Is Apple Business Sustainable

October 21 00:00 2011

New York, Oct 21, 2011 ( – Apple Inc (NASDAQ: AAPL) saw its shares plummet even though it had posted a net profit increase of more than 50%, which is indeed a rare sight considering the recent state of the economy. The shares plummeted because Apple’s sales of the iPhone were short of the 20 million handsets that analysts had expected. However, it needs to be considered that iPhone sales were higher than 14 million handsets in the last quarter.

Analysts say that the iPhone sales drop was because of the newer version of iPhone 4S that the company unveiled after the quarter ended. It is this launch that overshadowed the sales of the previous quarter.

However, the interesting bit is that Apple Inc has learnt some interesting lessons. Apple’s business model has increasingly come to bank upon the popularity of the iPhone. Apple gets about a third of its revenues from a single product! It has to continually innovate and aim those innovations at the same smartphone market. With competition in the smartphone market heating up, how long can iPhone keep on dominating the market?

How long do you expect the same users to upgrade their older version of the iPhone for a newer and more expensive one? Unless, iPhone creates a cult following which it is very close to, the business model may be unsustainable.