More consumers are buying the least expensive versions of Apple's iPhones and iPads, a new phenomenon that is causing the company's breakneck growth rate to slow.

Apple revealed that both revenue and net income posted increases of just over 20% - cause for celebration at most companies, but meagre by Apple standards.

Apple's growth was the slowest in more than two years, and failed to meet analyst expectations.

"The sheen is off the apple: It was a miss, no question about it," said David Rolfe, chief investment officer at Wedgewood Partners.

Apple routinely blows past analyst expectations. It has only come in under their earnings expectations twice in 10 years.

"We became too confident, in our expectations, that Apple had literally a perfect pulse on end demand throughout the globe... and quite simply, that wasn't the case this quarter," Mr Rolfe said.

It was not so much the volume of sales that disappointed: Apple sold 17 million iPads in April to June, beating expectations, and 26 million iPhones, at the low end of expectations.

But Apple's average selling prices for the gadgets declined to levels last seen in 2010 for the iPhone and the lowest levels ever in the case of the iPad.

Part of the reason was that consumers bought less expensive versions of the devices, said Apple's chief financial officer, Peter Oppenheimer. Apple introduced a new iPad in March, but kept the older model in stores while cutting its price.

The strengthening dollar also meant that overseas sales at constant prices translated into fewer dollars for Apple.

Sales in China, which have been a growth engine for the company, also declined compared to the previous quarter. CEO Tim Cook said that was because the iPhone 4S went on sale in China during the quarter that ended in March, and the company stocked inventories in the country.

Mr Cook is known as an efficient manager of production and supply. He took over after founder and CEO Steve Jobs died in October.

Mr Cook said he did not see any effect of the economic slowdown in China. But the troubles in Europe were evident, with sales to the continent growing just 16%.

He also blamed the tepid iPhone sales - up 28% from a year ago, but down from the previous quarter - on anticipation building for the next iPhone model. Apple has not said when it will arrive, but most company watchers now expect it in October.

Mr Rolfe had expected stronger iPhone sales, and said he was surprised that consumers are holding off on buying iPhones as much as six months before the arrival of a new model. Previously, iPhone sales started tapering off about three months before the arrival of a new model.

Net income in Apple's fiscal third quarter was 8.8 billion US dollars, or 9.32 dollars per share. That was up 21% from 7.3 billion dollars, or 7.79 dollars per share, a year ago.

Analysts polled by FactSet were expecting earnings of 10.37 dollars per share.

Revenue at the Cupertino, California, company was 35 billion dollars, up 23%. Analysts were expecting 37.5 billion dollars.

Investors sold off Apple shares, but the reaction was muted compared to the earnings miss. Apple shares fell 31.92 dollars, or 5.3%, to 569 dollars in after-hours trading, after the release of the results.

With its market value of 539 billion dollars, Apple is by far the world's largest company.

Apple forecast earnings of 7.65 dollars per share for the current quarter, well below the average analyst forecast at 10.26 dollars. Normally, Apple's forecasts are ignored, because the company routinely exceeds them. But for the just-ended quarter, Apple's cautious forecasts were more accurate than those of analysts.

Apple's forecast points to year-over-year profit growth of just 9%.

For revenue, Apple forecast 34 billion dollars, while analysts have been expecting 38.1 billion dollars.

Apple last missed expectations when it reported results for the quarter that ended in September last year. That was due to the iPhone 4S's launch being pushed from that quarter to the following one, and it made up the shortfall with very strong sales in the holiday quarter.

Mr Oppenheimer said the new version of its operating system for Macs, Mountain Lion, will go on sale today.