Anticipation of Apple's earnings announcement at the beginning of next month has already ratcheted up the anxiety among investors and analysts. The worry is that the company's strategy may have started to fail.

Many people find that concept inconceivable. Last quarter had record earnings, so how could the company be doing badly? Simple: great earnings, and good performance in services and Mac sales, but iPhone unit sales were down by 1 percent, year over year.

Here's a graph I put together of unit sales from FY2012 Q1 through FY2018 Q1.

The new and incredibly expensive iPhone X masked the problem because of its high average sales price. Using some algebra and a few modest assumptions back in February, I found that out of about 77.4 million iPhones sold, 27.2 million were for the iPhone X and 50.2 million, other versions of the phone. So, just over a third was the expensive model.

Many people are buying it, clearly. But when unit sales start to drop year over year, what you have is a strategic problem. The increased price of the X was a financial answer, but it doesn't address the basic issue that maybe Apple has seen its best days for the iPhone.

Nothing goes on forever, and savvy investors and analysts realize it. Apples entire house of success is built on continued sales of iPhones. The company has tried tablets, watches -- nothing else yes has come close to matching the massive appeal of the first modern smartphone. When there are good alternatives, at least for those who aren't Apple fanboys, to the iPhone at significantly less in price, that is a problem. The iconic consumer electronics device may no longer be a must-have.

The fundamental comprehension of Apple's weakness in a lack of product diversity in comparison to its financial size helps explain why so many have always had one foot out the door when it comes to the company. You can read over the years how some thought Apple stock was undervalued.

History shows that investors are frequently irrational, but if there were a lot of value per share that went wanting, you can comfortably bet that share prices would have gone up. There has long been an unease about the iPhone dependence.

The issue is strategy versus short-term tactical thinking. Investors are trying to apply the former, rather than the latter. Apple has been looking for a strategic bridge to other promising business ventures. So far, no luck.

The wait continues until May 1. Investors are hoping that May Day doesn't turn into mayday.

Published on: Apr 20, 2018