Tuesday, September 17, 2013

So did Apple blow it?

Last week's announcement from Apple drew a lot of boos and hisses from stock market traders and from the tech commentators.   The two new phones got ho-hum reviews and iOS 7 was barely mentioned.   But as one should often do in market and tech commentary - it is worthwhile to step back for a moment and take a breath to reflect.   Walt Mossberg disagreed the naysayers when his review concluded with "Overall, however, the new iPhone 5S is a delight. Its hardware and software make it the best smartphone on the market."

Before I offer my reflections on these product announcements it is critical to state one reality that I think is fundamental to cellular phones.    For the last year there has been a pretty strong trend that break through innovation in the sector has not been there.   Chips are a little bit faster, screens and cameras are a little bit better, battery life is better and LTE coverage is somewhat better (in many places) but the bang up that caused Blackberry to fade away (brought about in large part by the iPhone one) has been mostly non-existent.   Look back at the announcement of the Galaxy 4 and there was a lot of chatter about how it was really not much of an upgrade.   From my perspective we have moved into a mature market where holding customers is almost as important as gaining new ones.

So here are my reflections (from someone who is admittedly a strongly committed Apple user):

#1 - Is the 5C cheap enough?   A lot of the criticism of the 5C was that it was not cheap enough to crack the Chinese market - where presumably billions of consumers await the chance to have limited use of twitter through China Mobile.  The pre-orders for the phone seem to be very strong.   Who seems to be buying the phone?   Evidently, a lot of people.  The consumer colors are likely to attract a lot of non-users to the platform. We'll have to wait and see about whether the deal when the China Mobile deal is inked.   They evidently have more than 42 million iPhone users at the present time.

#2 - What does the 5S really have to offer? - When I watched the announcement I was intrigued by three things about the phone.   First, I kind of like the fingerprint recognition (assuming that it is reliable).    There has been all sorts of nonsense about how this new security feature will cause problems - from my perspective that is what it is - nonsense.   Second, the A7 chip is, indeed, faster than the prior chipset but more importantly is the M7 chip which controls a lot of the functions that were formerly controlled on the main chip.  From the technical discussions of the new chips the advance here is significant.  That means the main chip (the A7) can concentrate on running the phone - that is a big deal.   Third, the new gold case is cosmetic- but I bet it will attract some users who want to be able to demonstrate they have the new phone.  (I will keep mine in black/grey)

#3 - Ecosystem is a biggie - On a lot of the boards there has been chatter about the Apple and Android ecosystem.  (The ecosystem for phones is all those apps and other things that make the phone smart.)  Here, while Android has made some advances, Apple still is the easiest to use across devices.   So many Apple users also have an iPad and perhaps a linked laptop - and all those devices work well together.   To use a phrase in the drug wars - the phone is just a starter.   One metric to keep in mind- although Android phones outsell Apple's - the revenue for developers (those are the guys who write those handy APPs) was 2.6 times larger than that for developers of Android APPs.   That sounds like a pretty strong enrolled base.

#4 - iOS 7 - The announcement last Spring about the new operating system for phones and tablets has been followed up by what looks to be a very significant upgrade.    Obviously, tomorrow the real test will begin.   When the last operating system for the iDevices came out - a huge majority of users upgraded so that by six months after the introduction most users were on the latest system.  The best estimates on the current setting is that close to 90% of iOS users are on the latest system.
Android has a defect in their system - which is both a strength and a weakness.   Open source means that a bunch of people can tweak the system.   But according to the most recent data only about a third of users are on the latest Android operating system.   In the iOS world one can expect that almost all people can get the same functionality.   I have talked with several Android users who love their phone - but I have also talked with several who switched.   I've spoken with a lot more Windows phone users who did not like their operating system.

Ultimately, what smart phones have done is created a device that is a lot more than just something to call people with.  As an example, yesterday as I was fishing on the Sacramento River I texted photos of the two huge Salmon I caught.   I have one friend who was anti-smart phone until her husband bought her one and now the phone never leaves her side - she has become a Facebookista.    From my perspective, Apple did what it needed to do - produce some products that advance the utility of their products.   I am looking forward to seeing what they will do with the tablet market - which I hope will include an announcement in the next month or so.

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