7 Reasons The New iPhones Are Starting to Look Good


Shaughnessy, Haydn

September 13, 2013

The aftermath of Apple‘s Tuesday iPhone 5C and 5S event was a near 6% drop in the stock price and broad-based negative commentary. Strange though, some analyst opinion was a lot less unequivocal. The press reaction to an expensive 5C for China was, hey, Apple don’t get market share. That analyst reaction was, okay so they are protecting their margins. Interesting. Two days on and more people are seeing the good in the new iPhones.

1. The platform. My own view is the combination of the A7′s desktop processing power, the dedicated monitoring chip and iOS 7 vastly improves the overall potential of the Apple platform, the company’s most durable competitive advantage. There was very little commentary around Apple as a platform business Wednesday so I’ll give more of mine.

To deliver iTunes, the App Store, the upcoming Apple radio, Apple’s willingness to let third parties to create dedicated i-devices like music centers, and Apple’s increasing range of enterprise services, Apple has built a monumental e-commerce, developer, software and services platform.

Innovation is unquestionably becoming less glitzy but that’s because Cook is updating Apple at the platform level. In place of Jobs’ charismatic feature, design and miniaturization-led innovation, he is giving his team space to build the boat: a device platform that is powerful enough to integrate many more services, gives developers more scope; allows the iPhone to interact with more devices around the body and in nearby locations.

Meanwhile the base platform has to be able to cope with the expanded datasets that will come from monitoring, possibly via a smartwatch and other peripherals, as well as streaming music, and transaction support. A much more rounded personal data management capability is going to be a part of the near future, provided via third parties or by Apple. Whichever, Apple’s relationship with its customers will get deeper, and has to remain relatively fault free.

2. Margins. According to Reuters, Apple “won fans among some Wall Street analysts, who said preserving a premium price can safeguard Apple’s already declining margins.” There’s the other side of the coin. If you sell cheap then, arguably, you draw in customers who won’t spend on apps or peripherals and who won’t necessarily appreciate Apple’s user experience. Why attract customers who will burden your platform without providing you with service revenues? You have to give all those people the same quality experience as those who buy, buy, buy.

3. The dedicated motion chip, the M7. People are waking up to the fact that Apple has improved the platform’s ability to support more third party fitness monitoring services, opened an opportunity for Apple to move into that area, and opened up better options for contextual computing. CNET today began talking up the M7′s features and the potential to expand Apple’s ecosystem. You can read it here.

4. iBeacons. The combination of the M7 and iBeacon promises richer contextual computing that is now being talked about as an NFC  (near field communications) killer. It means Apple will have a lead in retail customer interactions, payments and in indoor mapping. It’s also going to add to the third party hardware ecosystem (and advocacy) around Apple.

5. The 5C. The 5C was criticized for not being cheap enough (but see above). On the other hand, it’s a great teen’s phone. With carrier subsidies on the purchase price it is very hard for a moderately well-off parent to say no. But it also has a new role in Apple’s annual product reshuffle. Here’s how Michael Fisher over on Pocketnow puts it:

I overheard two friends on the train discussing their iPhone options, during which one of them said, “well, I can just get last year’s model for cheaper. I’ll probably do that.” From that perspective, the iPhone 5C is just a more-intelligent means of reheating yesterday’s dinner for today’s lunch.

By producing the 5C Apple is giving people last year’s model all souped up (but with lower cost components like a plastic shell). The website Marketingland also majored on the benefits of the 5C:

The 5C doesn’t feel like “last year’s model.” It will be a clear choice for many, not just because of its lower price but because of its colorful shell options.

6. iWork and more for free. “APPLE FANS disappointed with the lack of an actual affordable iPhone handset could be cheered slightly by the news that Apple will be offering its five core productivity and multimedia apps free with all new iOS devices.,” says The Register. Nobody’s complaining.

7. The overall effect. This is not going to lose Apple any customers and it will undoubtedly gain very many. It has surely established a stronger base for what is to come next year – Samsung rushed out confirmation that it too was going to build a 64 bit processor into its next phones, a sure sign that more power will become standard. In the meantime there is plenty to give developers a good run at developing exciting new applications. The phone becomes more of a personal server At the same time, enterprise and retail applications will become more contextual. It opens new possibilities. But that’s the platform. The phones? It’s Apple, people will buy.

Follow me on Twitter @haydn1701 or join me on Facebook. I am here on Google. This is my new website.

Related on Forbes:

Apple Product Launch: iPhone 5S and 5C

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