When Did Apple Lose Its Magic Touch?

When did Apple become so out of touch? When did it realize that it's bequeathing the mainstream market to Google's Android? Has it even realized that yet? 

Yesterday's iPhone event was supposed to be Apple's moment to shine. It was one of CEO Tim Cook's perhaps final chances to prove that the consumer tech giant can recapture the glory it had when Steve Jobs was around.

Instead, we got more of the same.

  • The iPhone 5s has some new features, but it has the same form factor as last year's iPhone 5. That wouldn't be a bad thing if Apple hadn't surrendered market share, going from 17% of the global market to just 13% over the past year.
  • The iPhone 5c was supposed to be the entry-level device that would finally open doors for the company with the prepaid wireless carriers here, and the countless carriers abroad, which don't offer hundreds in subsidies in exchange for long-term contracts. No. It's unlocked price of $549 without a contract isn't going to make a difference in a world where entry-level Android smartphones are available for a sliver of that. 
  • After seeing Samsung -- the company that overtook Apple in smartphone sales -- introduce a smartwatch last week, there was always the hope that the Cupertino taste maker would finally make a big splash in wearable computing. No. It didn't happen.

There are plenty of snazzy features in the iPhone 5s. The camera is dramatically improved, and that's a big thing for many buyers trying to consolidate gadgetry. However, boasting about the more powerful 64-bit processor seems as if it's missing the mark. I've heard people complain about slow PCs, but never slow smartphones. It's a nice feature, but it's not a very marketable one if it's not aiming at an addressable problem. 

Then we get to the fingerprint identification. Blackberry had to be biting its cracked nails when Apple announced its features to make the iPhone 5s more secure, but when you're gunning for BlackBerry's fading market, you're essentially fighting for scraps. Yes, Apple did make its devices more compelling for the enterprise market yesterday, but that's right now. Just wait until the 5s is out in the wild, and folks begin having problems accessing their phones if the ID technology proves to be less than perfect, or the sensors wear out in time. Today's selling point can be tomorrow's selling point -- if you know what I mean.

Clearly, there's a reason why Apple shares began to slide during the final two hours of the trading day yesterday, just as Apple was failing to live up to the hype.

The 5s didn't raise the bar high enough. It didn't come in the larger form factor -- or at least the option for the larger form factor -- that has drawn the masses to larger Android devices. 

However, the real reason why Apple is clearly out of touch is that the 5c is not the entry-level device that we thought it would be. It's not cheap enough. Apple went ahead and put a plastic shell around last year's iPhone 5, and it decided to settle for turning a fat profit on a small number of sales instead of shocking the world in a good way. 

"Your margin is my opportunity," is one of my favorite quotes from Amazon.com's Jeff Bezos. 

Amazon's ability to sell things at ridiculous price points -- settling for market share instead of near-term profitability -- has helped make it a force, with the Kindle line of products, in categories where larger tech names have faltered. 

Well, here we are again. Apple is choosing to maintain its margins at a time when Google's open-source platform, and Amazon, are willing to do whatever it takes to get bigger in mobile computing. 

Apple's margins are it's undoing. The media invites promised that Tuesday's even would brighten the day of the attendees. That may have been a hint on the colorful array of devices that we're getting, but it turns out that Apple wasn't very bright at all.

Apple's opportunity is your margin -- of error
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The article When Did Apple Lose Its Magic Touch? originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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