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Somebody at Apple is leaking, and leaking big. An internal Apple planning presentation shows how worried the company is over larger screens and lower prices.

A number of Apple watching sites have published slides from an internal Apple planning meeting in which the company expresses serious concern over the fact that it is having trouble competing on price and screen size.

“Consumers want what we don’t have” says one slide, which compares the total growth in the smartphone market from 2011 to 2012 of 228 million units, which was virtually all in phones costing more than US$300 with screens larger than 4 inches, or with phones costing less than that, with any sized screen.

The iPhone 5, with its longer 4 inch screen, partially addressed that problem, but Apple is still worried, the slides reveal. iPhone growth rates are slowing, shows one set of revealing data, from a year-on-year figure of 10% in 2009 to just 8% (still year-on-year) in the last quarter of 2013. “So what is going on?” asks the next slide. It’s not hard to tell.

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“The strongest demand is coming from less expensive and larger screen smartphones,” says the slide. Well, d’uh. And competitors (read Samsung) have “drastically improved their hardware and in some cases their ecosystem.”

The slide also complains about the “obscene” amounts of money competitors are spending on advertising and with carriers and channel partners. Um … it’s called ‘free enterprise’, guys.

So, Apple has to drop is prices (see iPhone 5c) and make bigger screens (as seems to be happening with the iPhone 6. All this may seem common sense, but Apple is notoriously inwardly focussed, and it seems that only now, with the iPhone’s rapidly declining market share, is the message sinking in.

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Meanwhile, Samsung has stolen a march, and Windows Phone has become a serious competitor. The iPhone’s decline from market leader to also-ran will no doubt be the stuff of business school case studies for years to come.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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