Apple's stock is down 25% from its peak.

Many factors have contributed to that drop. But none is more important than this:

Apple has lost its edge.

What does that mean?

It means that Apple is no longer the clear product leader in several categories in which it has dominated the world in the past five years.

Now, of course, Apple is still the most valuable and profitable company in the world. And its product design, manufacturing, and distribution is still remarkable. And it's still a great company. So, let's be specific.

For most of the past five years, Apple has led the world in the following key areas. In the past couple of years, however, Apple has lost its lead. And in some areas, it has actually fallen behind:

• Smartphones. Apple reinvented the smartphone category with the launch of the iPhone in 2007. For the first five years of its existence, the iPhone was unequivocally the best smartphone on the market. Now, many people consider other new smartphones to be better than the iPhone 5, including Google's new Nexus phone and Samsung's Galaxy S3. And with Samsung set to release the Galaxy S4 soon, many fear that Apple will fall even farther behind.

• Tablets. Apple straight-up invented the tablet category. The iPad had the market to itself for the first couple of years. The iPad is still by far the industry leader in big tablets, but Apple was late to the market for smaller tablets. As a result, the company lost valuable time and market share in that category. And, in an attempt to preserve its profit margin, Apple made some compromises on the Mini (namely, the lower-resolution screen) that left many Apple fans disappointed.

• Pricing. When the iPhone and iPads came out, Apple led the world in both features AND price. This was remarkable: Apple had the best product AND the best price. The iPhone is still priced at parity with the other top smartphones, but Apple has surrendered the mass smartphone market in emerging markets (where the big growth is) to companies like Samsung. Also, Apple's new tablet, the iPad Mini, is now considerably more expensive than many other tablets in its category. So Apple is no longer the feature and price leader in this market.(Several reports suggest that Apple will launch a cheap iPhone this year, which is a smart move.)

• Gadget market share. If one credits Apple with defining a whole new category of smartphone with the iPhone, Apple had dominant share of the category for a couple of years. Same with tablets. In the last two years, however, in part because of Apple's decision to focus only on the "premium" segment of the market, Apple's global market share in both categories has dropped precipitously. If this were merely a "gadget" market, this wouldn't matter. Apple has enough scale that additional market share would not make a huge difference in economies of scale. But the gadget market is now also a platform market (other companies build products and services on top of gadgets). And in platform markets, market share matters a lot.

• Cloud-based services and apps. By owning the App Store and the most commonly used apps on smartphones and tablets--cloud-based storage, email, telephone, voicemail, clocks, calendars, etc.--Apple once basically had end to end control over the cloud software and services ecosystem. With the "Maps" screwup last summer, along with a slow pace of innovation in its own "anchor apps" and cloud-based services, Apple has given up ground to Google, Dropbox, Evernote, and many other aggressive, focused companies that have produced apps and services that are better than Apple's native apps and services. The more people use non-Apple apps and services, the less important Apple's gadgets become as a platform (if you can easily migrate all your apps and services and content to another platform, there's less reason to stick with Apple.)