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IPhone sales slowing down

Samsung offers competition with sleek model

- Associated Press - Monday, July 30, 2012

NEW YORK — The latest iPhone looks much the same as the first iPhone, which came out more than five years ago. That hasn't been a problem for Apple — until, now.

The pace of iPhone sales has slowed, Apple revealed last week. Part of the problem is that the competition has found a formula that works: Thinner phones with big screens that make the iPhone look small and chubby.

For a dose of smartphone envy, iPhone owners need to look no further than Samsung Electronics Co., the number-one maker of smartphones in the world. Its newest flagship phone, the Galaxy S III, is sleek and wafer-thin.

By comparison, the iPhone "is getting a bit long in the tooth," says Ramon Llamas, an analyst with research firm IDC.

Apple has become the world's most valuable company on the back of the iPhone, which makes up nearly half of its revenue. IPhone sales are still growing, but the question of how fast they're growing is of keen interest to investors. The iPhone certainly has room to grow: Only one in six smartphones sold globally in the second quarter had an Apple logo on its back.

When Apple reported financial results for its latest quarter last week, a new phenomenon was revealed: Buyers started pulling back on iPhone purchases just six months after the launch of the latest iPhone model.

Apple executives blamed the tepid sales on "rumors and speculation" that may have caused some consumers to wait for the next iPhone, which is due in the fall. But in the past, iPhone sales have stayed strong nine months after the new model is launched, then dipped as people began holding off, waiting for the new model.

In the April to June period, Apple sold 26 million phones, 28 percent more than it did in the same quarter last year.

Most other phone makers "would kill" for those numbers, says Stephen Baker, an analyst with research firm NPD Group.

The exception is Samsung, which has solidified its position as the world's largest maker of smartphones. Analysts believe it made just over 50 million smartphones in the second quarter, or nearly twice as many as Apple. (The company doesn't release specific figures.) Its smartphone sales have nearly tripled in a year.

Most of Samsung's sales comprise cheaper smartphones that don't compete directly with the iPhone. Its flagship phones, though, have emerged as the iPhone's chief rivals.

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