Halfway into year with no product launch, how’s Apple doing? Tuesday is report card time

This year so far is shaping up to be an interesting one for Apple: not for any particular product release or impressive financial result, but for their absence. On the eve of Apple’s(s AAPL) fiscal third-quarter earnings, with no major product releases to buoy the numbers, investors are expecting just so-so results for the second quarter in a row.
iPhone5iOS7Apple has predicted it will turn in revenues between $33.5 billion and $35.5 billion. The consensus on Wall Street is that Apple will announce revenues of $35.09 billion for the quarter, and earnings per share around $7.31. Revenue would be basically even with what Apple recorded a year ago ($35.02 billion), but earnings would be off by $2.
Having a so-so quarter won’t make Apple that different from its peers: Samsung, Intel, Microsoft and Google all turned in results recently that disappointed investors one way or another. But until the last few quarters, that’s what Apple has been known for: standing out.

What’s the matter with Apple?

Nothing is wrong, per se. But it’s not the Apple a lot of investors — and customers — have known since the dawn of the iPhone Era. After a remarkable run, the company’s momentum — at least in terms of frequency of new products and sales growth — has begun to level off. (Which isn’t too much of a surprise; it’s hard to keep up triple-digit growth rates year in and year out.)
The numbers that will tell the tale of why Apple did worse (or better) than in past years will be iPhone unit shipments and, to a lesser extent, iPad shipments. As last quarter showed, iPhone shipments and subsequent sales to consumers are slowing down. Seven years later, Apple is dealing with possibly saturated smartphone markets and competitors that have all but erased its lead in mobile hardware and software. Verizon is reportedly struggling to meet its iPhone order obligation from Apple, which exemplifies the possibility of some saturation of the U.S. iPhone market. But it may not be the only one.
iPadMiniWhile Apple has been trying to expand the appeal of the iPhone and broaden its customer base beyond established markets, it’s been pushing pretty hard to sell older model iPhones like the iPhone 4 and 4S: both of which have a lower price and could bring the iPhone’s overall average-selling-price down.

An April without an iPad

This is also the first April-June quarter since 2009 that Apple hasn’t had a brand new iPad to boost its quarterly numbers. Apple doubled up on new iPads last year — one in spring, one in fall — which left a giant hole on the yearly product schedule Apple established in 2010.
The iPad mini, released in October, is still relatively new and could be the main bright spot of the earnings story for Apple. But as for the full-size Retina display iPad, the company has trained its customers well: there’s probably plenty that have learned to hold off on a purchase until this fall when they’re pretty sure Apple will have the latest new tablet.
Apple will in all likelihood sail along to another huge year-end holiday quarter, assuming it sticks to its yearly update pattern and launches a new iPad, iPad mini, iPhone and possibly a new Apple TV (set-top box) and new MacBooks alongside the recently unveiled Mac Pro at the time. And 2014 is shaping up to be a potentially big year for new products — not just new models but new categories.
But halfway through the iPhone’s product cycle? That’s what’s getting harder to sustain. And that’s why, at some point soon, Apple is going to need to move on to something else — whether that’s a variety of new iPhones at different price points and/or a whole new mobile product category altogether.