I have attended just about every major Apple event since 1981. The only one I did miss was the WWDC in June of 2012 when I had a triple bypass the Friday before the WWDC keynote. Consequently, I have some experience with Apple events and since I view and analyze them at a much deeper level than the mainstream media, my takeaways are somewhat different than how they perceive and report on these events.
Here are five things that made this event important and not just an incremental iPhone update in my opinion:
Apple’s ownership of hardware, software, and services as well as the entire stack of their processor design is much more important than most people understand. This allows them to design software at the micro level to take full advantage of any new hardware and processor designs. After the keynote, I spoke with Phil Schiller, their head of worldwide marketing and he emphasized to me the fact that the processor team is in constant discussion with their OS team as well as their applications group and are much more in harmony on the way they go about creating hardware, software, and services.
This gives Apple a distinct advantage when all of what they create is optimized to take advantage of other things the design into all of their products.
The new A13 Bionic processor with its neural engine and increased us of AI in its architecture is a big deal. At the moment, this is the most powerful CPU and GPU ever created for a smartphone. This is the picture of the Bionic 13 processor features.
One important piece of this processor is the neural engine. Apple has been developing this for a while and with the A13 it looks to take a leap forward. It has a lot of functions, one major one I will get into in the next bullet point, but it plays a major role in how it manages tasks and allocates how much power is used for any particular app. This, in turn, helps manage battery life. The A13 Bionic processor can handle one trillion transactions per second and has 8.5 billion transistors packed into it.
Apple’s silicon engineering team had stage time for the first time ever at an iPhone presentation and emphasized the importance of Apple designing everything down to the transistor of their own silicon. This is one of the primary reasons Apple’s smartphones have more computational capability than their competition and why even several year old iPhones can still outperform many of the latest smartphones sold all over the world.
The three camera system managed by the neural engine. The three new cameras in the iPhone 11 Pro Series deliver some of the best imaging quality available on a smartphone today. But what makes this different is how the neural engine manages the photo images and the new special software that will come out later this year that will deliver enhancements that will be closer to what you can get from some DSLR cameras. I got to see some of these images on an iPhone 11 up close, and they were stunning. The amount of detail with no noise was amazing. And this was without the new enhancement software that will come out later this year.
When we research this area, consumers tell us that one of the top three things that are important to them is the quality of the pictures they take on their smartphone. The idea of a camera in your pocket has changed their mentality on taking pictures, and this is the one area that they look closely at and are willing to pay more for better quality pictures. While the best imaging will be on the iPhone Pro series, even the iPhone 11 that uses the same Bionic processor and its neural engine is finely tuned to use this chip to deliver stunning photos on a mid-level iPhone.
Aggressive pricing. Apple pricing the iPhone 11, starting at $699 is an important milestone. Some think that this is tied to Apple being more price sensitive to the market, and to some degree, this is correct. But I believe it has more to do with lower component costs for this phone as Apple has worked hard with suppliers to bring costs down in the last year. I suspect this will be their best selling phone in the holiday season as its camera is of great quality and has a lot of features that were not in the iPhone XR.
The pricing on the Arcade gaming service is very consumer-friendly too. $4.99 for up to six players in a family is reasonable, although this will be most attractive to families with younger kids. But would not be surprised if my wife gets this subscription as she loves these kinds of games.
Apple TV+ is also reasonably priced at $4.99. This particular streaming service is interesting to watch and could have an impact on the streaming business. Apple is setting a new bar in streaming by having a service that is tied only to movie level cinematography and storytelling. Unlike Netflix that does have original programming, some of its low quality, as well as shows that while they are still loved, some are as much as 15 years old. By creating a service of only very high-quality content and pricing it at $4.99, if the shows are compelling, it too could eventually add serious revenue to their service business. Also, the fact that they will give a full year of Apple TV + to anyone who buys new iPhones iPads and Macs starting Sept 10, 2019, will give them a subscription base of around 100 million by the end of 2020. A year of watching shows on Apple TV+ could go along way in helping them develop loyal customers who will stay with the service after their first year.
Also, look at the pricing of other products they have in their line.
-$329 feature loaded 7th gen iPad
-$699 iPhone 11 ($50 less than XR)
-Series 3 Apple Watch left in market at $199.
-iPhone XR left in market $599. iPhone 8 $449.
If we just looked at a price to value analysis of Apple’s services, and even their hardware lineup, we could argue from a hardware standpoint, it’s the most affordable time to upgrade or enter the Apple ecosystem. Apple’s pricing was surprising to many, but the argument that Apple is pricing itself out of the market seems to be one that is now very difficult to make.