Apple Inc. (AAPL) in the (i)Cloud, but Can It Face Reality?

Apple Inc. (NASDAQ:AAPL) has been taking a pounding on the market Thursday in the wake of its earnings conference call, which provided disappointing guidance for the March quarter – which basically has overshadowed the gaudy revenue and profit numbers, which were among the largest quarterly numbers recorded by any company in recorded revenue-and-profit history.

And while there seems to be a new reality in the consumer marketplace, Apple CEO Tim Cook mentoned his company was in the Cloud several times.

Of course, we mean the iCloud, but still …

One tech reporter noted during the conference call how Cook referred to the Apple Inc. (NASDAQ:AAPL) iCloud service several times, apparently proud  of the explosive growth of the service in just one year. Though signing up for a free iCloud account is part of the setup process for every new iDevice, the number is noteworthy – after reporting 85 million iCloud accounts in January 2012, Cook mentioned several times that the service has passed 250 million users – a nearly 300-percent jump in accounts. In relations to that increased demand and usage, Cook went on to say that the company was looking to place major capital expenditures in data centers to accommodate the great infusion of iCloud data.

While Tim Cook was in the Cloud, there are analysts and investors who are skeptical that Apple Inc. (NASDAQ:AAPL) may be struggling to know the new reality in the smartphone and tablet markets – that for consumers, it’s more about price point than having state-of-the-art, innovative devices. Apple has made a culture with its high-priced, high-quality devices, but with the smartphone and tablet markets becoming heavily populated with more lower-priced, fewer-feature phones that are very popular for other companies, it is possible that unless Apple adjusts its model or develops a new wave of innovation, the days of double-figure growth at Apple may be over.

How might Apple address this reality?

Brian Blair, analyst at Wedge Partners, wrote in a research note, “[I]t’s evident that Apple is now being forced to sell lower cost products at lower prices to address the low cost trend in smartphones and tablets. We believe this is best evidenced in the strong demand for the iPad Mini ($329 vs. $499 for the standard iPad) and in the continued strength of iPhone 4S/4 sales since the 5 launched last fall. As Apple continues to address its global audience price is paramount, and with so many low cost Apple alternatives on the market, Apple is being forced to offer competing products with lower margins.”

This would be consistent with Tim Cook’s continued determination that Apple Inc. (NASDAQ:AAPL) is focused on getting a foothold in China, an emerging market where Apple products are currently out of reach for a large percentage of the consumers. While Apple introduced a financing plan in China for its current stable to devices, there are rumors that the company may eventually  relent and put out a cheaper smartphone sometime this year in order to accommodate markets like China, India and Brazil. It’s either that, or the upgraded current devices will have to come up with premium-priced innovations to corral the bears that are on the loose.

What do you think? We’d love your comments about Apple Inc. (NASDAQ:AAPL) and your thoughts about the stock and the running of the bears right now. Is there hope for investors moving forward?

DISCLOSURE: I own no positions in any stock mentioned.

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