It was the usual story when the iPhone 5 hit the stores in September, with the die hard fans queuing for hours to get their hands on a coveted handset as soon as they were released at midnight. Demand for any new Apple product is high, but the launch of the iPhone 5 so close to the peak sales period in the run up to Christmas has led to shortages in the stores, a tumbling share price and increased competition from other brands trying to capitalize on the supply problems Apple are experiencing.
In the run up to Christmas, Apple has projected sales of 49 million iPhone 5 handsets worldwide. This level of demand is unprecedented in the telecommunications market and is a combination of the demand for the new handset as well as increased demand from current smartphone users who are coming to the end of their existing contract and looking to upgrade to the new iPhone 5. This is a typical pattern in the smartphone world but as now over half of us own a smartphone, the numbers this time round are far bigger.
Worries surrounding the supply issues which Apple are having with the iPhone have spilled over into the share price, which has fallen 13.5% since just before the iPhone was launched in September. The concern of many investors is that if users are ready to upgrade their mobile phone and an iPhone 5 is not available, they will not be prepared to wait until stock becomes available and will simply switch to an alternative handset made by Nokia or Samsung. Apple’s projected sales figures for the first quarter of 2013 remain high, but industry experts tend to agree that they are overly optimistic. The company is also still struggling to bounce back from the death of its charismatic founder Steve Jobs, who was seen by many as the face of the brand.
Up until now, Apple has stood head and shoulders above competing brands in terms of functionality and desirability of their handsets. Recently however Apple have been involved in a lengthy legal battle with Samsung, who are accused of copying some of Apple’s functions on their iPhone and it is certainly true that to a lay person, it is difficult to see that the Samsung phones differ that much from the Apple handsets. Nokia have also launched their Lumia range of phones in a huge blaze of publicity and are hoping to steal back some of Apple’s dominant market share.
Apple’s success has been built on the fact that it has had over the past decade a constant stream of innovative designs and products. First came the Mac and the iMac, then the iPod, the iPhone and the iPad. Apple’s continued success depends very much on whether they can continue to be ahead of the pack with new product development, while at the same time resolving the supply issues with the new iPhone 5.