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Wed 5 Oct 2011 08:39 AM

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New Apple iPhone fails to wow investors, fans

New CEO Tim Cook falls short of creating buzz that Apple co-founder Steve Jobs once did

New Apple iPhone fails to wow investors, fans
New Apple iPhone fails to wow investors, fans

Apple Inc's newest iPhone left Wall Street and fans wishing for more than a souped-up version of last year's device, igniting a rare storm of criticism and disappointment on the Internet.

Newly minted CEO Tim Cook ably helmed his first major product launch [photos] without former boss Steve Jobs, but failed to ignite the sort of excitement and buzz that the charismatic Apple co-founder once did.

Expectations were high at this critical juncture, when Android phones by Samsung Electronics and other rivals are closing in on Apple's lead and the important holiday shopping season gets started.

Investors and fans, looking to be blown away by some amazing surprise, sent the shares down as much as 5 percent before they recovered with the market to close down 0.6 percent.

Cook, who took over from Jobs in August, and his executive team showed off a device that comes with voice recognition and a better camera, but looks identical to the last phone and does little to lift the bar for smartphones.

While the gadget wasn't as tricked out as some had hoped, analysts liked its voice-enabling technology that helps users vocalise everything from stock price searches to sending messages - more easily than on Android phones or Research in Motion Blackberries.

"It's been 16 months and all you've got is an A5 processor in the existing iPhone 4," said BGC Partners' analyst Colin Gillis. "It's a mild disappointment, but they're still going to be selling millions of units."

Some shareholders and analysts hoped for a cameo appearance by Jobs, now chairman. The pancreatic cancer survivor, who took his third medical leave in August, did not appear.

In some ways, Apple may have been a victim of its past success. Its launches are some of the hottest events on the tech calendar. Tuesday's "Let's talk iPhone" show marked Cook's unofficial debut since taking over from Jobs in August.

Analysts say it is more crucial than ever to sustain the popularity of its aging iPhone 4. Apple sold more than 20 million units in the third quarter ended June 25.

"It's kind of funny - if they have gone and called it the 5, the stock would have been fine, but they're calling it the 4S, which is a disappointment to some," said WP Stewart portfolio manager Michael Walker.

The iPhone, which accounts for more than 40 percent of Apple's sales, has been a success since it came out in 2007, making Apple into one of the world's leading consumer electronics companies.

On a brighter note, the company would seem to be making inroads into potentially pivotal new markets.

It said more than 90 percent of Fortune 500 companies are testing or using its iPhones and iPads, expanding its presence in a corporate market dominated by RIM. RIM shares trading on the Nasdaq stock market slid nearly 3 percent before ending 2.4 percent higher. Google shares finished 1.3 percent up.

The two-generation-old iPhone 3GS will be offered free, as long as users sign a contract. Analysts said that would help to expand its market in lower-end Asian and developing markets.

"Apple is hitting Nokia when it's vulnerable. How many billions of people in emerging markets would love to have an iPhone? These are a growing demographic," said YCMNet Advisors CEO Michael Yoshikami.

Tuesday's iPhone event took place at Apple Central - the same venue where the iPod first was introduced years ago - versus the larger, splashier venues of more recent choice such as downtown San Francisco's Moscone center.

Heading in to the event, many on Wall Street had questioned Cook's ability lead the company as Jobs did. In terms of stage presence, Jobs was a tough act to follow, but analysts say Cook acquitted himself well.

Twitter users were not impressed with the phone, though.

"Please note I will be selling some 'S' stickers for $0.99 so iPhone 4 owners have a cheaper upgrade option," wrote HAL9000 on Twitter.

Tomlinsonr tweeted, "I'll have a double helping of 'meh' with a side of 'whatever'."

The latest version of the iPhone comes as the economy slows and competition intensifies. People activate more than 550,000 Android-based devices - including tablets - each day.

Nielsen data shows the iPhone was No. 2 in the United States with a 28 percent market share, with Android at 43 percent.

Globally, iPhone shipments rose 9.1 percent in the second quarter while Nokia's plummeted more than 30 percent, handing the top spot to Apple with a market share of 18.4 percent, according to IHS iSuppli. Samsung, whose shipments grew faster, is coming on strong with a market share of 17.8 percent.

Despite disappointment online, analysts said the phone is superior to many rival offerings.

"Voice recognition has been on Google and Blackberry devices for years, but Apple will make it much more usable," said Morgan Keegan analyst Tavis McCourt.

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AR 8 years ago

Apple can and will launch the Iphone 5 but this is going to happen in 2012. The fact that the venue for the small press breifing was on the Apple campus was sufficient to tone expectations of want was coming. Apple never fails to make a big splash when it has a big announcement, and this was certainly not intended to be one.

opsecusa 8 years ago

Solid company, solid products, you can count on Apple to be there for you with good profit margins. A smart investor will pick Apple as part of his portfolio.

Jag 8 years ago

With Steve Jobbs gone, the Apple baloon is slowly but surely deflating.......

The vitality that Jobbs brought into Apple is gone. Subsequent product launches will only highlight his absence in a starker manner......

Ramy 8 years ago

Well with all my respect to all critics on the announcement but I personally that people have set their expectations too high, specially that the leaks around a "magical" new iPhone5 have been spreading all across internet for the past weeks.
The way I see it: "Clever move ..." what else do you expect a new phone concept every year? you need to manage the lifecycle of the product, cleverly while making sure to nourish customer's commitment to the brand. Would I throw my current iphone? NO
Am I thrived of what Apple has shown specially in terms of AI? YES and I am sure that this a small bit of what iPhone5 is going to carry in terms of enhancements and developments.
This is a desperate move from all people who have long been at some point jealous of the growth of the company and want to cease the opportunity to justify Jobs departure impact, as if a bet is on the table.
Well sorry to disappoint you but you ain't seeing further of your own nose, a revolution is under development for 2012

jb 8 years ago

I agree with Ramy totally. The reason why I stopped buying Nokia phones is because 4 to 6 months after I bought the unit, it is already old model since they keep rolling out new models very often. Why should I buy something expensive when it becomes an old model almost right after you buy it. Making the consumers wait at least 2 years before rolling out a new model makes sense especially when the precedent model is a top hit.

Telcoguy 8 years ago

@JB did you nokia phone stopped working? Were you unhappy with its performance?
Nobody forced you to buy the latest... I certainly do not see your point. Unless the main reason for buying the phone is being seen with the latest and greatest. But if that is your driver, I fail to see that may be nokia's fault.

Johnny Mac 8 years ago

Sure, because Steve Jobs was the only person who had any input into Apple's products. Jeez, this sort of comment is going around a lot on the internet at the moment and it shows the commenters up as both ignorant and shortsighted. Yes it's terribly sad that Jobs died, and the world will miss his presence, his genius for second guessing the market and making people lust after things they didn't even know they wanted, but his illness has meant that others have been running Apple day to day for many months already. There are many, many talented people at that company (not least Jonathan Ives and Tim Cook) who will ensure that it endures this sad moment and continues to thrive for a long time to come.