The deceleration of the demand for the iPhone along with the increasing concerns about gross margin resulted to nearly 30% decline in Apple Inc.'s shares last year. The rising rivalry from other tech giants like BlackBerry, Google and Samsung accounted for this year's stock plunges. The competition came with fears that the smartphone market was close to saturation.

The iPhone brand earned almost 50% of Apple's value. However, no new upgrades were reported yet. Since Apple's competitors releases new gadgets in answer to its new products, Apple was said to be accountable for the market slow down. According to a report recently made by UBS, the decreasing upgrades for high-end phones were the main reason the market was slowing down.

In 2012, only 68 million people in the US upgraded their smartphones. The figure was down by 9% in 2011.

The saturation at the high-end of the smartphone market showed that Apple needed to tap the growth in emerging markets like China. China was the world's biggest smartphone market by volume. Experts said that up to 850 million Chinese users would upgrade to 3G. This would be a huge potential for Apple to boost if it would keep on making smartphones. It would also secure the sales if it would produce iPhones that were cheaper.