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Apple against the ropes as sales flatten

Apple might be celebrating 30 years of the Macintosh (see - Macintosh: my part in its triumph) but that’s not something that cuts much ice with the stock market. A slight dropping off of iPhone sales saw Apple’s share price shaved in after-hours trading, despite the fact that the Cupertino company is still returning the sort of numbers that others in this market can only dream of.

Sales in the final quarter of 2013 actually rose to a record $57.6 billion. It sold 51 million iPhones too, 3 million more than the year ago quarter. But these only pushed its revenue up by a paltry single digit 5.6 per cent with profits remaining flat at $13 billion.

Apple saw its valuation drop by $40 billion as investors weighed up the implications of its ‘slowing’ growth.

Apple’s shareholders are used to double digit revenue growth so the flattening sales numbers plus guidence for the next quarter set well below analysts’ forecasts adds up to a disturbing turn of events.

What gives? Where Apple seems strangely to have missed a trick is in exploiting a clear demand for larger smartphone screen-sizes - an area which Samsung, with its larger Note smartphones for the thick-of-finger, has not been slow to grasp (as it were). The also-ran vendors have produced larger sizes too.

It’s as if, having invented what Jobs regarded as the perfect, iconic smartphone format - ideal for single hand dialing - the company is stuck in a groove it can’t exit for fear of upsetting the founder. Well, he can’t shout at you now… courage!

It actually makes perfect sense for Apple to make a larger iPhone for those who can really make use of the larger screen size as applications and use cases become more demanding, especially business use cases.

I was impressed a year or two ago when the man who came to do an energy audit on my house produced a Note and then used the stylus to box tick his way through the process. The Note was clearly just the right size as he moved around the house and in and out of different lighting conditions. It looked ‘right’ in a way the iPhone just wouldn’t have.

I’ve been expecting Apple to round to the bigger phone for several years… perhaps this time around it will.

Follow the writer on Twitter @ ian_TTV

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