Apple’s tech lag starting to show

A lack of ideas is a gloomy thing to behold in a tech leader. Executives try to strike all the right notes and use all the latest buzzwords, but the numbers show a disturbing trend and competitors are way ahead with real innovations that can be seen and touched.

This is now happening to Apple.

On Tuesday, Apple released its fiscal third-quarter results. Revenue is 14.6 percent down year-on-year. Net income is down 27 percent.

Even Apple's enormous cash pile has decreased slightly as debt - which Apple uses to move overseas profits to the United States - grew by $5 billion. iPhone sales are down 23.3 percent on the year-ago quarter - and they are the backbone of the company's revenue, still accounting for 56.8 percent of it.

The growth in services - 18.8 percent year-on-year - trumpeted by CEO Tim Cook during Tuesday's earning call - does little to make up for that shortfall: Apple sold almost $6 billion worth of services in the latest quarter and $24 billion worth of iPhones, so the scale isn't comparable.

Sales in greater China, Apple's single biggest source of growth in recent years, are down 33 percent year-on-year, more than in any other geographical region.

'We face some challenges” was how Cook described this on the earnings call.

The situation has not been caused by currency headwinds, a slowdown in the Chinese economy or any other factor beyond Apple's control. The company is losing competitiveness in both hardware and software, and its concessions to smartphone commoditization - such as the launch of the midrange iPhone SE, which Cook called highly successful - are doing little to stem the decline.

In hardware, it is losing to Samsung, a company whose earnings have increased 17 percent year on year in the same quarter thanks to the strong sales of the flagship smartphones, the Galaxy S7 Edge and the Galaxy S7.

Samsung struggled throughout last year, after Apple copied it by producing a large-screen phone. But then it fought back with a curved screen and better specifications.

At the same time, it simplified its product lineup and cut costs.

Samsung's edge on Apple is mainly in hardware. It's the global leader in high-end displays, and its phones use more advanced display technology than iPhones. Apple will be buying Samsung's OLED (organic light-emitting diode) panels starting next year, but Samsung will be the first to benefit from any technology advances - for example, Samsung is working on making these displays flexible, then foldable.