iPhone 5c, iPhone 5s: Connecting up the dots in Apple's plans

iPhone 5c, iPhone 5s: Connecting up the dots in Apple's plans

Summary: The Apple rumour mill is going into hyperdrive, but what are the real issues that Apple needs to focus on with its next iteration of the iPhone?

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With Apple expected to launch new hardware next month, the rumour frenzy is building, but by now the speculation is coalescing into a comprehensible and even believable pattern: that Apple is likely to unveil two iPhones at an event in September: one premium model (thought to be called the iPhone 5s) and an economy sidekick (the iPhone 5c). It may even throw in an unexpected bonus by adding gold to its range of device colours.

Apple, the iPhone, and the enterprise: What does the future hold?

Apple, the iPhone, and the enterprise: What does the future hold?

Apple, the iPhone, and the enterprise: What does the future hold?

But whatever Apple actually unveils, it will have to deal with a shifting smartphone landscape, marked by growing competition and fresh challenges. Here are some of the priorities that Apple needs to tackle — regardless of what colour its next handset turns out to be.

Turning dumbphones into iPhone fans

It may come as a surprise to those of us inside the high-tech filter bubble, but there are still some people out there who don't have a smartphone. In fact, there are quite a few, even in the US and western Europe (and plenty, plenty more in emerging markets). Persuading them that now is the time to make the jump from feature phone to smartphone, and chose Apple when they do, must be a top priority for Apple.

But it's not going to be easy: in a survey commissioned by Fortune, Samsung was found to be attracting more first-time smartphone buyers upgrading from feature phones (37 percent) than Apple (26 percent). An entry-level iPhone model that can trade on the cachet of Apple's premium brand could certainly help here, especially in developing markets.  

Taking on Android, and defending the iOS app ecosystem

Android phones continue to utterly dominate the smartphone market: Android increased its lead to 79 per cent of the market in the second quarter of this year (up from 64.2 percent in the second quarter of 2012), according to data from analyst Gartner, while iOS held a 14 percent share. It's a tough fight — Apple's family of (very similar) handsets versus pretty much the rest of the mobile industry.

And what of apps? While Apple users may spend more on their apps, Android users download on average the same amount per device, per month — and there are far more Android users out there. That means Android is becoming a more attractive development platform than it has been previously, analyst Benedict Evans points out. "This is a major strategic threat for Apple. A key selling point for the iPhone (though not the only one) is that the best apps are on iPhone and are on iPhone first," Evans writes on his website.

His answer: a cheaper iPhone to push up market share and protect the broader app ecosystem.

Laying the foundations for the next big thing

While it looks like the Samsung Galaxy Gear will be the first of the new generation of smartwatches to hit the market, there has been the constant tick-tock of leaks and rumours that suggest an iWatch is on its way.

But apart from the 'quantified self' fans, there's not a clear demand for smartwatches (or Google Glass either) yet. That means Apple needs to start laying the foundations for wearable devices and explaining why anyone ought to care.

Elsewhere, there's plenty of speculation that Apple will finally add the long-expected biometrics to its next iPhone. As my ZDNet colleage Jason O'Grady points out, adding biometrics could (assuming the implementation is decent) open the way for a whole new range of mobile payments applications.

Stop the average selling price slide

But while Apple's sales have continued to grow, the company has faced a significant drop in the average selling price (ASP) of its smartphones: despite the iPhone 5 being the most popular model, its ASP declined to the lowest figure registered by Apple since the iPhone's launch in 2007, thanks to strong sales of the iPhone 4, according to analysts Gartner.

The declining ASP suggests a need for a new flagship model, but introducing a new lower-priced model alongside could risk even greater cannibalisation than is happening with the iPhone 4. Gartner analyst Anshul Gupta has warned: "Despite being seen as the less expensive sibling of the flagship product, it would represent a new device with the hype of the marketing associated with it." Launching a premium model and an economy handset could reduce the risk, but Apple has to get the balance between the two right.

Regaining momentum and defeating iPhone fatigue

It's incredibly hard to deliver major innovations in the smartphone realm, but following the underwhelming iPhone 5 launch, Apple needs to come up with something better than a gold iPhone to regain its momentum.

And much of its competition are currently quite invigorated: Samsung has done a good job with layering additional services on top of Android on the S4, the Motorola Moto X has some interesting new ideas and even BlackBerry's BlackBerry 10 operating system looks surprisingly elegant: Apple needs to leapfrog all of these. That iOS 7 has dumped the tired skeuomorphics of previous iterations suggests a step in the right direction.

Further reading

Topics: Smartphones, Apple, Samsung

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77 comments
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  • smartphone fatigue is the right word

    It's not just Apple, even other smartphone makers will start seeing a slowdown. Even though the S4 is cool with just having to replace my trust Note 1 I decided to replace it with, you guessed it, another Note 1. Why?

    I seriously considered the Mega 6.3 and the S4. However price, performance and 'good enough' came into play.

    At what point is my handheld device doing everything I need and more?

    It'll take something really significant to get me to look beyond the price tag/feature list to buy the hottest new gadget.

    Just like PC's years ago they got to a point where the hardware far exceeded the software need.

    When I get my 41megapixel, octo core, 7" screen, self dialing, eye following breakfast making phone then I'll look at an upgrade
    REDPINXC
    • Partially.

      Other change is the gradual carrier move to having people pay for their own phones. Now that there isn't an illusion anymore as to how much phones actually cost, people might reconsider getting the top-of-the-line phone every 2 years, and go with cheaper models when they do need to upgrade.
      spacespeed
    • Augmented Reality

      I'll give you an example of how my Nokia Lumia 928 is enhancing my life. Last week I had to go to a dermatologist in Columbus, OH for a skin cancer screening. I live in Lima, OH (about 90 min away) so I was not overly familiar with the area where the doctor was located. After my appointment I wanted to grab some lunch before heading back and I opened up Nokia's City Lens APP which uses augmented reality to show me places to eat using my camera. I can read Yelp reviews, select where I want to eat and then navigate there using Nokia's navigation App Here Drive +. Everything works seamlessly and I had me a 5 guys burger thank you very much!
      sph0308
      • And you could get better results

        From either Android, or iOS, without looking dorky. Only Microsoft fanboys use WP 8 series OS Phones.
        Troll Hunter J
  • Hardware getting less relevant

    I can't lose the feeling that the hardware is getting less relevant. In the mid 90s I bought a Nokia phone on Orange in the UK (there was only one design) and for a bit you could keep track of various models in your head, then by end end of the decade the market was so stuffed with different handsets that your best bet was to just go and choose the one that felt right in your hand and was on special offer.

    Fast-forward to the iPhone's initial launch and it was quite a unique product. Even up to a couple of years ago there were only a handful of handsets around. Now I feel we're back heading towards the commodity hardware market and to most users there's little difference between an iPhone or something from Samsung etc.

    Yes, the software might distinguish the platforms, but as you mention there's less and less difference between Android and iOS now in terms of range of apps. I'm an app developer and last year I'd say 90% of our clients wanted iOS only. Now it's 90% wanting both iOS and Android.

    It's all commodity hardware now, in my opinion. The interesting stuff is happening with data analysis and presentation, and possibly AI.

    Now if they could come up with a revolutionary battery, then that would be a hardware advance worth having....

    Peter
    peter.bennett
  • Cheap budget phone?

    Brings to mind the Cadillac Cimarron...
    zole2112
  • "Regaining momentum and defeating iPhone fatigue" - The real issue

    It's a nice article, but if Apple wants to regain the magic it once had with the iPhone this is the key right here. The iPhone has become cliche in recent years. Worse yet, the last few iterations of both the phone and iOS have failed to deliver anything in the way of exciting new features and innovations. In fact iOS 6 & 7 both removed features that were very popular without introducing anything new and exciting. How is Apple going to raise ASP, convert first time buyers or win back developers when each new release of their phones and iOS is a question of what long neglected features will finally be added to this version to bring us closer to what Android has. Apple has fallen seriously behind the curve and needs to make HUGE leaps to get ahead of it again if they want to bring back that magic.
    intechpc (GPEN, CISM, CEH, ECSA)
    • Waiting for MAGIC

      Who cares where magic comes from ? It's MAGIC. Let Apple go and enjoy the world which is magical.
      Peace.
      john.medcalf@...
    • Magic in hindsight?

      Apple has always had FAR more detractors. The stock TANKED when the iPod, the iPhone (even) and the iPad were announced. And they were all predicted to be total failures, certainly here on ZDNet, as well as most any other talking head.

      Funny how you first pretend that they are in real trouble now (when they are in fact in the cat bird seat) and that they once had 'magic'. It's not gone just because some people are buying copies rather than the real, market leading product.
      comp_indiana
    • Cliche' is Windows, not iOS

      Look no further for a truly tired product which is completely out of ideas (and never had any original ones to begin with).
      comp_indiana
      • As if Apple had any original ideas either...

        Name them, and I'll quickly find a phone with that idea in it which was made earlier.

        Windows did have a couple of unique inventions during its history - most of them rather behind the scenes though (and more having to do with NT)
        spacespeed
        • Please, name them before we all forget...

          LOL
          comp_indiana
    • Where has all the magic gone...

      Apple's success WAS due to TWO key factors. Jobs and amazing, amazing marketing. The former fed the latter. Jobs knew it does not take the best hardware to sell products. He knew he couldn't win on hardware; someone will always come out with something better. So chasing specifications is like chasing one's tail...one gets no where.

      Jobs was able to take the hardware he had and make people think they are getting the best...here is where marketing comes in: the best user experience. It didn't matter if you charged two or three times the actual cost, as long as people walked away with a "great user experience". It's a sleight of hand, MAGIC trick which only the great magician, Jobs, could pull off. Now that he is dead, so is the MAGIC...
      Cain69
      • You have to have product and service to sell

        Jobs had both, Apple still has both
        comp_indiana
  • Non-smart phone user

    Still use an old flip phone. Why? Because all I need is a phone and, frankly, don't really want that. I don't have to be connected all the time. I don't care what someone is having for dinner. I don't care to see what everybody is doing. Do I still have tech products? Yes. A high tech car with all the buttons and whistles, a high tech digital tv, and several other "high tech" devices. They do exactly what they do best and nothing else. I don't need a smartphone, but eventually I'll have to get one because that will be all that's available. Will it be the Apple iPhone X or a Samsung whatever, I don't know. Maybe there will still be somebody who makes just a phone with good call quality, doesn't drop calls, and who knows maybe I'll get text messaging.

    Yep, just an old geezer.........
    deeppowder54@...
    • You're absolutely right.

      You don't need it. None of us do. But the minute we start using one we decide we can't live without them. When you think of us, these lost souls, think on us with a soft heart and kind words. ;)
      d20dad
      • Agreed mostly....

        None of us need these so called 'smart' phones... I now refer to mine as my 'stupid' phone.
        But contrary to your post I haven't decided that I can't live without it. Mine only came about because of an upgrade offer for a Galaxy - free handset and not much more for a monthly 1Gb data and unlimited calls and texts allowance than I was previously paying just for telephony services.
        The first few days I thought it was great...... Set up Exchange email and calendar on it and downloaded a zillion apps, and wasted hours exploring the amazing new world that had been opened up in the palm of my hand..... - few days later phone slowing to a crawl even just trying to bring a number up to dial a phone call and battery needing recharging at least daily. The damn thing binging and bonging away every 2 minutes in my pocket every time a new mail arrives or some other 'unmissable' event in life occurred.. 1 week later all apps removed, Exchange account removed and wifi and 3g data disabled. Battery life now nearly 2 days but still nowhere near as good as my old basic Sony K800.
        Let's face it is there really any email that can't wait 10 mins until you get back to your PC? Must we really communicate our lives via Facebook or catch up with twats on twitter every 5 mins?
        The next phone I get will be exactly that - a phone!
        The Central Scrutinizer
        • That...

          Is why I turn off the auto sync. I don't know I have new emails until I open up the app.
          d20dad
  • Can you use a smart phone as a phone?

    My iPhone 5 is a wonderful piece of kit, it tells me the time, works well for searching the web and email. The apps are brilliant, but as a phone it sucks with dropped calls, missed calls, poor quality audio etc.
    A few of us at work are now looking at ditching the iPhones for a simple Nokia and carrying an iPad for data type communications.
    By the way we are all on EE.
    pwilletts@...
    • Not so interesting...

      I never had all that much use for a cellphone. I've had phones at home, phones at work, etc. Useful on business trips, that's about it.

      The smartphone is something entirely different. The fact that we still even call these pocket computers "phones", simply because among their many peripherals is a voice modem, that's kind of a funny quirk of history. "Phone" represents less than 5% of the use of my smartphone.

      And that does suggest, for people who don't care about all that other stuff, smartphones are not the answer. The combination of users who just want voice and maybe the occasional text, and users who simply don't want to pay the extra $30-$90 per month for a smartphone, suggests that going after non-smartphone users is not the basis for a sound strategy.

      And in fact, that's been tried. That was Microsoft's first approach to selling Windows Phone 7. At that point, they were clearly still not understanding why the Kin failed (half of that, at least, was the monthly price -- the Kin was required to run on a smartphone plan, even though it was just a feature phone). But they gave up on that, and did a little better as a result.

      Plus, the wireless carriers are doing this job, anyway. Just try finding a dumbphone at a Verizon or AT&T store. Last time I looked (about a year ago -- my kids don't get smartphones), they had a total of three models, versus about 30 different smartphones. And those were pretty well hidden in the store. This tells you that the telcos are making a boatload of cash on their smartphone plans... consider this the next time they complain about the huge cost of network traffic and upgrades.
      Hazydave