Apple’s Latest iPhones Could Be the Most Disappointing in the Company’s History

After Apple (NASDAQ: AAPL  ) debuted its two new iPhones last month (the 5s and 5c) shares sold off. Evidently, investors didn't have much faith in Apple's new devices -- and now it's looking increasingly likely that they're right.

Apple's cheaper model, the iPhone 5c, appears to be selling worse than the company had anticipated, while the iPhone 5s is having stability issues. With Apple whiffing on its latest devices, it strengthens the case for handset makers that use Google's (NASDAQ: GOOGL  ) Android, including Samsung (NASDAQOTH: SSNLF  ) .

It's clear that the iPhone 5c is just too expensive
Before Apple announced the iPhone 5c, most analysts had expected the phone to sell off contract for a just a few hundred dollars -- about the cost of Google's own Nexus 4. Although Apple has about 40% of the US smartphone market, it's getting obliterated in countries with developing economies, particularly in China, where Google's Android is dominant.

Rather than offer the iPhone 5c at $300 or even $400, Apple debuted the phone at a full $549 in the US -- over $700 in China. As many consumers in developing markets don't have the benefit of carrier subsidies, the iPhone 5c is out of their price range -- particularly when companies like Samsung are offering comparable handsets powered by Google's Android for much less.

Samsung has about 18.5% of the Chinese smartphone market, compared to just 5% for Apple. Other Chinese firms like Xiaomi, Lenovo, and ZTE also lead Apple, and like Samsung, they use Google's Android.

Admittedly, "forking" -- heavily modifying Android -- is common in China, and so Google may benefit little from Android's dominance in the Middle Kingdom. However, the dominance of Google's platform is certainly not good for Apple -- with Chinese developers focusing on Android apps, Apple may soon find itself shut out from China entirely.

Even in the US, where carrier subsidies are the norm, Apple's iPhone 5c may be too expensive. Retailers, including Best Buy and Wal-Mart, have already cut the carrier-supported price to $49, while the iPhone 5c is freely available for purchase on Apple's website.

A report from Chinese tech site C Technology indicated that Apple was cutting production of the iPhone 5c in half, while KGI Securities cut its estimate for iPhone 5c sales by 33%. Cantor Fitzgerald's Brian White, a longtime Apple bull, remarked that in his travels through Asia, both the iPhone 5c and 5s were widely available.

Apple may have destroyed its biggest selling point
But more than iPhone 5c sales, reports of an unstable iPhone 5s could be greater cause for concern. Many consumers may purchase Apple's iPhone over a competing Samsung because of its unparalleled system stability -- well, maybe not for much longer.

There are reports that Apple's iPhone 5s is prone to the so-called "blue screen of death" -- the dreaded system crash that plagued Windows users for years. Analytics firm Crittercism claims that, according to its data, apps running on the iPhone 5s crash twice as often compared to earlier models.

That's hardly surprising. Apple's iPhone 5s sports a 64-bit processor, a step up from the 32-bit processors of prior models. Although it brings increased performance, older apps designed for a 32-bit processor might run into issues.

Not the first time Apple has stumbled with the iPhone
To be sure, this isn't the first time Apple's iPhones have been criticized: the iPhone 4 had "antennagate" and the iPhone 5 brought backlash over Apple Maps. Apple bounced back from those mistakes relatively unscathed, and it could do so again.

But the problems with its newest iPhones do highlight the weaknesses in Apple's strategy. Without a low-cost iPhone, Apple is still unable to compete with Samsung and other handset makers that use Google's Android in emerging markets. At the same time, if Apple is going to continue to control a large of chunk of developed economies, including the US, consumers need to believe its products are superior -- stability issues certainly don't help.

Are you an Apple investor?
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Read/Post Comments (45) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 13, 2013, at 1:47 PM, tauk21 wrote:

    You must be joking. That small and soon-to-be corrected issue constitutes an opportunity for competitors? This is not serious analysis.

  • Report this Comment On October 13, 2013, at 2:53 PM, Laureanb3 wrote:

    I beg to disagree!

    This is AAPL bashing at it's lowest.

  • Report this Comment On October 13, 2013, at 2:58 PM, steyoun wrote:

    You seem to forgot to state the stability issues quoted as double for the 5s were less than 2% and were most likely due to developers not having access to the new 64bit hardware before launch.

    http://www.iclarified.com/34657/crittercism-apps-crash-twice...

    Concerning the 5c price drop you are speculating the reason for the price and production cuts. It might be good to give it some time and more data before you conclude.

    It seems like you are skewing any rumored news as fact in a way to make a biased article. Not a very good trait for an analyst.

  • Report this Comment On October 13, 2013, at 3:05 PM, What4What wrote:

    I am aware that a lot of people despise Apple, but this article is complete bull and far from the truth. I mean soon to be shut down from China? The demand for iPhones there are still significantly strong.

  • Report this Comment On October 13, 2013, at 3:17 PM, toddball wrote:

    A horrendously researched article. This is nothing but an opinionated Android fanatic. The fact of the matter is people have been waiting for the "iPhone killer" for 6 years now. Isn't that saying something that the iPhone is the ONLY one that needs a "killer"? I have yet to see or hear "Galaxy killer". Why can't people appreciate the craftsmanship (can we agree that the hardware is "top notch") and revolutionary (we all know that they weren't the first touchscreen phone but they did make them mainstream). I wish people could just say "it's not for me" or "I just like Android more" instead of just bashing the iPhone. Everyone has an opinion and let's leave it at that. Opinions aren't facts.

  • Report this Comment On October 13, 2013, at 3:32 PM, Diogeneez wrote:

    fdzb

  • Report this Comment On October 13, 2013, at 3:40 PM, mapsguy wrote:

    This article is typical of today's news cycle. ANYTHING, regardless of veracity or the source, becomes a headline. This is why the stock market went up 5% in two days on wishful thinking. Humans are crazy!

  • Report this Comment On October 13, 2013, at 3:47 PM, don1mike wrote:

    I am so in agreement with the other comments, not because you don't like a product it mean that you should talk it down... the iPhone is a top notch product and none other will catch up with it anytime soon... I dislike it when you analyst talk such #$$$#...

  • Report this Comment On October 13, 2013, at 3:50 PM, DanManners wrote:

    Look, I am hard on Apple but this article is a joke. If Motley is up to this junk count me out.

    Why don't we get a few more hundred blue screen articles? This is really stupid.

    Get real.

  • Report this Comment On October 13, 2013, at 4:14 PM, slapppy wrote:

    More misinformed amateur articles from MF. Terrible article.

  • Report this Comment On October 13, 2013, at 4:16 PM, ivanson1 wrote:

    Why is the Motley Fool publishing this kind of garbage. The iPhone 5s is super stable beautiful and an absolute home run! Everybody loves it and is lining up around the corner to get one. I have one and it works like a dream Sam!

  • Report this Comment On October 13, 2013, at 4:24 PM, hershey71 wrote:

    Crappy articles like this is precisely the reason I would never never take anything this analyst or anyone at motley fool seriously. Anything to AAPL bash. It is getting boring folks.

  • Report this Comment On October 13, 2013, at 4:36 PM, JManandtheChanny wrote:

    Two weeks ago, this was the best smartphone ever. Now it's the most disappointing??

  • Report this Comment On October 13, 2013, at 4:44 PM, RaulR2 wrote:

    I fail to understand why MF has lowered its standards allowing not serious people to write in its page????

    Once again, this is not the first time I have seen this kind of crap articles and I warned MF about this poor policy.. I think I am going to reconsider about my membership with MF..

  • Report this Comment On October 13, 2013, at 4:57 PM, BradApple wrote:

    This hatchet job of an article notes with alarm that "reports of an unstable iPhone 5s could be greater cause for concern," but fails to mention that these "reports" are few and far between. To say that Apple is "whiffing on its latest devices," when the reality is that Apple Stores can't keep the iPhone 5S in stock reveals the author's blatant anti-Apple bias.

  • Report this Comment On October 13, 2013, at 5:06 PM, Jasaus wrote:

    I'm not surprised by this. My local apple store is stocked full of the 5s, seems only first day sales made an impact. Then it's gone downhill.

    I've been impressed with the new phones out there much more then the iphone 5s. At this point the only way id buy the iPhone 6 is if they move production to America.

  • Report this Comment On October 13, 2013, at 5:09 PM, beerandloathing wrote:

    There is nothing more foolish than reading Motley Fool for financial advice. It's all about headlines this POS is the National Enquirer of finance. Worry not Apple fans tomorrow Motley Fool will be praising Cupertino. Strongly encourage Yahoo users to elect out of fool news along with kardashians

  • Report this Comment On October 13, 2013, at 5:11 PM, monkeyfurball wrote:

    AAPL is past its glory days. Sell sell sell this stock and don't look back.

  • Report this Comment On October 13, 2013, at 5:13 PM, monkeyfurball wrote:

    COMPLETELY agree with the author. LOVE my Samsung android phone. Best phone made.

  • Report this Comment On October 13, 2013, at 5:16 PM, monkeyfurball wrote:

    The Apple store a few miles from me has over 1500 5S's in stock. LOL. I bet they can't even give them away. You APPLE SNOBS better sell your aapl stock and hold on to your paper weights, err, I mean iPhones for historical value some day.

  • Report this Comment On October 13, 2013, at 6:08 PM, skippywonder wrote:

    This article is like a B-grade horror movie. It is sensationalistic, unconvincing, and entertaining only for its awfulness.

    But just as with the B-movie, it's all done to drive an audience. Quality is not the goal, money through page views is. Let's see if we can get a click from curious people who want to see how awful this article is. Congratulations. You got mine.

  • Report this Comment On October 13, 2013, at 6:45 PM, LoveMelancholy wrote:

    I work at Sprint, managing phone cells. We have not had a prob with prices with the one up program and early upgrade options, .but the ios7 and ios.2 and proved to be huge problems with the older phones and the new ones, it has caused many factory resets losing all information, freezing, and causing those who don't like the androidish look to reconsider, we sell more colours yet, we also are back ordered in all of them. The update is the issue we see mostly.

  • Report this Comment On October 13, 2013, at 6:45 PM, dugsterm wrote:

    Sorry monkeyfurball but your lies are easy to verify. According to my local Apple Store, supplies do very from store to store but THERE IS NO STORE IN THE SYSTEM THAT HAS 1500 5S's IN STOCK at this time or at any time. I don't understand why those who are not interested in Apple products feel the need to read these articles and slam Apple. If you like your google or windows phone that is your choice but I hate those phones and LOVE how well my iPhone works. I won't slam you for having different priorities or standards than mine so don't slam me just to be mean.

  • Report this Comment On October 13, 2013, at 6:54 PM, dugsterm wrote:

    WOW! To think the author of this sleaze article likely got PAID to write it. But a quick check of this guy's history (by clicking on his byline) shows that over 2/3rds of his articles are Apple slamming articles so we know he has an agenda and a BIG, BIG anti-Apple bias. Sadly so many people only look at headlines and don't read the article or verify a solid source. It is called Motley FOOL for a reason.

  • Report this Comment On October 13, 2013, at 6:55 PM, JackBaker1 wrote:

    Honestly, WHO WRITES THIS UTTER RUBBISH!!!

    The only FOOLS are the people who read this crap and believe it.

  • Report this Comment On October 13, 2013, at 7:30 PM, docmoi wrote:

    Junk article with no objectivity whatsoever, but then what would you expect from a fool?

  • Report this Comment On October 13, 2013, at 8:15 PM, ztol7527 wrote:

    Look at all these Apple fans POed. The bigger they are the harder they fall. How's that blue screen of death treating you?

  • Report this Comment On October 13, 2013, at 8:15 PM, fauxscot wrote:

    Must agree with the predominant sentiment here. Where is your data?

    Sam Mattera, should we add you to the blocked list? This isn't a useful article. Mostly, it appears to be speculation and innuendo. My read of other, better researched and coherent articles overwhelmingly praise the 5S and are puzzled, but patient on the 5C. Your article (sic) is an outlier.

    I hope you'll do the homework that your post warrants and update your opinions and conclusions if warranted. Like everyone here, I think your reputation is at stake. Quality counts if you're going to do this.

    (I don't care if you like Android or Apple or Windows Phone, or Symbian, but FUD does not belong in articles on ANY of them. Your article seems really thin on useful information. Why on earth would you write it with so little data to share? Kind of embarrassing.)

  • Report this Comment On October 13, 2013, at 8:19 PM, Casualreader4 wrote:

    Headline: "Apple’s Latest iPhones Could Be the Most Disappointing in the Company’s History"

    Total garbage...

    Headline: "Apple’s Latest iPhones is the best phone in the Company’s History".

    Fact...

  • Report this Comment On October 13, 2013, at 8:20 PM, fauxscot wrote:

    Apple and Android fans... you are both allowed to like what you like. This isn't a character issue. It's a phone. This is an investment board, not a class election. The issue here is whether the author wrote something other than inflammatory clickbait, and it appears he might have. Everyone is certainly inflamed.

    My opinion on the article is that it is not useful, and its premises and conclusions are poorly supported. The phones are what they are. Where is the data on what the author suggests? How does this launch compare with other phone launches? Hard numbers.

  • Report this Comment On October 13, 2013, at 8:26 PM, Charismatron wrote:

    In less than 72 hours, Motley Fool will publish an article saying exactly opposite what's been said here.

    Whether it's one author, or several, the outcome concerning Apple-related article has always been inconsistency.

    As for the haters of Apple or Android, calm down and realize there are different strokes for different folks. If you're old enough to use a computer and haven't figured this out by now, well, good luck at life. Competition drives innovation.

  • Report this Comment On October 13, 2013, at 8:46 PM, Iphroid wrote:

    Yes, it is disappointing to learn about the BLUE SCREEN OF DEATH...So the 9 million record sales is going to turn to 9 million recalls and complaints...great. Maybe it is time to diversify selling organic APPLE juice and other apple food products...the reality is investors do not even know and do not even care about apple products, all they care is their ROI in the short term and if your a long term investor, apple is not the way to go anymore...too many product issues, parts etc, etc...

  • Report this Comment On October 13, 2013, at 8:55 PM, Iphroid wrote:

    This is a very revelatory if not covering the very obvious about apple's future and it is ticking off many blank-headed apple fans who bought the latest Iphones (who spent way too much) only to find too many problems including faulty fingerprint scanning capability, app crashing due to the 64 bit processor incompatibility, and the list goes on. Well the die-hard apple fans will ride it out even if they lose their sanity using the latest apple offerings...who cares its apple that is supposed to be of high quality...could this be one of the biggest disappointments in 2013....9 millions unit sold, ha...

  • Report this Comment On October 13, 2013, at 9:21 PM, daveshouston wrote:

    This author has to be a paid shill for Samsung. What a complete load of bull.

    I have an iPhone 5S and it really rocks. Best smart phone ever. Love it.

  • Report this Comment On October 13, 2013, at 9:35 PM, badugub wrote:

    Was someone paid to write this anti-apple article?

  • Report this Comment On October 13, 2013, at 9:52 PM, AntiSmartAlec wrote:

    They couldn't give it away free; to save face, they started to charge for them again.

  • Report this Comment On October 13, 2013, at 10:01 PM, larryw101 wrote:

    I HAVE SAID THIS BEFORE AND I'LL SAY IT AGAIN, MOTLEY FOOL IS NOT WHAY IT USE TO BE. THIS GARBAGE AUTHOR, SAM MATERA, IS THE LOWEST CLASS APPLE BASHER ON THIS SITE OR ANY OTHER FOR THAT MATTER

    .

    MOTLEY FOOL'S CREDIBILITY IS AT AN ALL TIME LOW WITH GARBAGE JOURNALISM SUCH AS THIS.

    JUDGING BY ALL NEGATIVE COMMENTS FROM DISGUSTED READERS ON HERE, IT IS CLEAR MOTLEY IS THE LAUGHING STOCK OF FINANCIAL COMMUNITY WHEN IT COMES TO INVESTMENT ADVICE.

    EVERYONE SHOULD SEND TOM GARDNER, THIER CEO, A MESSAGE TELLING HIM WHAT A JOKE THIS SITE REALLY IS.

    AS FOR THIS AUTHOR, WELL, HE BELONGS WRITING FOR A TABLOID NEWSPAPER.

    SAM MATERA SHOULD LOOK FOR ANOTHER CAREER, MAYBE AS A CIRCUS CLOWN.

  • Report this Comment On October 13, 2013, at 10:04 PM, donnymatrix wrote:

    Really people? Its the " The Motley Fool "

    One day a positive article and other day Negative.

    ............................................................................

    But to those who say that the 5s iphone is the best Apple phone / Quality phone

    It seems that the 5s has more problems than the rest.of the Apple line.

    iphone 5C screen cracked with no impact and was told it was a crack caused by a manufacturing defect in the glass.

    Blue screen of death

    Wi Fi issues

    Motion sensors are not calibrated properly

    Llight was leaking out around the power connector/ hardware design issue

    Bent enclosure issues

    Date and time bug

    Unresponsive touchscreen

    Scratches on the body

    Overheating and excessive battery drain

    Screen flicker

    5s units having SIM issues

    Charging issues

    Fingerprint Sensor issues

    ......................................................................

    Quality?

    All companies have problems

  • Report this Comment On October 13, 2013, at 10:18 PM, nine7one wrote:

    I have a file with hundreds of articles like this going all the way back to the iPod where the death of Apple, or an Apple product is all but guaranteed. Remember, less than a year ago the iPad was dead-in-the-water because the Microsoft Surface was so superior it was going to bury the iPad...the best part is that the same people that wrote those are the ones who write the ones like this.

  • Report this Comment On October 13, 2013, at 10:37 PM, simplesam562 wrote:

    Thought this article was about apple... Not Samsung or android.... Or samjunk as some of you might say.. hahah some of you take your phone's too seriously get a life.

  • Report this Comment On October 13, 2013, at 10:50 PM, 0gre wrote:

    Getting more and more difficult to take articles from TMF seriously. It's gotten to be about the same quality as "Wall Street Cheat Sheet" and other click bait rags.

  • Report this Comment On October 13, 2013, at 11:27 PM, Jdzspace wrote:

    I think it's hilarious that 99.99% of time this guy is so blatantly pro-apple it's ridiculous, borders on comical to be honest.

    But let him say something negative about apple, and you would swear he's a paid agent for Google or Samsung. lol

    the internet givith, and the internet taketh away i suppose.

    as someone in the smartphone industry, one thing I can say is that Apple is no longer a top tier device. And it's not because the 5s was or is a flop, or anything tangible or faulty hardware wise. But the funny thing is, iOS7, the system that shamelessly copies Jelly bean in so many ways is causing the older generation to turn away from Apple.

    And in truth, those were the only people left who REALLY demanded iPhones. Anyone under the age of 60 can see very plainly what the most technologically advanced phone with the most freedoms and functions is. Some are loyal, some don't care to have so much option and choice.

    But as a top tier device, Apple has been on the downward trend for a while. and releasing essentially the same phone with a worthless (for now) 64-bit processor and a fingerprint scanner isn't really helping their situation. They will always be around, but there days as a top tier cell phone are over, have been for a little while.

    but let's be real, apple will be fine overall. cell phones are far from the only arrow in that particular quiver

  • Report this Comment On October 13, 2013, at 11:40 PM, Neuronflash wrote:

    What the...? I think I will stop reading TMF if they continue to publish such poorly researched articles. This is a serious waste of time.

  • Report this Comment On October 13, 2013, at 11:55 PM, Appleblows wrote:

    Haha, love all the Apple fanboys getting their panties in a twist, I just switched from the iPhone 5 to the Note III and I love it. Re-packaging the iPhone 5 with fruity colors isn't innovative, it's stale.

  • Report this Comment On October 14, 2013, at 7:54 AM, flybywire54 wrote:

    Disappointing or not the Iphone 5S will still sell twice more then the Samsung GS4 or Note 3 .

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