Having customers excited about your new line of products doesn’t seem like it should be a problem, but it’s one that tripped up Apple’s earnings last quarter.
Consumers held off buying the iPhone ahead of an anticipated refresh in the coming months, when Apple is expected to unveil a new model of the immensely popular smartphone.
“Our weekly iPhone sales continue to be impacted by rumors and speculation regarding new products,” Apple CFO Peter Oppenheimer said during the company’s earnings call yesterday, later adding “we think this has caused some pause in customers purchasing.”
Investors were disappointed to see a slowdown in Apple’s rampant growth – its market value hit a staggering $500 billion in March – but the company’s numbers were still healthy. It made $8.8 billion on sales of $35 billion during its fiscal third quarter, numbers lower than some analysts had expected. It sold 26 million iPhones, 17 million iPads, 6.8 million iPods, 4 million Macs and 1.3 million Apple TVs.
Apple’s shares dipped about 5 percent in after-hours trading following its earnings report yesterday, and were down about 4 percent this morning.
The top brass in Cupertino is keeping quiet about its upcoming device unveiling, but there have been the usual cluster of rumors about what the next generation of iPhones might look like. This week, Reuters reported that Apple may change to a smaller 19-pin connector, a design change that would make consumers’ existing iPhone accessories incompatible with the new model.
Speculation has also surfaced that Apple planned to use a thinner touchscreen that integrated touch sensors with the display itself. There have been reports that Apple will come out with a cheaper version of the iPhone targeting a more budget-conscious segment of consumers, rumors of a downsized iPad and some talk that the company may finally launch an iPhone with T-Mobile USA.
As is always the case when talking of the goings on in Apple headquarters at One Infinite Loop, none of these reports have been confirmed by the company. The most recent whispers have it that Apple will come out with its new products in mid-September, but Tim Cook and his team may be the only ones who knows that for sure.
One thing is certain, though. A new round of iPhones means consumers will rush in to buy the devices from their wireless provider of choice, and operators will have to foot the bill for the phones’ heavy subsidy costs.
Companies like AT&T and Verizon Wireless have shown signs that they’re getting fed up with emptying their pockets for Apple’s success, and are making it harder for customers to upgrade to costly new handsets like the iPhone. That change could hit also hit other smartphone manufacturers which have long relied on the subsidy model to get handsets off store shelves.
AT&T said yesterday that reduced subsidy costs contributed to record-high profit margins in its wireless business, which made $4.9 billion on sales of $16.35 billion. Those numbers came as its iPhone sales inched up less than 3 percent year-over-year to 3.7 million.
Some are testing whether U.S. consumers are open to paying full price for the iPhone. Cricket Communications and Virgin Mobile USA recently began selling a prepaid version of the iPhone that doesn’t come with subsidy discounts, but does offer cheaper monthly plans.
Neither provider is talking about how well the devices are selling, but more information could become available in their upcoming earnings. Sprint, Virgin Mobile’s parent company, may release details about its prepaid iPhone sales during its earnings tomorrow. Cricket is unlikely to disclose any figures until parent company Leap Wireless International reports its earnings on Aug. 6.
