Apple disappoints market with an upgraded iPhone 4

Analysts, fansHAD expected iphone 5 Stock drops 5 percentbefore recovering

Washington Post

In its first product announcement since Steve Jobs resigned as chief executive, Apple unveiled a smartphone that failed to deliver what many fans of the company had hoped for — a redesigned iPhone.

Instead, the company raised the curtain on an upgraded version of its existing handset. Called the iPhone 4s, the new smartphone offers faster performance with a slick voice recognition program. But it disappointed some analysts and customers who have come to expect a steady stream of breakthroughs from the tech giant.

iPhone 4

“Everyone was underwhelmed by Apple today. Only the most loyal are standing by this one,” said Rob Enderle, principal analyst for the Enderle Group, noting that the company failed to manage people’s expectations. “With everyone and their brother bringing 4G phones, you now have the weakest iPhone ever up against a strong market.”

Facing sky-high expectations, Apple scaled down what has been one of its signature events. It moved the announcement into a smaller venue and did not stream video of the event over the Web.

It also limited those who could attend. Consumer Reports, which was critical of Apple’s last smartphone, said it was not allowed to go. Tech blog Gizmodo, which posted pictures of a stolen iPhone 4 before its release, provided updates from afar.

For years, Apple has sat at the top of the consumer electronics world, remaking itself from nearly bankrupt to the most valuable company in the world in a little more than a decade. And the release of its latest smartphone is coming at a critical point in the company’s trajectory.

Besides Jobs’ resignation in August, Apple is trying to fight off rivals who are muscling into its territory — and some are gaining real traction.

The challenges are reminiscent of the late 1980s and 1990s when Jobs, who had invented the personal computer, watched Microsoft and a host of hardware markers come to dominate that market.

iPhone 4s

Today, Google has replaced Microsoft as Apple’s fiercest rival. Its Android operating system increasingly powers smartphones and tablets made by an array of hardware devices. And Apple may eventually struggle to keep up the pace of so many innovators who are competing both on features and price, some analysts say.

Smartphones running Google’s software now comprise 43 percent of the market compared to 28 percent for Apple, according to Nielsen. Gartner Research projects Apple’s iPad will account for 73 percent of worldwide tablet sales this year, down from 83 percent in 2010.

Some analysts noted that the new iPhone lacks features that are already in other smartphones, such as the ability to operate over 4G wireless networks, the latest and fastest available. Apple’snew chief executive, Tim Cook, hosted the event, but he passed many of the speaking opportunities on to other top executives.

Pre-orders for the phone will start Friday, and handsets will be shipped Oct. 14.

Consumers took to Twitter to vent their disappointment, with one writing: “I’m going as the iPhone 4S for Halloween by wearing last year’s costume and disappointing everyone.”

With a design identical to the iPhone 4, Apple may also face questions over whether its new handset has the same antenna problems that forced the company to give out free cases to customers last year, analysts said.

Apple did not respond to requests for comment on why it moved the event or declined access to Gizmodo and Consumer Reports. It did not respond to a question on the iPhone 4s antenna.

Investors showed their disappointment by selling off their stock moments after an Apple executive uttered the words “iPhone 4S.” Shares fell as much as 5 percent before ending down about 0.6 percent.

The new iPhone 4S will start at $199. Apple also lowered the price of the iPhone 4 to $99, while the iPhone 3Gs is now free with a phone contract.