Give Apple and iPhone 5 a break
iPhone 5 is not a revolutionary device. Does it really need to be? No. Despite the geek freak-out that iPhone 5 isn't innovative enough, I don't doubt the handset will sell really well. What matters: Is it better enough? From my first impression, playing with one inside Apple Store, yes. More importantly, the device will be better enough for many people moving from feature phones to smartphones but shocked by the huge physical size of other devices.
Apple already has a successful post-PC product and supporting ecosystem of applications, cases, peripherals and other stuff. iPhone 5 isn't the be-all, end-all Apple cloud-connected device but the flagship in a platform continuum. Why else, for example, would the company also offer iPhone 4 (free) and iPhone 4S ($99)? iPhone 5's challenge is to be better enough, and if it's not for some buyers -- say, either the 4 or 4S is good enough -- older models are still available for less. To understand what iPhone 5 is not, you need to understand what Apple is and why the new handset actually is more than upgrade enough.
Many critics point to competing devices and call iPhone "catch-up". They're right, when looking at the larger display (4 inches up from 3.5 inches) and 4G LTE. The same arguments made today about the superiority of Android or smartphones like Samsung Galaxy S III are markedly similar to those about Windows PCs compared to Macs. For years, Microsoft partners offered systems with beefier hardware specs. On a spec-for-price comparison, Windows systems long outpaced Macs -- and in some respects they still do today. Cheapest Mac is $999.
But Apple product managers don't much look at competing products, and they never have. Particularly since Steve Jobs' second coming, the Cupertino, Calif.-based company matches features and prices against its own stuff, prioritizing benefits based on customers living the Apple lifestyle and maximizing margins over market share. Apple would rather sell one thing for 300 bucks than 30 for $10. The latter priority puts profits before matching competing devices. The point: Criticisms that iPhone 5 isn't feature comparable to competing products is nothing new, and Apple doesn't care. Many of the people whining about lack of iPhone 5 innovation are the same kind of folks wagging accusations years ago -- some still today -- that Windows PCs are superior to Macs.
From Apple's perspective, iPhone 5 fits into a continuum of pricing and features. For example, iOS derives from OS X, which in the last two releases inherited features from mobile operating system. The platform is a continuum from the cheapest iPhone to the most expensive Mac. Similarly, price is also a continuum from the free iPhone 4 to the $2,799 MacBook Pro with Retina Display, as I first explained in January 2010. Each product line follows a continuum of prices -- iPod from $49 to $249; iPhone from $0 to $399; MacBook from $999 to $2,799.
There are increasingly fewer differences in uses among Apple hardware products along the spectrum. The iOS and Mac OS products have wireless capabilities, surf the Web, run applications (including traditional productivity suite apps) and consume or produce digital content. The range of hardware capabilities is limited by size, processing speed, storage capacity, etc., but not really software as Apple offers more of the same applications or features across the entire continuum. Apple seeks to offer single-user experience across all its devices, regardless of hardware features.
Innovation by Iteration
You can blame Jobs and his ego for Apple's current innovator's dilemma, where by showcasing so-called "one more thing" products -- some of them category changing like iPod, iPhone and iPad -- people expect even more. But in looking closely at business realities, Apple more often innovates by iteration.
The company announces a big, new showstopping thing then iterates -- incrementally improves -- the product over time. The process is essential to Apple maximizing margins. These cooler-than-anythings typically have initial higher selling prices or same as the replaced product(s). Plenty of buyers demand the newest, coolest product, and they're willing to pay a premium price to get it. To many of these buyers, the tech gadget is as much an accessory -- statement of their coolness, superiority -- as useful product.
Apple engages in a tried-and-true retail practice. It's good business. Clothing stores take a similar approach. There are teens who must have the newest wears from Aeropostale, American Eagle or Hollister at full price; they can't wait for sales. They want to be cool. Apple sometimes charges more for fashion, just like clothiers. Remember the black MacBook, which cost $150 more than the white model, simply for the color? Same can be said of some features. I know people who paid more for MacBook Pro with Retina Display not because they need the higher resolution but having it means something to them. They feel better about themselves for it.
As a product's lifecycle progresses and Apple maximizes margins at the front end, incremental improvements begin. The company typically starts by offering better hardware for the same price. Later, Apple adds substantially better hardware or features and cuts the price.
Smartphone is good example of this process. The iPhone 4S design somewhat differs from the "one more thing" model that went on sale in June 2007, and hardly at all from the 4. But the user interface, basic features and most functions only incrementally changed since. The original iPhone lacked 3G, video and MMS, but offered slicker user interface, a capacitive touchscreen, more enjoyable media playback and better calling features than comparable handsets.
The first iPhone was less and more comparatively, then. But buyers paid. Apple and AT&T sold the 1st generation iPhone for $499 or $599 at launch; Apple lowered the price to $399 a few months later. New models brought lower prices -- $199 and $299. Apple continued offering iPhone 3GS for three years, maximizing margins over time, while capturing buyers looking for a cheaper phone. Now iPhone 4 has that role.
Target: Feature Phone
iPhone 5 is the next evolution. There are big improvements and yet few -- and they follow a longstanding Apple trend: Use size, whether bigger or smaller, as a differentiator. The company incrementally improves features while changing the device's design and form and in ways that maximize margins in production and distribution. Meaning: A radically new form factor costs more to produce than one similar to its forebears. iPhone 5 is taller than its predecessor but same width and basic form factor is otherwise not that different from the 4 or 4S.
The handset features a 4-inch display with 1136 by 640 resolution and 326 pixels per inch. The new model marks the first major change in display size since the original launched five years ago. iPhone 5 is 7.6mm thick -- that's 18 percent thinner than its predecessor -- and 20 percent lighter at 112 grams. My first impression: iPhone 5 is lightweight, pretty and feels good in the hand. Screen is bright and crisp. Marvellous.
The changes in form, added new features (the camera will surprise many people) that will make iPhone 5 better enough for many existing customers and appeal to people upgrading from feature phones. Apple's target market isn't people using Androids but those with feature phones. For them, iPhone 5 is a huge upgrade -- granted, as would be something like Galaxy S III.
But the S3 and other Androids will be a huge, and for some buyers insurmountable, leap in size. Imagine going from a flip phone to a 4.8-inch screen. iPhone 5's 4-inch screen, slimness surely will appeal to many feature phone users, and that's without factoring in the aforementioned cool factor. Remember: The majority of handsets still in use today are feature phones. There's a huge market yet for smartphones, but not necessarily one for huge mobiles when something smaller and sexier is available.
Most of iPhone 5's critics are existing smartphone users, particularly non-Apple devices. They expect Apple to match features and prices against competing handsets, but the company has other priorities. Maybe people whining about Apple's lack of innovation should re-examine their priorities.
Photo Credit: Joe Wilcox