Apple's iOS 7 to test new design approach

Analysts are wondering out loud whether iOS 7 and its flatter design will have enough of a new look to drive demand for the iPhone.

Apple's Worldwide Developer Conference (WWDC) kicks off Monday and the main attraction is likely to be iOS 7 and whether or not design chief Jony Ive can bring his hardware mojo to mobile software.

As widely noted, Apple's latest iOS is supposed to have a flatter design. Analysts are wondering out loud whether iOS 7 will have enough of a new look to drive demand for the iPhone. Jefferies analyst Peter Misek said iOS is expected to be "drastically transformed." It remains to be seen if that prediction pans out. Apple could go the refresh and tweak route before doing something jarring.


BGC analyst Colin Gillis said that expectations for Apple's WWDC powwow are low. Indeed, there's not a lot on the table beyond iOS 7, the first version under Ive. Gillis noted:

The question we look to see answered is if the new iOS look is visually stunning enough to accelerate demand for the iPhone.

That's a tall order for any mobile operating system, but analysts such as Cowen & Co.'s Matthew Hoffman said iOS 7 will hopefully "spur upgrades of older hardware and capture the attention of new users." By older hardware, analysts appear to be hoping everything below iPhone 4S has to be replaced.

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More importantly, iOS 7 could be the first installment of a broader move to more services. Gillis made another, more notable point:

Apple’s weakness in building a meaningful advertising platform to assist in monetizing its user base may become more glaring as the smartphone market continues to mature. We expect the market is going to continue to tilt towards subsidized or no-profit hardware with an eye to the total lifetime value of a customer. This benefits companies that can generate meaningful advertising, subscription and commerce revenue from its users, and could hurt companies such as Apple that generate the majority of their profits from the initial sale of hardware.

Simply put, the mobile market may tilt more toward the business models deployed by Google and Amazon. If that's the case, Apple will have to step up its cloud services game as well as utilize all of its customer data via iTunes and its App Store.

Apple is more likely to be successful with the customer data treasure trove. In that regard, iOS 7 may be a first step to integrating payment systems. Apple has dabbled, but mobile payments haven't done so well as technologies like NFC are still in the infant stage. Nevertheless, Apple has all the tools to create an iWallet and boost the lifetime value of a customer.