Apple commands 75% of worldwide smartphone profits, according to analysts, and its earnings are the envy of businesses around the world.
But Samsung on Monday said it's sold more than 100 million Galaxy S smartphones since their 2010 debut.
Apple declined to comment.
Magic carpet turbulence
More than a year after Jobs' death, the question among Silicon Valley watchers is, how long can Apple's ride last?
Apple faces growing competition from Google, Amazon.com and Samsung in the fast-paced tech market without its forceful visionary, says Vivek Wadhwa, vice president of academics and innovation at Singularity University. "Where is the latest and greatest from Apple?" he asks. "It's been a few years."
"Apple's biggest challenge is to define itself in the post-Steve-Jobs era," says Salesforce.com CEO Marc Benioff, who worked at Apple in the 1980s. "Where it is struggling is when it pretends to be Steve Jobs instead of actualizing its new identity. They need to find out who they are now."
Apple's advances are increasingly being met by products from Amazon's Kindles and Samsung's Galaxy devices, running Google's Android, as well as facing a rising threat from Nokia and other device makers running Microsoft's Windows 8.
Apple came to the retail party with a smaller iPad after Google and Amazon launched smaller formats first -- in the tablet category Apple created.
"I would hope they are working on something now. They need to keep this meteoric growth," says Jared Ficklin, a technologist at Frog Design, a design consulting firm that worked on early Apple computers.
Apple needs a new game-changing product to nudge the stock. Shares have drooped about 29% since they hit an all-time high of $705.07 last year. Investors are concerned Apple can't keep growing at the same rate without consuming another industry.
The big problem is, Apple has run up against the law of numbers: To grow on a significant percentage basis -- Wall Street's quarterly fix -- requires massive growth.
"They fight the law of large numbers -- the company will need to go to new markets" to keep growth up, says Edward Jones analyst Bill Kreher. "There's a lot of concern about innovation and what Jobs brought to the table."
Without a new invention, Apple needs to sell an ever-increasing number of iPhones and iPads.
"They've had such a fabulous run. It's just hard to sustain such high growth once you get that big," says Richard Sloan, a professor at the University of California-Berkeley. "Apple was sort of the king of the glamour stocks since about 2009 with increased visibility on increased sales in iPhone and iPad."
The run, at this rate, had to end. "Everyone thinks this is going to be a flat quarter" compared with a year ago, Sloan says.
'Value' company momentum
Apple has missed quarterly earnings estimates in three of the past five quarters, including the past two, says FactSet. Its reputation as being a fast-growth company may be waning. Analysts expect it to earn $13.46 a share in the December 2012 quarter, down 3% from the $13.87 it earned at the same time a year earlier, says S&P Captial IQ.
It's transitioning from a "growth" stock to a "value" one, financial experts say. The selloff that carved billions off market capitalization was due, in part, to this concern, experts say. Institutional investors with established growth-oriented funds could be liquidating positions. "Hedge funds could be pulling out," Sloan says. "I would suspect that it's the growth-oriented investors."
Value funds (think investors in Microsoft, General Electric and Coca-Cola) would be next in line to pick up the stock because Apple has a $121 billion cash hoard, pays a dividend that may rise and remains a relatively safe haven for lower-risk investors. "The market is certainly valuing Apple more like Google and Microsoft," Ritter says. "People are concerned: Is the smartphone market saturated?"
Apple could become a ho-hum value stock if the company transitions from innovator to commodity hardware maker. It's now entrenched in markets that are uber-competitive on features and prices.
The only advantages are Apple's focus on better hardware designs, home-brewed intuitive software and vibrant marketplaces for media and apps. Those still command a premium, but rivals are mimicking all areas to grab a chunk of the market.
As a result, Apple appears ready to head down the path of price competition. The launch of its iPad Mini last year was evidence of its need to offer a tablet to compete with Amazon's smaller Kindle tablets and Google's Nexus 7, which are selling briskly. The device is also expected to make less money as it eats into sales of higher-margin iPads.
Speculation has run high that Apple may also offer a lower-cost iPhone to compete in emerging markets, where cheaper Android-based devices dominate. The company could cut costs by replacing its aluminum chassis with a plastic one and using lower-performing components.
"Cutting the prices of their Apple products -- it's a slippery slope," says Allen Adamson, managing director of branding firm Landor Associates. Apple should "start thinking of themselves as a luxury brand rather than a mass brand. The margins are much better."
Contributing: Matt Krantz in Los Angeles and Jon Swartz in San Mateo, Calif.
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