Today: Apple's market share in smartphones continues to decline, and plenty of pundits offer their thoughts on the Cupertino company's next move. Also: Cisco, NetApp, Applied Materials, Nvidia and SunPower announce earnings.
The Lead: Plenty of possibilities for Apple as iPhone's market share dips again
Apple continued to cede market share to Android in the smartphone market in 2013, IDC reported Wednesday, lending credence to concerns about the Cupertino tech giant's ability to grow its record-breaking revenue totals in the years to come. Reports suggested many possible approaches to change the company's growth trajectory, however, including a refreshed Apple TV product, larger iPhone offering and an "iAnywhere" approach that would merge the company's mobile and desktop operating systems.
IDC's report noted that Google's Android mobile operating system and Apple's iOS continue to dominate the smartphone market, accounting for 95.7 percent of shipments in the holiday-shopping quarter and 93.8 percent of the market for the full year of 2013. Android's growth dominated Apple's, though, with Android shipments increasing 58.7 percent from 2012 to 2013 while Apple's growth was 12.9 percent. As a result, Android's market share grew from 69 percent to 78.6 percent, while Apple's declined from 18.7 percent to 15.2 percent.
"iOS posted the lowest positive growth for both the quarter (6.7%) and for the year (12.9%), underperforming the overall market in both instances," the research group noted in its announcement. "Although it remains wildly popular in the smartphone market, Apple has been criticized for not offering a new low-cost iPhone nor a large screen iPhone in 2013 to compete with other OEMs. IDC believes the company will release a large-screen version in 2014, but will not altogether abandon the smaller 4" screen version of previous models."
Multiple reports out of Asia on Wednesday also suggested Apple will offer a larger smartphone, colloquially known as a "phablet" because of its size resembling a mix of a phone and tablet. Those reports mesh with earlier reports about a larger iPhone being introduced in 2014, most prominently a Wall Street Journal report last month that suggested Apple was testing a 4.5-inch version as well as one larger than 5 inches diagonally; the current iPhone offering measures 4 inches.
"Apple definitely needs a larger-screen smartphone soon, particularly to address the demand in the emerging markets," Canalys analyst Jessica Kwee told the Journal for its January report.
Bloomberg News reported that Apple is also working to refresh its set-top box offering, known as Apple TV, and is negotiating with Time Warner Cable and other possible partners to ensure fresh content for the device. Apple hopes to unveil the device by April, Bloomberg reported, with a faster processor and updated interface.
JPMorgan analysts Mark Moskowitz and Mike Kim suggested that Apple's salvation lies in offering a consistent interface across all its products, which the pair dubbed "iAnywhere."
"While not a new idea, our global tech research team believes Apple could be on the cusp of introducing a new category with iAnywhere, a converged MacOS-iOS operating system that allows an iPhone or iPad to dock into a specially configured display to run as a computer," the analysts wrote.
In JPMorgan's estimation, the approach would allow Apple to generate more revenues from peripheral devices and cloud services, reducing the company's dependence on huge sales numbers from every new generation of iPad and iPhone for revenue growth, while providing a hook for the next generation of its mobile devices.
None of those approaches would involve the "new product category" that CEO Tim Cook has been promising for 2014, however, a promise the executive reiterated in an interview with The Wall Street Journal last week that -- along with $14 billion in share repurchases -- helped prompt activist investor Carl Icahn to dump his campaign for greater investor return from the company. For its completely new product, pundits are pointing at the possibility of a smartwatch that focuses on the health of the wearer, according to a recent New York Times report, part of a movement dubbed "the quantified self."
Apple's stock had been on a big push this week since the beginning of last week, gaining 7.1 percent in that time, but the momentum stalled Wednesday, when Apple held steady with a four-cent decline to $535.92.
SV150 market report: Little movement on Wall Street ahead of earnings
Stock indexes followed Apple's path of little movement Wednesday ahead of a raft of after-hours earnings reports from Silicon Valley tech companies, led by a dour report from Cisco that the networking giant predicted in its previous quarterly report.
Cisco's profits and revenues took a large tumble from the same quarter a year ago, a result that the San Jose company projected in its third-quarter earnings report in November, which resulted in a big loss on Wall Street. Even with that warning, however, Cisco's profits fell much farther than analysts expected, with the company reporting earnings of $1.4 billion, or 27 cents a share, on revenues of $11.2 billion; analysts had expected profits of 37 cents a share on revenues of $11 billion. CEO John Chambers has said that the roughly 55 percent decline in profits from the fourth quarter of 2013 was the result of a slowdown in purchases from emerging markets, an area of concern for many investors across different Wall Street sectors. After gaining 0.6 percent to $22.85 in Wednesday's regular session, Cisco shares declined to nearly $22 in late trading.
Cisco was joined in Wednesday's earnings parade by a variety of Silicon Valley companies from different sectors: SunPower, Applied Materials, Nvidia and NetApp. San Jose solar panel manufacturer SunPower reported net income of $22.3 million in the fourth quarter, or 15 cents a share, on revenues of $638.1 million, with revenue decreasing and profits increasing dramatically from the same quarter a year ago; after gaining 1.6 percent to $31.62 Wednesday, shares declined to near $30.50 in late trading. Santa Clara semiconductor-equipment company Applied Materials, which is still waiting for its $9.39 billion merger with Tokyo Electron to close, reported quarterly profits of $253 million, or 21 cents a share, on revenues of $2.19 billion. The results were big jumps from the same quarter a year ago, and shares topped $18 in late trading after gaining 0.7 percent to $17.91 in the regular session. Santa Clara graphics-chip manufacturer Nvidia reported net income of $147 million, or 25 cents a share, on revenues of $1.14 billion, year-over-year gains of 24 percent for profits and 9 percent for revenues; shares gained 3.6 percent to $16.83 in the regular session and topped $17 in late trading. Sunnyvale storage firm NetApp reported profits of $192 million, or 55 cents a share, on revenues of $1.61 billion, and shares dipped to around $41 after closing with a 2.5 percent decline at $42.59.
Google retreated from all-time highs established Tuesday, dropping 0.3 percent to $1,186.69 while announcing a partnership with VMware that will allow Chromebook users to access Windows apps and desktops; Palo Alto-based VMware rose 0.5 percent to $93.53. eBay gained 1 percent to $54.83 while the focus remained on its PayPal unit, which Icahn wants the San Jose company to spin off; PayPal President David Marcus has run into some hot water for an email he sent to San Jose employees, and in a Forbes profile on Marcus and the online-payments company, PayPal co-founder Elon Musk backed the spinoff idea. Musk's current focus, Palo Alto electric car company Tesla Motors, fell 0.7 percent to $195.32 after hitting record highs Tuesday, while the San Mateo solar installer for which Musk serves as chairman, SolarCity, gained 2 percent to $71.42. Infoblox's severe post-earnings dive finally seemed to end Wednesday, while Palo Alto software company Jive dove 18.8 percent to $7.20 in response to its quarterly announcement. Sunnyvale's Trimble Navigation wen the other way after its earnings report, hitting an all-time high $37.42 before closing with a 14 percent gain at $37.19, while fellow Sunnyvale company Pharmacyclics increased 3.1 percent to $137 after the FDA approved the company's leukemia drug.
Up: Twitter, Zynga, Nvidia, SolarCity, Adobe, Electronic Arts, SunPower, eBay, Applied Materials, Cisco, Oracle, VMware, Pandora, Salesforce, Intel, Gilead, Hewlett-Packard
Down: LinkedIn, Intuit, NetApp, Yelp, Juniper, Netflix, Yahoo, Workday, Tesla, Facebook, Google, SanDisk, AMD
The SV150 index of Silicon Valley's largest tech companies: Up 2.34, or 0.15 percent, to 1,540.52
The tech-heavy Nasdaq composite index: Up 10.24, or 0.24 percent, to 4,201.29
The blue chip Dow Jones industrial average: Down 30.83, or 0.19 percent, to 15,963.94
And the widely watched Standard & Poor's 500 index: Down 0.49, or 0.03 percent, to 1,819.26
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.