iPhone is no longer the Apple of consumer's eye

Company's reputation hit by poor sales, child labour and bigger screens

The iPhone is no longer the "It" phone. Apple last week stunned markets when it announced lower than expected sales, the bad news sending share prices crashing. Its problems were compounded this weekend when it confirmed reports that its suppliers had used illegal child labour to make its products.

The admission has encouraged critics who accuse the company of profiteering. The iPhone has an estimated profit margin of 55 per cent, helping to make Apple one of the world's most valuable listed companies. But iPhone sales were worse than predicted over the Christmas quarter, with 47.8 million iPhones sold, two million short of a forecast 50 million.

An internal audit uncovered 106 "active cases" of children being employed by its suppliers over the course of 2012, and 70 people who had been underage and had either left, or passed the age of 16 by the time of checking.

Of those 106 under-16s, 74 were employed by a single Chinese manufacturer of circuit-board components used in Apple products. Apple said a local labour agency "knowingly" supplied the children and responded by terminating its relationship with the supplier, and reporting the labour agency to authorities which fined it and suspended its licence.

"Our approach to underage labour is clear: We don't tolerate it, and we're working to eradicate it from our industry," Apple wrote in its report. "When we discover suppliers with underage workers or find out about historical cases ... we demand immediate corrective action."

The news followed the high-profile protest by Chinese workers at Foxconn, the world's largest electronics manufacturer, which supplies Apple and others. About 150 workers threatened to commit suicide by leaping from their factory roof in protest at their working conditions but were coaxed down after two days by Foxconn managers and local Chinese Communist party officials.

The setbacks have added more pressure on chief executive Tim Cook. Apple's stock reached a peak of $705.07 in September last year,but last week fell below $500. During a conference call with investors last week, Cook played down reports Apple had reduced iPhone orders, insisting the company "is in one of the most prolific periods of innovation in its history". He said: "We rely on the same spirit and drive that brought the Mac and other revolutionary products like the iPod, iPhone and the iPad into the world."

But analysts say consumers are shifting away from the iPhone's 3.5-inch and 4-inch screens toward the 5-inch screens offered by companies such as Samsung, which saw its profits in the last quarter of 2012 surge 76 per cent, helped by sales of its Galaxy smartphones. Tellingly, demand has also been high for the Apple's earlier and cheaper smartphone models.

Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Agretti is often compared to its relative, samphire, though is closer in taste to spinach
food + drink
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
The dress can be seen in different colours
i100
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    Ashdown Group: Front-End Developer - London - up to £40,000

    £35000 - £40000 per annum: Ashdown Group: Creative Front-End Developer - Claph...

    Ashdown Group: QA Tester - London - £30,000

    £28000 - £30000 per annum: Ashdown Group: QA Tester - London - £30,000 QA Tes...

    Ashdown Group: Linux Administrator - London - £50,000

    £45000 - £50000 per annum + bonus: Ashdown Group: Linux Systems Administrator ...

    Ashdown Group: Business Intelligence Analyst - London - £45,000

    £40000 - £45000 per annum: Ashdown Group: SQL Server Reporting Analyst (Busine...

    Day In a Page

    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
    Yvette Cooper: We can't lose the election. There's too much on the line

    Yvette Cooper: We can't lose the election. There's too much on the line

    The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
    A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

    It's not easy being Green

    After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
    Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

    Gorillas nearly missed

    BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
    Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

    The Downton Abbey effect

    Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
    China's wild panda numbers have increased by 17% since 2003, new census reveals

    China's wild panda numbers on the up

    New census reveals 17% since 2003
    Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

    Our woman in Beijing builds a new relationship

    Britain's first female ambassador to China intends to forge strong links with growing economic power
    Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

    Courage is rare. True humility is even rarer

    Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
    Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

    Alexander McQueen's astonishing vision

    Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
    New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

    Dinner through the decades

    A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
    Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

    Philippa Perry interview

    The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
    Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

    Bill Granger's Indonesian stir-fry recipes

    Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
    Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

    Harry Kane interview

    The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
    The Last Word: For the good of the game: why on earth don’t we leave Fifa?

    Michael Calvin's Last Word

    For the good of the game: why on earth don’t we leave Fifa?
    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?