First Take: The fall (and rise) of Apple

SAN FRANCISCO — Brace yourselves for the fall of Apple.

Not the decline of the empire that Steve Jobs & Co. built, but the resurgence of Apple during the fall season — starting with the expected announcement of iPhone 6 in early September, followed by a new iPad and the long-rumored watch (some are now calling it iTime, based on patent papers filed by Apple).

Judging from Apple's third-quarter financial results, the product barrage can't come soon enough. Revenue and profits remain strong. Apple racked up $37.4 billion in sales and a quarterly net profit of $7.7 billion, or $1.28 per diluted share — topping analyst estimates.

However, sales of its franchise smartphone and tablet lines are cooling, suggesting hints of consumer fatigue with the current product lineup. IPhone sales topped 35.2 million, up 13% from the year-ago quarter, but clearly in need of a new version. IPad sales dipped 9%, to 13.3 million, from the same quarter a year ago.

The Macintosh, ironically, is outpacing unit shipments of iPhone and iPad, percentage-wise. Mac units rose 18%, to a modest 4.4 million, in the quarter.

Apple's slice of the U.S. smartphone market continues to grow, but at a slower rate. It is expected to be 40.5% this year, compared with 40% in 2013 and 36.5% in 2012. Android, meanwhile, is 50% this year, from 49.5% in 2013 and 43.5% in 2012, according to eMarketer.

And while the number of iPad users continues to increase, Apple is losing share to others entering the market. Apple's share of U.S. tablet users is expected to decline to 51.8% this year, from 54.5% in 2013, says eMarketer.

Although the second quarter is typically slow for smartphone sales, Apple's partnership with China Mobile, the world's largest phone carrier, kept iPhone sales humming. The long-term narrative of Apple rides heavily on China, where faster communications networks bode well for Apple.

Apple's refreshed product line, on the heels of its startling business partnership with IBM, underscores a new, more aggressive posture by CEO Tim Cook. His bold move to create business apps with Big Blue exhibits a willingness to leave the enterprise market to someone else.

"(Cook) speaks quietly through actions and understatement," Forrester analyst Frank Gillett says. "Despite Jobs' ego, the ethos of Apple is letting its product speak" for the company.