and September quarter, while customers wait for the iPhone 5.

Now, at the time, when Apple “delayed” last year’s iPhone release and then released the iPhone 4S instead of the 5, the Apple faithful immediately concluded that this had all been long-planned and reflected Apple’s usual brilliance and perfection and so forth.

And that may be true — that it was all planned.

But, planned or not, it is still looking like a significant screw-up.

By changing the release date of the iPhone and then releasing merely a “refresh” instead of a revolutionary new product, Apple really opened the door for Samsung and other manufacturers to leapfrog it. And, by some accounts, with the Galaxy S3, that’s exactly what Samsung has done.

Yes, when the iPhone 5 is finally released, it may be so staggeringly amazing that it will blow away the S3 and all other phones–and everyone who is not buying iPhones now will rush out and buy one and Apple will recoup all the sales it is losing now, in the six months leading up to the launch.

If that happens, the Apple faithful will be vindicated, at least temporarily. But it won’t then be long before Samsung, et al, release their next-gen phones, and these may once again leapfrog the iPhone 5. 

In other words, the one-year lead over the competition that Apple’s iPhone always used to enjoy may now forever be a thing of the past.

So, from my perspective at least, it seems safe to say that Apple screwed up a bit over the past year in the iPhone product line.

It missed a step, and it opened the door a crack for the competition.

And for these six months, at least (if not longer), it will be paying the price.

SEE ALSO: Well, It Seems Like One Of Apple’s Big Risks Is Now Hitting Home

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