Apple's big iPhone launch: What could go wrong

Apple's big iPhone launch: What could go wrong

Summary: Let's play the contrarian game. The world says that Apple's iPhone 5 launch will kick off the greatest upgrade cycle in the history of electronic devices. Here are the wild cards that could prove the analysts wrong.

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Apple's launch on Wednesday in San Francisco will kick off what analysts have repeatedly predicted was the biggest smartphone upgrade cycle in history. With those proclamations leading to what could be ridiculously high expectations, it's worth pondering the downside.

Now I'm not going to be dumb enough to doubt that Apple's iPhone 5 will outsell iPhone 4S by a wide margin. In fact, Apple's latest iPhone will launch with multiple carriers around the world. It's a global phone and distribution alone will ensure its success.

The wild card here will be the duration of this iPhone upgrade cycle. Meanwhile, there are other worries for the latest iPhone. Will these concerns materialize? Who knows, but it's certainly worth highlighting them amid the sea of gushing coverage on deck.

Let's play the contrarian game. Here's a look at the key wild cards surrounding the iPhone launch:

Carrier upgrade cycles. Apple got a healthy bump from the iPhone 4S launch. Those iPhone buyers in the U.S. are locked into two year contracts and few will pay heavy penalties to upgrade to the latest greatest Apple smartphone. Meanwhile, carriers won't allow customers to upgrade until they are 20 months into their contracts. That means that customers are locked into their old iPhones just a bit longer. As a result, Apple could see more steady demand over time as long as consumers don't decide after six months to wait around the iPhone 6.

Likely scenario: Apple will offset carrier upgrade cycles with new partners in global markets.

Consumer behavior. Apple is likely to get a massive bump from pent-up demand for the iPhone 5. The big question is what happens after all those new buyers go through the pipeline. Last quarter, it became clear that the iPhone upgrade cycle was getting shorter. After four months, it's quite possible that consumers will start waiting for the iPhone 6.

Likely scenario:Apple will see increasingly shorter iPhone demand cycles. That's why it needs a new hit---iPad Mini, iTV---to offset iPhone demand. Conversely, Apple could go for a faster release cycle, but that's difficult and may only make the upgrade progressions shorter. More: Why the iPhone 5 launch will be the "biggest upgrade in consumer electronics history"

The iPhone has already pounded the little sisters of the smartphone poor. NPD noted that Apple will have a tougher time taking share with the iPhone 5 largely because it has already beaten the likes of RIM and Nokia to a pulp. Samsung and Apple now run the smartphone landscape and both have feasted on a steady diet of RIM defectors.

Likely scenario: Apple's market share will increase a smidge vs. Android, but basically run in place. Profits trump market share anyway.

Perhaps the iPhone 5 isn't all that. According to numerous leaks there are two key features for the iPhone 5: The screen will be bigger and it will support 4G LTE. The catch is that Samsung has already been around with a larger screen and 4G devices. We'll let those two crazy smartphone makers yap in court about who is copying who. The iPhone will be a hit, but whether it lives up to Wall Street expectations remains to be seen. Trefis said in a research note:

The pent-up demand might mean a phenomenal holiday quarter for Apple, like last year, but it also puts its stock under the risk of the iPhone 5 not meeting customer expectations.

Likely scenario:Techies will be disappointed because most news about the iPhone already leaked. Keep in mind that the iPhone 4S looked very incremental too, but sold more units than previous version. More: Will the iPhone 5 display remain competitive?

Market saturation. In developed markets, smartphones are dominant. Most phones are now smart. In other words, there aren't a lot of easy wins for Apple or Samsung to exploit. Easy upgrades will be harder to come by. Keep in mind though that Apple's emerging market field is wide open. Apple is just now exploiting emerging markets. Should Apple somehow support China Mobile---a doubtful move given the carrier's proprietary network---these saturation concerns would disappear quickly.

Likely scenario:Apple gains won't come easy. As mentioned above, don't expect a massive share gain. More: Analyst: iPhone 5 sales could hit 10 million in first week

Related: CNET: Apple's Sept. 12 iPhone event: What to expect 

Topics: Mobility, Apple, iPhone, Smartphones

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176 comments
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  • Orrrrr

    The phone gets banned within a month of its release because of all the scumbag frivolous lawsuits Apple has been throwing around, coming back to haunt them in the form of LTE patent litigation. Hopefully. They need a lesson.
    jamz2277
    • How is protecting one's IP frivolous?

      Or are you one of those hypocrites who think that Apple is evil when it sues to protect it's IP but it's okay for everyone to sue Apple?
      athynz
      • There seem to be a lot of those

        Here, unless they are just a few, with many screen names
        Troll Hunter J
      • I don't like them hypocrites

        They could not take the fact that a tap is indeed a zero length swipe and a blatant violation of Apple's IP.
        Fleeb
        • consider this

          Jamz2277 has a point. So y did apple take so long getting with the 4g program?...

          @athnyz I believe in fair play but yes it is ok to sue apple. Didn't Jobs once say something to the likelyness of; smart people invent things, brilliant people steals those and make their own?..

          @fleeb excellent point but the tap on a touchscreen has been around way before apple got in the iphone/ipod/ipad game. Think crt touch monitors (elo). Apple just patent a name to something that already existed. Heck, i'll even come go to 2000s. The pocketpc2000 era. Yes a stylus was best method but same principle. Lets go back further, 1st gen palm pilots. Seeing my point. They were allowed patent cause of type of touch (active, passive, resistive. Not sure which they use) and the stylus was a finger. To a point the gesture is all the same. Apple is the one not playing nice/fair. And because they have the money they can have it their way. Money Talks
          Free Webapps
      • Did Google due Apple?

        When iOS implements the top notification area like Android, did Google sue Apple? No!

        Why Apple can sue Samsung using stupid reasons like rectangular shape with rounded corners, and using icons and that's logical? Give me a break please....
        chmun77
        • Google is run by college kids

          Google did not sue Apple because they did not believe software should be patentable or copyrightable. That's a wake-up call for Google: Just because you don't believe the rules does not mean other companies can't use them to sue you.
          AppToday
          • Wrong

            Google did not sue because they don't have a patent (Apple has a license from the patent holder).
            rbgaynor
          • Even college kids are smarter...

            than that. Copyrights and patents are there for a purpose and you can be quite sure Google does and will continue to defend their patents. Interestingly, even GOOGLE told Samsung to back off.

            What you may not know is that Samsung practically owns South Korea and yet even the South Korean courts determined that Samsung was infringing on Apple's patents.
            DWFields
        • Notification bar

          Was not invented by Google. It is patented and licensed by apple from Paul Allen. In fact Paul went after Oracle because of there use.

          http://www.androidcentral.com/google-others-sued-microsoft-co-founder-paul-allen
          Johnpford
          • Ummmm

            If it was licensed by Apple, why is Apple listed as one of the companies being sued? Or did you just read the first one and a half sentences and not the full second sentence (or any of the accompanying links in the article)? The companies he sued were Apple, Google, Facebook, AOL, Netflix, Yahoo, eBay, YouTube, Office Depot, Office Max, and Staples.

            A little followup research shows that three of the four patents were immediately granted reexamination and the fourth was soon to follow. Still don't have a reexamination opinion from the USPTO, mainly because Allen's attorneys keep moving the target.

            So your post is extremely useless here.
            benched42
      • i hope apple does get suid

        i hope apple does get sued
        ShqTth
      • Like it or not a lot of people do think just that!

        The real issue is that patents should never have been granted for some of the things which are simply common sense things like a rectangle with rounded corners for a phone, the use of icons on a phone and finger gestures on a touch screen. Secondly a responsible company would only use such patents where there was an obvious intent to defraud customers into believing it WAS an iPhone If it says Samsung or HTC on the phone that is clearly not the case. Next they clearly know that enforcing the more general patents is against the public interest in that it will reduce the range of options open to people.
        I remember not too many years ago that MS were litigating against anyone they could and they are still struggling to shake off the image they created for themselves.
        Phones with screens that had icons on them had been around for ages and although not "touch" sensitive it was obvious that this would be a way to manage a smartphone - apple just got theirs to market first and remembered to patent it.
        The Samsung (and many others) are clearly not exact copies of an iphone and have many different features (indeed apple fans decry these as worse and android fans say they are better - that does kind of imply there are differences.)
        The high end androids are so close in price that I doubt many will choose on the cost factor and those at the lower end are in a market that Apple frequently admit they dont want to compete in. It would be interesting to see how many of their patent applications would have been successful in say the UK or another European country. As for the court decision it is a US court upholding a US patent infringement made by an increasingly powerful US company. Many people outside the US believe that the US government is increasingly controlled by business interests and the government appoint the judiciary. I know also that many US citizens feel the same way.

        As for the launch, of course it will be successful - firstly there are people who will sell their soul to get an iPhone 5 to whom contract penalties will mean nothing, then there are people like me who buy phones off contract and then there are people who like apple phones because they are an excellent product. I moved to Android android for some practical reasons that had little to do with money - the screen size was a prime one though I have since found that I prefer the way that I manage the folders and files on my phone in the same way as I can on my windows PC. I also think that despite the plastic (but at least removable) back the Samsung seems as reliable and well built as my former iPhone 3gs (which in my view was a much prettier phone than the 4 series)

        I genuinely hope that Apple will offer something genuinely innovative that no one else has yet because I am not an Apple hater, just an android fan. In recent years Apple have led the pack and their innovations help to develop the future for the whole industry - I don't mind that I have to wait 9-12 months for the others to catch up which is they way the tech industry has worked for the last 20 years or so. Apple seem to want to move from being innovators and leaders to become sole manufacturers and that can only be bad for consumers, no matter what spin the Apple executives put on it.
        cymru999
        • The real issue...

          "The real issue is that patents should never have been granted for some of the things which are simply common sense things like a rectangle with rounded corners for a phone...."

          No. They never were. The design patent that you refer to is far mote complex and that component is just one small characteristic.

          Like complaining that a patent of a jet engine is just a patent on blowing hard.

          The design patent is there to classify a whole set of characteristics that collectively would constitute making a product intended be passed off an another product. The precise dimensions of the rounded corners are just one small component.

          But if Samsungs's lawyers represent that as the a patent on rounded corners in the hope of duping some poor sole in the jury, and failed, then we shouldn't be surprised that they duped some other poor fool instead.
          Henry 3 Dogg
          • And yet...

            We have jet engines made by General Electric, Rolls Royce, Pratt and Whitney, and many others. So yes, as far as the general principles go a jet engine really is just a machine that blows hard. I.e. they all have the same basic components like compressors, combustion chambers, turbine sections, exhaust nozzles, etc just as all smart phones, generally speaking have a cpu, gpu, memory, storage, and a touch screen for display and user interaction. Yet, no one accuses General Electric of copying Rolls Royce.

            Once you settle on the idea of the jet engine, much of the rest - with variations of course, becomes relatively obvious and in fact was thought of, designed and built in a number of different countries (such as Britain, Germany, the US and the Soviet Union) at the same time. Of course there was a war on at the time so the Germans would have had a hard time suing Frank Whittle. But still, these same concepts apply to electronic devices. Once the underlying idea is there, it is not at all surprising that multiple companies would independently develop similar devices that implemented that technology.

            The evidence is all around us. Is a Ford really all that different from a Chevy when looked at as a personal transportation vehicle? Generally speaking they both have four wheels, an internal combustion engine, are controlled by a steering wheel and either two or three pedals on the floor with either a manual or automatic transmission. Anyone who drives a Ford can hop in a Chevy and drive it with basically no instructions because the "user interfaces" are so much alike.
            cornpie
          • And here is another example

            Open the Ford and Toyota web sites in separate windows and put those windows side by side. Bring up pictures of the 2013 Ford Escape and the Toyota Rav 4. Imagine these two vehicles sitting side by side with all brand labels and logos removed. If you knew nothing about either vehicle or company coming in, could you tell which one was which? Even knowing the Ford product line very well, the only thing that says "Ford" to me is the grill work and that's just because it looks like the grill work on a focus.

            So where is the Toyota law suite against Ford?
            cornpie
          • What a horribly crap analogy. Ha! It proves the opposite! Ha!

            I get what your trying to say, but your analogy actually proves why your largely WRONG.

            Here is why you are wrong, and where you went wrong. You say:

            “Like complaining that a patent of a jet engine is just a patent on blowing hard.”

            What Apple is actually suing over is more like; a thing that blows hard “that looks like this”.

            The ‘looks like this’, being the infringed upon issue.

            The one commonality most devices have is that there is often a general form that provides for good common sense efficiency of functioning. Hence, good engineering of devices usually abide to a great deal by the old adage of form follows function.

            Jet engines certainly fall into this category, and certainly to a large degree so do touch screen smartphones. Aside from size, most people would have a difficult time telling one jet engine from another unless they were close enough to see particular details. Generally they look quite similar because efficient design dictates jet engines will usually be of a particular shape and design. Many of the differences in the way they look are in fact details and many of the rest of the differences would often take an expert to point them out. Certainly from a distance. Jet engines are generally quite large. The internals of the jet engine itself may have numerous technical differences on very specific parts of course, some engines in fact having parts another doesn’t have at all in some cases.

            Smartphone have much the same issue. Your dealing with a device that’s going to enlist the use of a persons hands, ears and mouth, the device itself will have touch screen functioning, perhaps with a few strategically placed buttons. They will all be used for the same general purposes. The device will typically be carried in a pocket, or many women will carry them in a purse.

            Because of the way its used and what its used for and how its transported, size and shape would logically not stray a whole lot from one unit to another, particularly where similar price points are being considered and the company producing the phone have come to similar common ground thoughts about approximate screen size. Rounded corners may not be absolutely necessary, but they are simply common sense wise for a device that’s going to be slid in and out of what may be somewhat tight pockets on a regular basis. Again, the internals may have some significant differences.

            Even screen icons. Screen icons are nothing new in themselves. Computers have had them since the first graphical UI. The fact it’s a finger touching them to activate them instead of a mouse curser makes no important difference on that fact, except it rather dictates size of those icons a little more as they will want them to be designed to work with whats determined to be a most common average finger size.

            There are in fact numerous reasons why generally, touch screen smartphones will look fairly similar and it should hardly be surprising when some look very similar. Unless a particular design “look” is in fact unusual in some way, this usually comes about when a device has some unusual function others do not, one should actually expect that the way smartphones look should not typically be a patented feature, any more than the general look of a jet engine should be a patented feature. Its nonsense.

            In such cases, allowing for such a thing may hobble the rest of the industry as form following function is then hobbled to some degree. It takes away from some common sense engineering. That’s not an entirely fair approach.
            Cayble
        • Agreed

          Some things are just inherent in a particular technology. In this case, once you settle on a touch screen, the idea of icons that you tap with your finger is so obvious that there is no way anyone should be able to patent that. The touch screen itself could be patented, but not the touching an icon to take an action part.

          We could also cite the concept of "prior art" ( http://en.wikipedia.org/wiki/Prior_art ) i.e. its been widely done before. Anyone every use an ATM machine? They were around, including touch screens and icons, long before Apple's iOS (and of course lets not forget that Apple had to pay off Cisco for appropriating the name "iOS" from Cisco networking devices, the Beatles for appropriating the name of their record company, and Toshiba for appropriating the name iPad)
          cornpie
          • Pay off..

            Lets get it at least a little straight.
            1) Apple negotiated for iOS there was no disagreement on that part.
            2) I believe what you are referring to is iPhone which apple did after the fact.
            3) I hardly call Apple records vs Apple Computers both of which were founded in the late 70's as being Apple copying someone. If you recall Steve was a guy who worked in a Apple orchard.
            4) And it was toshiba for iPad. They bought the name of the iPad. It was proview. And Apple paid for the name actually twice.
            Johnpford
          • ???

            BUt Apple also said they would not get into the music business - and just what did iTunes start out as - a way to buy music - sounds like the music business to me
            stevejg61