Is Apple's lineup beginning to rot?

Apple Lineup Reaching Ceiling Puts Pressure on CEO Tim Cook

Smartphone Saturation

While Apple’s stores were crowded during the end-of-year shopping season, many consumers also are flocking to cheaper smartphones. Samsung Electronics Co. faces similar challenges and last week reported its slowest profit growth since 2011 as it battles Apple in high-end smartphones and inexpensive handsets made by Lenovo Group Ltd. and Xiaomi Corp.

“The high-end of the market is saturated,” said Van Baker, an analyst at researcher Gartner Inc. “Apple’s going to have to rethink its approach.”

Corning Inc., a supplier of glass to Apple, said sales volume for Gorilla Glass, the shatter-resisting material used to cover the iPhone, was weaker than the company had expected.

“That was a little bit of a surprise,” James Flaws, Corning’s chief financial officer, said in an interview.

Still, demand for Corning materials used in tablets remained strong, and Flaws anticipates that revenue from those devices will grow in 2015.

In a conference call with Wall Street analysts, Apple executives faced questions about whether iPhone sales have stalled and the outlook for the current quarter.

Product Updates

Cook said the company is growing in emerging markets and that new products are coming. In addition to an iPhone with a bigger screen, the company has been exploring the release of a wearable-computing device and an expanded mobile-payments system, people with knowledge of the plans have said. While Cook didn’t specify what’s in the pipeline, he said he’s “intrigued” by letting people pay for products with iPhones.

“We have zero issue coming up with things we want to do that we can disrupt in a major way,” Cook said. “The challenge is always to focus on the very few that deserve all of our energy.”

Apple hasn’t introduced an entirely new product since the iPad’s debut in 2010. The iPhone was released in 2007. Absent that, the company has been counting on updates to those existing product lines to fuel demand. The company released the iPhone 5s and 5c, as well as the iPad Air and iPad mini in time for the holiday shopping season last year.

Over the quarter, Apple sold a record 26 million iPads and also sold 4.8 million Mac computers.

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