iPhone 5s, iPhone 5c and beyond: Why Apple needs to break the smartphone to remake it

iPhone 5s, iPhone 5c and beyond: Why Apple needs to break the smartphone to remake it

Summary: ZDNet’s Monday Morning Opener: Apple's next set of smartphones will help it into new markets, but it's time to up the pace of innovation.

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To be able to sell what is effectively the same handset for six years in the ultra-competitive device market reflects how well designed and shrewdly marketed the iPhone has been.

But later this week Apple will unveil its latest smartphones, the iPhone 5s and the iPhone 5c, which together will mark a significant change in Apple's strategy: they represent possibly the first step towards offering a constellation of iPhones.

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

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

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

And it's about time too. After six years, the competition has caught up with, and in some cases overtaken, Apple. And, as reasonable Android devices get cheaper, it's getting harder for buyers to justify the premium price tag on iPhones.

The importance of China

Around 88 million smartphones were shipped in China in the past quarter — a third of all sales globally, making it an appealing market for the company in particular. But it's also a market where Apple holds less than five percent share, making it a modest seventh among smartphone sellers in the country. With the US and Western Europe drawing closer to smartphone saturation, Apple's biggest hope for growth is in China, India and other fast-growing economies, where price really does matter.

Hence the widely-trailed arrival of the iPhone 5c, a cheaper model that can compete better with mid-market Androids (Apple has been working on persuading China Mobile to start selling iPhones too — if the operator bites, it could be big win for Apple thanks to its 740 million subscribers).

The iPhone 5s (likely to come with a biometric home button which could kickstart all sorts of authentication and mobile payments plans) will target the high end, while the 5c will expand Apple's reach elsewhere.

The risks of expansion

Still, adding a new handset is not without its risks as Gartner analyst Anshul Gupta warned recently, because the iPhone 5c could eat into demand for the iPhone models. "The potential for cannibalisation will be much greater than what is seen today with the iPhone 4. 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," he warned.

But Apple's objective isn't to protect sales of a particular device, it's to safeguard the entire ecosystem. Here's one potential threat of sticking just with a high-end iPhone strategy: Android has always been the second choice development platform behind iOS, but as the number of Android devices out in the world continues to expand, that's no longer a given.

And if Microsoft's acquisition of Nokia turbocharges Windows Phone, developers may have to decide between three competing and attractive app platforms. With Apple's global market share at around 14 percent, it might not necessarily remain the de facto choice. If developers start defecting, then the whole edifice can come tumbling down — that's why it's time for Apple to grow market share, even at the expense of losing some sales at the high end.

And it's important to note that Apple has a pretty good track record of taking on the innovator's dilemma and winning. After all, Apple let the iPhone cheerfully cannibalise iPod sales and eventually kill off the music player, and then launched the iPad, giving consumers a compelling reason to avoid its MacBook line — but this never stopped Apple for a second.

Apple seems less sentimental, and less cautious about its products. Most tech companies, especially hardware companies, are inherently and miserably conservative.

Part of the problem of the PC industry has been its unwillingness to innovate, and a desire to squeeze as much profit out of ageing designs as possible. Admittedly this strategy served those companies well for a decade but Apple spotted that weakness and exploited it — and the PC makers found their comfy world collapsing around them.

However, Apple is veering towards that comfiness, and needs to have some more urgency around innovation. While iOS 7 is a vast improvement on its predecessors, it's no longer at the cutting edge of UI design, and when it comes to hardware that houses it, Apple is being outpaced by more elegant designs. The modest changes seen in the iPhone 5 and the two new handsets are not in themselves enough to keep iPhone the handset to beat. Wearable tech might be that next wave of disruptive innovation, but it's not going to hit for a couple of years, so Apple needs a stronger story around iPhone innovation.

To many, the 3.5-inch screen on the iPhone 4 and 4s and even the four-inch screen on the iPhone 5 are a little too petite in the phablet world. It comes as no surprise then that Apple is already testing different screen sizes and is rumoured to be trying out a six-inch device (indeed, it's interesting that these rumours about what's next have begun circulating even before the iPhone 5s and 5c are formally unveiled). Could it be ready to make an iPhone phablet perhaps, even at the risk of hurting sales of both the iPhone 5s and the iPad mini?

Perhaps, but Apple can't be afraid of doing just that. After six years of selling the same device, Apple needs to be ready to break the iPhone to remake it.

ZDNet's Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8.00am in Sydney, Australia, which is 6.00pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's Global Editorial Board, which is comprised of our lead editors across Asia, Australia, Europe, and the United States.

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Topics: Smartphones, Apple, Hardware, The Year's Best Tech for Work and Play

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Talkback

260 comments
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  • Innovation

    Wow we really lowered the bar if just increasing the screen size on the phone is considered innovation these days.
    Rogifan
    • We will see soon enough IF there is any innovation in the 5s

      It's rumored to have the same screen size but increasing screen size would not be an innovation, it's already been done and its not an innovation anyway. Rumored to have fingerprint reader... It would be a first for a phone (I think) but there's nothing innovative about a fingerprint reader, been done already. New version of OS, not innovative. New SOC revision, boring. Upping the pixel race? Not rumored to happen but doesn't matter if they do.. The 5C is rumored to be cheaper but analysts say its not really even cheaper. Maybe the "C" stands for China.

      So. It seems all we really get is, a new color on the 5S and more colors on the 5C... Now that is innovative.
      greywolf7
      • Fingerprint reader...

        Motorola Atrix 4G had a fingerprint reader (it was released way back in 2011).
        Demigod79
        • Thanks

          Not really surprised about that, glad you mentioned it.
          greywolf7
          • Sick

            This industry is sick to a point where you need to sell zillions of phones to be relevant, profitable, praised or even considered by buyers. BB is out even if they are still selling millions of phones, Windows is considered almost out even if they are selling millions of phones and they are the third player in the game. Worst, this article suggest that Apple needs to break the phone to reinvent it. C’mon, it was reinvented 5 or 6 year ago. It’s not like we were using the stuff that our grandfathers use to!

            The phone industry is extremely dynamic right now. It doesn’t need a reinvention. It is still a new toy that we haven’t fully figured out yet.
            gbouchard99
          • Boring. Yawn.

            As an Apple lover, it seems to me they have lost there way. I would not be surprised to be reading in the weeks to come that the sales of the devices have flopped. First time in history. Watch this space. Steve will turn in his grave.
            klausbartosch
          • Re: Boring. Yawn

            I think you've been reading too much ZDNet. I think Apple is doing fine, thank you very much.
            I'd like to have their problems.

            Really, what else is there to do? I think we're all unable to be shocked these days by anything. These phones are all miracles in little boxes, but none of us appreciate it.

            And give Apple a break - they built the machine and the ecosystem that everyone strived to match. And it's always easier to one-up an existing platform. Still, Apple has got a great story. Certainly the equal (depending on what you consider important) of anything out there.

            I predict abject disappointment tomorrow - followed by ridiculously high sales numbers.
            ;-)
            rossdav
          • if apple sold cars...

            it would have manual transmission, bucket seats, and no seatbelts!!

            BUT look at the design! isn't that the most beautiful???? :) :)
            comnut2k
          • people cannot wait for the new apple car, it will fly!!

            it will go 100 MPH, and have a tv in the windscreen!!
            comnut2k
          • If apple sold cars....they would drive themselves

            Everything Apple does is extremely user friendly and simple to use. The car would drive itself (like the google car, but better :p), or at the very least, be so easy to operate a small child could do it. Manual transmission and no seat belts? Come on, have you ever even touched an Apple product? Everything is done automatically with minuscule user effort, and OS X is the most stable and secure platform out there, not to mention user friendly. I know we're not talking about computers here, but come on, at the very least pretend like you know what you're talking about before rattling off erroneous statements.
            Garrett21
          • Beyond fanboyism

            "Everything Apple does is extremely user friendly and simple to use."
            Some things Apple does are user friendly, and some products are of high quality, indeed.
            Most of the things Apple does, however, if you look at the big picture, are not according to the interest of the end user.
            Assuming an enduser living in a democratic society and having thoughts of his/her own.
            Apple doesn't have to do much to strengthen its position in the market, but if it does this little required, enduser will have more personal power and independence; something Apple does not want.
            Innovation is good and all, but when it comes to personal freedom it is irrelevant.
            prszdn4
          • Lets just not mention...

            Apple Maps.
            An apple made car might be able to drive itself, but it will soon drive off a cliff or attempt to drive you to Berlin via the Arctic Circle.

            Probably not a good example of an "If apple made X" discussion.
            Funkmonkey
          • There were Smartphones better than Apple...

            ...when the iPhone came out. Android phones have always had players better than the iPhone. Saying iPhone is better than Android is like saying Xbox is better than PC. It's not true, and impossible to hold (if it WERE true). PC/Android gets much more frequent hardware and software updates than Xbox/iPhone. Android is cheaper when you think about the tech you're getting. Anyone who complains about the UI is just plain stupid. With PC/Android, you can get a number of applications to make your system look like an Xbox/iPhone.
            bakus522
          • Re: Re: Boring. Yawn.

            I think youve been ignoring reality far too much.
            Funkmonkey
          • So much for predictions of doom

            The two phones sold a record 9 million the first weekend, the 5s uses the first 64 bit mobile processor, and despite being only a 1.3 GHz dual core processor (Apple designed), is faster than any of the competitors (using higher clocked quad cores) in the vast majority of benchmarks.
            Mark_42
          • LoL

            You said Windows Phone is out. Good joke
            jamz2277
          • Haha Windows phone, Good Joke.

            The real joke is that he even mentioned Windows phones, as they are essentially irrelevant to the mainstream smartphone market.
            Garrett21
          • Innovative

            Lytro style camera point and shot.It never been introduced in any smartphone makers nowadays except Nokia.Currently I heard the new rumors said that Nokia are working on it in their next gen phablet phone
            Anonymous1511
        • Finger print readers? Wow!

          I have one on my PC. I set it up with my right hand, and I can login with my left hand. I'm really going to trust that sort of technology.
          Treknology
          • Technology is pretty decent

            I have an I-wallet that has a finger print reader, and you are not going open it with a finger that you didn't scan into it. In fact, if you don't swipe it just right it isn't going to work. Must be the quality of the reader on your PC.
            sgtm8