iPhone 5 Design As a Killer Feature

As Steve pointed out in his article this morning, the sentiment that the iPhone is underwhelming steaming from many of the tech press lacks serious understanding of the consumer market. It is true that the iPhone does not have things that other phones have. Things like the largest screen of any phone, or NFC (I point out why here), or a number of other features. In the whole discussion of what the iPhone doesn’t have people are forgetting that Apple’s philosophy of what you leave out is just as important as what you put in. Many of those things the tech media is complaining about for not being in the iPhone 5 were left out on purpose. And I think its clear that Apple knows what they are doing.

But one thing the iPhone 5 does have that is unmatched in the smart phone market today is industry leading industrial design. In my opinion only Nokia comes close to Apple with its passion for industrial design. I’ve been using the Galaxy Nexus since June and there are many things I like about it. I used a Galaxy S3 for a short time a few weeks ago and it is nice as well. But I continually find the build quality, and attention to hardware design detail sorely lacking across the board, with the exception of Nokia. Design is a feature, that should not be ignored or discounted.

Many smart phones have a plastic, and cheap in my opinion, feel even though the screens are made of glass. Many of the most popular smart phones today are in fact made mostly of plastic. But there is a fundamental reason why these design decisions are made and holistically why most major smart phone OEMs do not pay the same attention to detail and industrial design of Apple.

Android Handset Depreciation

For Android to compete with Apple it takes an army of Android devices. Although Apple has several products on the market, they only have one current generation smart phone. Android OEMs launch dozens or more every year. Although the Galaxy S3 outsold the iPhone 4S briefly last quarter, its hard to believe that is a long term trend since many consumers held off for the iPhone 5.

The Android army can only succeed by flooding the market with Android devices. Some are very good but many are not. The key, however, is that to survive in that market and actually compete you need to constantly put new products in the channel and be very aggressive with price. Android devices depreciate faster than any other product on the market. What I mean by that is they start at inflated price points then very quickly get to $99 or even buy-one-get-one-free.

The Galaxy Nexus, one of the better devices on the market and the one that I am using until next Friday, is already $99 dollars with many carriers with a buy-one-get-one-free offering at that price point.

Some carriers around the world are also already offering similar deals for the Galaxy S3, Samsung’s flagship smart phone. Soon that device as well will be offered at extremely aggressive prices in every carrier around the world.

The iPhone however holds its value and does Apple does not need to drop the price of its flagship phone every three or six month’s to continue to outsell any single other device. Apple has never dropped the price of their current generation iPhone nor has any carrier needed to offer a buy-one-get-one-free deal in order to move tens of millions every quarter. I find this fascinating.

Further points on how the iPhone holds its value is in trade in or resell offers. I don’t see companies offering high value trade nearly a year after its release with any other product than the iPhone. This simply goes to you how the market value for the iPhone is drastically different than any other smart phone on the market.

This is where the design is the key. Because of the unprecidented attention to detail the iPhone does not just hold its value, it is valued by the market. More so than any other smart phone. Premium design is valued and don’t let anyone tell you any different.

Design is a premium differentiator and the fact that Apple keeps such a premium designed product at an entry level price with contract at $199 should continue to impress people.

I stated this in my article on the iPhone 5 earlier in the week but this new product will stand out like the crown jewels at a garage sale at every retailer where it is sold.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

11 thoughts on “iPhone 5 Design As a Killer Feature”

  1. Good article Ben. In support of your thesis:

    “…after 18 months iPhones retain 53% of its resale value –- 11% higher than Android and 12% over BlackBerry, a report by Priceonomics found in February.

    Those numbers are a reflection of the total cost of ownership. ‘The iPhone hardware only costs you $13.20 per month if you resell it at the end of 18 months. Android phones cost 40% more,” the report says.'”


  2. Design as a killer feature is more like the tent over the circus. Practice and hard work by the circus acts lead to delight and amazement. Google supplied the important acts (Apps) while Jobs was the master of ceremonies. To bad he thought he was the whole show.

      1. Gmail, search, Maps, and and many more were free to Apple and delighted people who wanted to know where they were, who wanted tell them some thing, but when they might meet and how they might get together.

        1. Free? You’d think so. Google makes twice as much money on traffic it gets from iOS than it gets from all android devices combined. Google certainly didn’t do anything for free.

  3. “I think its clear that Apple knows what they are doing.”

    But people who don’t like Apple seem to have one of two views: either Apple *doesn’t* know what they’re doing and they’ll soon be dead, or else they’re way too powerful and they’re pounding their competitors into the ground. I guess if you dislike someone they’re either stupid or crappy.

  4. @jnfarrrell I disagree. I feel that good, solid design is the ONLY feature. Your circus analogy might be better explained as: The producer(designer) understands what acts will delight (via deep research) and seeks out hard working talent and develops the show into something amazing. Thus the show experience itself becomes your brand and signature. The tent is the skin over the product and the logo. Also delightful and recognizable, but to some extent, styled and superficial.

  5. Apple has a sense of feel and instinct that other tech companies lack – pure and simple. That not only goes for hardware but for the software as well. This is why I absolutely believe that Samsung cannot “win” over the long-term. Samsung does not have the software – the mind and soul of the computer and the iPhone *is* a computer.

    But only looking at things from the hardware perspective, it’s quite apparent that Apple (mainly Mr. Ive and his team) cares about how the device *feels* in one’s hands. As I mentioned before, Apple has an artistic type of mastery over the various intangibles like form factor, aesthetics, feel, etc.

    Apple obviously approaches a new product like an uncompromising musician producing a new album or a film director working on a new movie: Let’s put out the best possible product first and everything else will follow. Great financial results are simply a byproduct of the creativity and flawless execution that goes into the new product.

    I work in the music industry – both with world-class artists as an artist/band/label manager and the musical instruments manufacturing industry. I work in an industry where feel and instinct for the music and trends within the industry is more important than typical business analytical skills.

    I’m much more interested in Apple’s approach to the “intangible” factors in terms of product and services design and implementation as well as long-term business strategies than the typical short-term stuff (i.e., quarterly results) that Wall Street analysts focus on.

    Apple is fascinating to me because the company’s primary focus is on the products – kind of like how serious musicians focus on music and music only. While producing an album in a recording studio, musicians fret over the tiniest details that would normally never get noticed by the typical music fan and listener.

    Apple is very much like that uncompromising and obsessive musician who relies on his ears and musical instincts about what sounds good and doesn’t. In comparison, Samsung strikes me as a musical hack that nearly plagiarizes the melodies, the harmonies and the beats that a much more creative and musically superior artist comes up with. Samsung is all about the quick buck and, obviously, there are plenty of those types in the music industry.

    While we’re on the subject of the music industry, I recently (and finally) decided that I needed to check up on Korean pop artist PSY’s ‘Gangnam Style’ video and song after my kids in school told me that it has become a sensation amongst their friends. I am well aware of the ‘K-Pop’ phenomenon that is sweeping Asia and Europe but always thought that, while competently executed, it was derivative, saccharine, and shallow.

    Well, after seeing the video several times (now garnering hits at an incredible pace of around 10 million hits per day on YouTube), I have to admit that it’s very well done with a distinct Korean style and perspective. Being of Korean descent and having lived a good chunk of my youth there, I was able to relate to the video and the lyrics quite easily.

    There is real musical talent and strong determination to do something distinct and original here. I’m not a fan of pop music fads at all but this one was rather impressive. My thoughts after internalizing this video: Samsung needs to go ‘Gangnam Style’. Perhaps then, I will give Samsung some respect. Until then, Samsung will always remain the Monkees to the Beatles that Apple is.

    1. Well said, especially the musical instrument comparison. I think that what really impressed people at the “hands-on” after the Apple presentation is how good the iiPhone 5 feels in the hand. A tremendous amount of care went into producing that feeling, but it’s all but impossible to relate. You have to hold it yourself.

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