For the first time in three years, Apple didn’t launch a new iPhone handset at WWDC. They showed us iOS 5, but then told us we have to wait until September to get our hands on it. What’s the deal with this? All signs are pointing to a brand new mobile strategy from our friends at Apple…
So – where is it? The iPhone 5, or 4S, or 4G, or whatever it’s going to be called. Clearly, it’s not at WWDC – in any form. There haven’t even been any whispers about it from Apple at the conference. Journalists, bloggers and analysts seem to think that Apple’s next-generation handset is destined to appear in September, or perhaps October. With iOS 5 now set to drop in September, this makes some sense.
I hate to break it to Apple, but a ton of people tuned in to blogs and live streams for one reason on Monday: to see or hear something regarding the next iPhone. Sure, everyone cares about Lion and iOS, and people will definitely care when they get to actually use iCloud. But the faithful tuned in at the same time this year as last year and the year before to hear something about this new iPhone, and got nothing. This is a solid indication that Apple’s changing the course of its handset strategy.
It’s pretty clear that right now, Apple’s iPhone plan is rather simple. Sell whatever the newest iPhone is (the iPhone 4, currently) for the highest price, and the last model (the iPhone 3GS, currently) for less. A quick check at virtually any carrier that offers the iPhone around the world will show you that the 3GS is the “low end” iPhone and the iPhone 4 is the “high end” iPhone.
For Apple, the problem is simple – this situation is awful. By having a predictable annual release cycle, Apple painted itself into a corner when it comes to market segmentation. There are no other iPhone handsets available from carriers… just those two. Up until now, since Apple was brand new to the mobile market, this has been sufficient. Now that they are established players in the game, it’s not. By shifting the release date out of June and into the fall, they have a lot of room to make significant change.
The iPhone is NOT an iPod
Earlier this year rumors surfaced that Cupertino was developing a miniaturized, less expensive iPhone which journalists dubbed the “iPhone Nano”. While this seemed preposterous to nearly anyone with insight into the mobile industry, it rang clear as reasonable to many others. Why? It’s simple – it’s the same strategy Apple used with iPods. Take care of the high-end market, then offer a lower-priced middle-end model that some may even adopt as a second device, and then cough up something later that satisfies the low end. iPod, iPod Mini, iPod Nano. Simple. However – this strategy doesn’t work in the mobile space, thanks to the development of smartphones and rapidly-innovating smartphone manufacturers.
Apple can’t bring out a cheap, low-end phone. It doesn’t have the market share (currently 17% of the smartphone market worldwide), and it doesn’t have the market segmentation. No form of iPhone will ever satisfy the “featurephone” crowd, who want a durable phone for things like… making phone calls. With its fifth-generation handset set to appear, Apple owns just a 4% share of the colossal 430,000,000 phones sold annually in the global market.
The iPhone 5: an Updated, Refreshed iPhone 4
Consider this for a second. What if Apple moved its yearly iPhone refresh to a half-yearly schedule? The next iPhone comes out in September, or October; the sixth-generation iPhone lands sometime in March or April. This is a major shift that would take a lot of stress off of the iPhone team, as they can relax and not have to bring gigantic, blockbuster designs out every year that wow crowds and set a new market-leading standard. Instead, Apple can – like Android manufacturers – usher in incremental changes, updated designs, and offer a wider-range of handsets than it currently can.
Picture an Apple lineup with these offerings: the current iPhone 4, the September/October launched iPhone 4S, an iPhone 5 launched sometime in the spring, and an iPhone 5S launched in fall 2012. Suddenly, Apple now has market segmentation, can offer four different handsets at four different price points, and even stagger the features offered on some of them to capture other markets they haven’t penetrated yet. This would push the iPhone deeper into territory dominated by Android and being clung on to for dear life by RIM – a company that Apple firmly declared war on with its iOS 5 iMessage app, a clone of RIM’s popular BBM.