Apple Quarterly Earnings Lower Than Expected
Apple Quarterly Earnings Lower Than Expected

Apple has had a flurry of uncharacteristically bad news over the last few days. A riot at its Foxconn supplier in China. Weaker-than-expected iPhone 5 sales over the weekend (although sales weren't all that bad, see below). A disappointing feature in its new iOS 6 operating system.

It's enough to make a person wonder how long Apple will hold on to its place atop the digital music marketplace.

iPhone 5 sales of five million units over the weekend failed to meet expectations. Many analysts wanted see about twice that many units sold over the weekend. BTIG analyst Walter Piecyk told Yahoo! Finance's "The Daily Ticker" that Apple would need to do "probably about ten million to really excite investors."

Investors thought the iPhone 5's first weekend was something of a flop. Apple shares opened at $686.86 on Monday and fell as far as $683.00 after closing at an all-time high of $705.07 on Friday. Some investors sensed a buying opportunity and pushed shares to a plateau of $690 until midday Tuesday. (By the way, Apple isn't the only high-flying tech stock with a music affiliation. YouTube parent company Google reached an all-time high of $764.89 on Tuesday.)

Avid Apple followers aren't concerned, however. A collection of analyst note excerpts at reveal a consensus that timing issues and supply, not demand, were the reasons for the apparently soft numbers. A timing issue arises due to the way Apple accounts for its own sales versus sales by its retail partners. Apple is fulfilling most iPhone 5 orders itself and recognizes the sale when the customer receives the product in the mail. iPhones sold to retailers are recognizes as sold when shipped. In addition, limited supplies means some orders will be fulfilled in October. Analysts are confident iPhone 5 demand will be strong through the end of the calendar year.

Strong demand of the iPhone isn't the problem, writes the New York Times' Joe Nocera. The problem is that Apple doesn't have another product waiting in the wings -- a possible result of life without Jobs' leadership.

"Though Apple will remain a highly profitable company for years to come, I would be surprised if it ever gives us another product as transformative as the iPhone or the iPad," Nocera wrote last week in an op-ed titled "Has Apple Peaked?"

One product in particular is a watershed moment for Nocera: Apple's map feature in its iOS 6 update. Jobs never would have let Apple ship "such an embarrassing application," he wrote." Scorn for Apple's map app seems universal. In Japan, Apple's new map app contains incorrect data and may not take into account the fact that Japan uses a system of longitude and latitude that deviate slightly from the global standard.

Apple has suffered from weak product rollouts before and has managed to overcome and improve. The difference is the company is now under new leadership. Maybe Jobs would have released iOS 6 with the current version of the map apps, but he could have got more out of the developers.

Which brings us to the music business.

Without another iPhone, iPad or iPod, Apple will not have the next innovative product that transforms the digital music marketplace. The question then becomes who will step in and take from Apple its place at the top of the digital music heap? And how long will it take? Or will the digital music marketplace languish without Apple's leadership?

One of Apple's biggest advantages is that few companies could possibly sneak through the door it might leave open. Aside from Google and Amazon, which decent cloud music service and the resources to improve their offerings, and Spotify, which has the most momentum in the subscription market, the market lacks the right combination of product and brand power.

There are many role players in tomorrow's digital music business. Microsoft is working on Xbox Music service (details will be released next month) but has a history of underwhelming music services. Nokia just launched a playlist-based streaming service for two of its Lumia handsets. Sonos is using $135 million in fresh venture capital to bring digital music to the living room. But none are truly transformative at the level of Apple.

Mobility is ripe for more disruption. The company that best serves the mobile-minded customer will hold an advantage as customers shift away from the PC and mobile devices become more powerful and important in people's daily lives. Google's Android has a dominant 52.2% of the U.S. smartphone market ( July, comScore) and has an opportunity to make inroads against Apple -- but it needs a killer app.

Apple has yet another new product for music lovers. As if music fans don't already have enough reasons to have an iPhone, now they have Passbook to take their mobile tickets to concerts. If any company can bring mobile ticketing to the mainstream, it's going to be Apple.

Over time Apple will release the products Jobs left in its pipeline. It could, as the Times' Nocera writes, follow the path of other large companies and become overcome by more nimble, younger companies. A company built by one of the greatest CEOs in US history is not likely to be as valuable without the drive, innovation and decision-making he brought to the company. The digital music market will be different without him, too.