Reviewing Apple’s iPhone Event

John Kirk / September 12th, 2013

I am providing you with a copulation of answers to several questions raised… ~ Marion Barry

The recent Apple iPhone event raised so very, many questions. Let’s touch on a few of them and see where we stand today.

Don’t sweat the petty things and don’t pet the sweaty things. ~ George Carlin

Apple TV

BREAKING NEWS: Piper Jaffray analyst Gene Munster on suicide watch following conclusion of Apple event with no sign of Apple television1. ~ Peter Cohen (@flargh)

Sniping & Backstabbing

Personally, I could have done without the sniping and backstabbing done by Apple’s competitors. Apple does it too, so I’m not taking a “holier-than-thou” stance. I just think that it’s bad policy. But no matter what I think, it’s not going to stop any time soon.

Here are some examples of competitor’s mocking ads for those of you who like that sort of thing.

People who like this sort of thing will find this the sort of thing they like. ~ Abraham Lincoln

iPods

Not. One. Word.

Wow.

iPhone Buyback

Not mentioned at the event, but recently announced and implemented. I’m intrigued.

Phone buybacks, trade-ins and resales were already a big business but now Apple’s stepping in too. What effect will Apple’s participation have on the secondary markets? Worth keeping an eye on.

Apple’s Free iWork Just iScrewed Microsoft

Q: Where are an elephant’s genitals?
A: On his foot.
Q: Why do you say an elephant’s genitals are on his foot?
A: Because if he steps on you, you’re screwed.

Apple just stepped on Microsoft. Hard.

I don’t hear anyone talking about this and I’m not sure why.

Google has been attempting to undercut Microsoft Windows with Chrome for the desktop and Android in mobile. Apple has always subsidized its OS sales, but recently, they have begun to bundle their OS with their hardware for free.

(I)t’s not just Android that has made the OS layer non-monetizable. ~ Ben Thompson (@monkbent)

Google also attacked Microsoft’s other cash cow, Office, with free versions of Google Docs. Now Apple joins the attack by bundling iWorks into every new iPod Touch, iPhone and iPad.

Further, Apple already announced that iWork in the Cloud would be free and work cross-platform.

The problem for Microsoft (is) that you can’t charge for software anymore. ~ Horace Dediu (@asymco)

iWork being free could be truly disruptive to Office (especially ) if Apple were to make it free or pre-installed on all new Macs. ~ ßen ßajarin

Microsoft has an unequalled gift of squeezing big mistakes into small opportunities.2

Colors

PATIENT: Doctor doctor, I keep painting myself gold
.
DOCTOR: Don’t worry it’s just a gilt complex.

I refuse to argue over matters of taste. Let the market decide.

In matters of style, swim with the current; in matters of principle, stand like a rock. ~ Thomas Jefferson

iOS 7

Lots of controversy here. Some hate iOS 7. Some love it. Some say its going to upset Apple’s client base. Some say it’s going to reinvigorate Apple’s client base.

Only time will tell…

…and that time starts on Wednesday, September 18, 2013.

Carriers

Perhaps the biggest news for the iPhone came from outside the Apple event when reports indicated that Japan’s largest carrier (DoCoMo) and the world’s largest carrier (China Mobile) would be selling the iPhone this Fall.

Huge.

Literally and figuratively huge.

Something that people don’t seem willing to understand: Apple could have a deal with any carrier at any time they chose. But they choose to make deals only on their terms. Does that policy mean that they sell less phones? You bet. Does that policy mean that they make more money and sell only to the most engaged customers? You bet.

Apple’s low market share is not by accident, it’s by design.

M7 Chip

People say that Apple’s new M7 motion sensor is only potential…

…but that potential is huge.

People say that Apple isn’t innovating…

…but those people are dead wrong.

Apple is quietly putting together the foundation for the next five to ten years. People seldom pay attention when foundations are being laid…

…but they should.

Let’s wait just a bit and see what Apple hath wrought.

A7 Chip

How big is the new A7 chip for Apple? Well, let’s start with the fact that all of the differentiation between the iPhone 5C and 5S is built upon it:

— Faster and more powerful
— Camera features
— Fingerprint scanning

All of these benefits are made possible by the A7.

And future uses? Who knows?

But one thing to keep in mind. The incredible horsepower of the A7 is not so much targeted at consumers as it is targeted at developers.

With the A7 chip, Apple appears to be playing to their strengths. And it’s hard to know how quickly (or how slowly) the competition will catch up.3

Fingerprints, Privacy, Payments And The End Of NFC (We Hardly Knew Ye)

This topic deserves its own article, so let me briefly say this:

— Remember when people criticized Apple for not hopping on the NFC bandwagon fast enough? Yeah, forget about all of that.

Illustration of of Apple’s market power: it has effectively killed NFC despite Android supporting it. ~ Benedict Evans (@BenedictEvans)

— Remember when people said that Apple wasn’t innovative? Yeah, forget about all of that, too.

It seems Apple will skip NFC just like they skipped blue ray. ~ JF Martin (@jfmartin67)

— Remember when people said that Apple was doomed? Yeah, you forget about that one, too.

Having built a ‘secure element’ into the 5S…what else might Apple do with it? ~ BenedictEvans

Ah, now THERE is a grand question, indeed.

Seven Hundred Million iOS Devices

iphone-salesiOS is niche or going away?

Get over yourself.

iOS is 700 million strong and growing every day. iOS will reach a billion customers by 2014.

An iPhone 4S (2 year old phone) is only worth $50 less in good condition than the Samsung Galaxy S4 (4 month old phone) on Gazelle. ~ Abdel Ibrahim (@abdophoto)

Gazelle is not an analyst or a pundit or a fan boy. They want to make money. Their estimate of what they can re-sell hardware for is about as objective an appraisal as one can get. It’s set by the market. And so long as the market values Apple’s iPhones as premium products, then Apple’s iPhones ARE premium products.

Apple’s Unreasonable Pricing Strategy

Again, a topic for a full article. Let me just say this. The iPhone 5C is Apple doubling down on their current pricing strategy.

Apple’s iPhone event was a confident declaration that iPhones are worth paying for. ~ Ben Thompson (@monkbent)

Much more to follow in later articles.

Differentiation

One of my concerns was whether Apple would be able to sufficiently differentiate the iPhone 5C from the 5S. Would they be able to make the iPhone 5S $200 more valuable than the iPhone 5C without resorting to crippling the 5C?

It turns out that Apple only had to differentiate the phone by $100 since they inserted the iPhone 5C in the mid-level, rather than the low level, price bracket.

And did they meet their burden? Easily.

— Better A7 processor;
— Better camera features; and
— Fingerprint scanner and security system.

As an aside, I have to admire Apple’s marketing strategy. They created three differentiators between the iPhone 5C and iPhone 5S, all of which can be explained in a single sentence.

By way of comparison, go to a Microsoft store and ask the salesperson the difference between Windows 8 RT and Windows 8; or the difference between the Surface and any one of the notebook or hybrid computer models made by Microsoft’s (dwindling) hardware partners.

See what I mean?

Flagship v. Premium

Another topic that deserves another article. Let me boil it down to this:

The iPhone 5 was both Apple’s Flagship and Premium model. The iPhone 5S is Apple’s new premium iPhone. The iPhone 5C is Apple’s new Flagship iPhone.

Take a look at apple.com today and note which new iPhone appears first: the 5C, not the 5S” ~ Horace Dediu (@asymco)

Posit: yesterday Apple cut the price of the iPhone by $100, at same margin, and made it cooler. Also launched entirely new high-end phone ~ Benedict Evans (@BenedictEvans)

People are just not getting it. Apple has just reduced the price of their “Flagship” – the iPhone 5c – to $99 subsidized, $549 unsubsidized. Apple is going to sell a TON of these mid-level phones. This is by design.

Much, much more in later articles.

Jony Ive

The difference that Jony [Ive] has made, not only at Apple but in the world, is huge… If I had to pick a spiritual partner at Apple, it’s Jony. ~ Steve Jobs

appledesignteamJony Ive is the real deal, Apple’s true visionary.

Fast Company says that over the entire course of Ive’s leadership, only five designers have ever left Ive’s team with only two actually quitting, the other three simply died.

An incredible tribute to an incredibly gifted man and one of Apple’s greatest assets. So long as Jony Ive is with Apple, Apple won’t have to worry about that “vision thing.”

Innovation

When I hear people say that Apple isn’t innovative anymore, I have to do a reality check. Are those people living on the same planet that I am?

— MacBook Air
— iOS 7
— Mac Pro
— A7
— iPhone 5S

Taken together, the Mac Pro mentality and the A7 direction are terribly exciting. ~ Rene Ritchie (@reneritchie)

Agreed. The charge that Apple isn’t “innovative” would be laughable if it weren’t for the fact that so many people seem to take it seriously.

Critics who claim that Apple is not innovative may look like idiots and talk like idiots but don’t let that fool you: They really are idiots.4

Critic’s Free Advice Worth Every Penney

The long knives are out for Apple. Critics are literally calling Apple “clueless”5

Leading candidate for Stupid Comment of the Day from Jony Evans at ComputerWorld: “Apple may have “hit its BlackBerry moment.” ~ Shawn King (@ShawnKing)

I don’t know about that, Shawn – the competition for stupidest comment is mighty fierce.

A critic is a person who rocks the boat and then claims that they are the only one capable of saving the ship.

Pshaw.

“The critic leaves at curtain fall
To find, in starting to review it,
He scarcely saw the play at all
For starting to review it.”

― E.B. White

Measure not the work until the day’s out and the labor done. ~ Elizabeth Barrett Browning

I have studied the wisdom of many (critics) and many cats. The wisdom of cats is infinitely superior. ~ Hippolyte Taine

Apple’s been doing pretty well on its own by ignoring the critics’ advice. Let’s wait and see how this all plays out before we jump to any premature conclusions. And let’s hope against hope, that Warren Buffet got it right when he said:

If a business does well, the stock eventually follows. ~ Warren Buffett

  1. It’s an in-joke. If you don’t get the reference, just laugh hysterically anyway, then move on. []
  2. With apologies to Henry James. []
  3. No competitors are even close to bringing 64 bit to market and even for some platforms like Android which is focused on the low end non-spec smartphones it may not even make sense. []
  4. With apologies to Groucho Marx. []
  5. FRED WILSON: “The C in 5C does not mean ‘cheap’ as I had hoped. It means clueless, as in clueless about how the vast majority of new smartphone users are paying for their phones.” []

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?
  • steve_wildstrom

    Apple’s move to make iWork free is important, but I think people are going a bit overboard on the “Apple has killed Office” meme. Office as a consumer product is dead. Apple just made it a little deader. The question is how important consumer sales of Office are to Microsoft, and we really don’t know. First, you have to split the market. There are pure consumer purchases of Office. These haven’t made sense for years. Casual users of spreadsheets and word processors don;t need Office and haven’t for a long time. But then there are the people who buy Office to deal with work documents on their own devices. These people don’t need word processing or spreadsheets or presentation software; they need Office for compatibility.

    Office’s core market is actually reasonably safe. The real problem comes from the phenomenal downward pressure on software prices that is coming from many things besides phone and tablet apps. Microsoft is doing the right thing by moving Office and other business products to subscription and software-as-a-service models, but the price pressure is going away.

    • James King

      “Office as a consumer product is dead.” – Steve Wildstrom

      ?!?!

      • Idon’t Know

        Microsoft did this to themselves by not creating an iOS and Cloud version of Office years ago. They taught a lot of people that they could get along just fine without Office. Now they have an overpriced subscription based clunky Office that nobody wants and no iOS version. Brilliant.

        • James King

          No argument from me on that point.

      • blairology

        iWork for iCloud will work on Windows for free.

        • James King

          Looks more like a Google Docs killer.

      • steve_wildstrom

        The problem is that the relative health of Office in the enterprise (or, more broadly, in business and to some extent education) is distinct from its deadness in consumer markets.

        • James King

          I’d posit that there is a symbiosis between consumer Office and enterprise Office and that consumer Office won’t truly be dead until enterprise Office is killed.

    • jamesdbailey

      At least now I understand Apple’s motivation for creating the iCloud version of the iWorks apps. Very smart. Giving away the apps without any way of using the resulting content on a PC would just seem desperate on Apple’s part. But now I can see iWorks actually being used for office documents.

    • Anders CT

      Microsoft Office still print money for Microsoft, and is essential in many enterprises. The real threat to Microsoft office is that Micrsoft might do something stupid, like tie Office to with a consumer-facing platform that has little or declining marketshare. Like Windows 8/RT/Phone

  • James King

    “(I)t’s not just Android that has made the OS layer non-monetizable. ~ Ben
    Thompson (@monkbent)”

    “The problem for Microsoft (is) that you can’t charge for software anymore. ~
    Horace Dediu (@asymco)

    I initially wanted to agree with this premise but, the more I thought about it, the less I actually did.

    There is a prevailing thought that Microsoft is being “disrupted” right now by mobile devices. But I’m sitting in a home with three computers that get regular use. Microsoft still makes billions in Windows sales. Yes, the PC industry isn’t showing any growth but, the more I consider the situation, I’m considering the fact that nothing is DRIVING that growth. Microsoft’s monopoly position has been so dominant that it hasn’t needed to innovate. Also, processing power hasn’t really been an issue for a long time; we’ve reached the “good enough” stage for that awhile ago, largely because OS innovation stopped because of the prior point.

    In other words, I don’t think the PC industry has been “disrupted” so much as I think it has stagnated to the point that it is literally standing still. But do I think, it’s going away? Do I think CONSUMERS will no longer purchase them in major quantities? No, I really don’t. The ergonomic advantages of a real tactile keyboard and a large screen, not to mention its raw power and versatility, don’t suggest to me a device that is cartwheeling its way into the dustbin of history. To the contrary, I can’t envision a world without the PC or even a world where the PC becomes a niche tool.

    Microsoft and Intel have become victims of their own success. Without effective competitors in their own space, they have literally achieved total victory. The only thing that was left WAS “disruption.” The major players in mobile have essentially flanked Microsoft but, sooner or later, someone is going to have to figure out a way to take out the massive army at its back.

    Do I think Google has the tools to do it? No, I really don’t. It suffers from the same cultural issue that Microsoft has: it is dominated by engineers. Google is only slightly better at the stuff that drives people crazy about using Microsoft products. It’s UI/UX efforts, while an improvement over Microsoft’s, are still the stuff of geeks. Google has shown that it can stitch together a cohesive and compelling ecosystem of technology but it hasn’t innovated any particularly better ways to USE that technology.

    As for Apple? It’s stuck at the high-end. All of its awesome innovation comes at a price… a relatively high one. Apple couldn’t fund its efforts in innovation selling at the price points of PC OEMs. All of Apple’s synergies are created by being positioned as a premium brand. By definition, that means it will never dominate the market.

    Samsung? It has a LONG way to go because it is only just developing competencies in software. Without a compelling software stack and ecosystem of its own, its influence in the industry will always be based on its ability to create “good enough” hardware.

    The ironic thing is that I think Haswell shows that Intel understands the problem it faces and is attempting to innovate its way out of it. But its efforts have been hampered by Windows 8. As long as Microsoft is unable to offer a compelling OS solution for PCs, Intel is hamstrung. Haswell is the type of product that could easily drive growth for PCs but Microsoft is the company that is in control of the user experience.

    Bottom line, I think Microsoft can very much continue charging for software. Chrome OS and Google Docs are no match for Windows and Office and there isn’t even a whiff of another serious challenger on the horizon. Microsoft may be in a “siege” state, but it has great supply lines and strong walls. It just has to learn to fight DIFFERENTLY.

    • Kenny

      @James King Bottom line, I think Microsoft can very much continue charging for software. Chrome OS and Google Docs are no match for Windows and Office and there isn’t even a whiff of another serious challenger on the horizon. Microsoft may be in a “siege” state, but it has great supply lines and strong walls. It just has to learn to fight DIFFERENTLY.James King

      I disagree with you on this Paragraph
      Google Chrome OS with the new addition of Chrome Package App and App Launcher can easily match Windows and OS X applications for all but the most advanced tasks as. video and sound editing, but they are much better than web apps for those and will continue to improve as the Chrome OS matures. i give Chrome OS 2 – 5 year to become a real Affordable computer solution for Consumer and Business alike

      • James King

        If it was a matter of matching functionality, Linux would have made significant inroads in the desktop space. When facing an entrenched incumbent, it takes more than creating a product of equal capability, your offering has to be significantly superior.

        That being stated, it’s tough to compete with free. But Chrome OS has to be free AND very good to compete with Windows. Linux has shown that.

        • TheEternalEmperor

          Agreed. Linux’s displacing of Windows is in year what? 18?

          [update]
          RedHat. Debian. Caldera. Suse. Mandrake. Lindows. Mint. Ubuntu. Canonical.
          They’ve all come and gone and Windows is still here. The only Linux that ironically may do it is Android.

          However, they are all Unix and Unix is doing on mobile what it couldn’t do on the desktop.

          • James King

            LOL, EXACTLY!

        • Kenny

          That is the whole point

          Google Chrome OS provided better functionality compare to Windows and OS X because it built in the cloud with cross platform capability and it is also the safest and the easiest to use, till today the only think lacking was Capability which they are tying to address with Chrome Package App.

          Imagine Having your Application Available on any OS where Chrome Browser is install, that’s a dream come true for most developer

          • James King

            While I agree that is a great feature of Chrome OS, until I see programs in the class of Photoshop or practically any major video or audio production software, consider me a sceptic. I’m also not crazy about having my every keystroke or action tracked (at least any more than they already are).

          • Kenny

            First of all
            Chromebook is not for Pro Power User
            it’s an easy to setup computer for the mass, student and those who use cloud and web service hence Photoshop video or audio production software are not a deal breaker and Chromebook was the most selling computer this year.

            second
            if you’re Afraid of Google having to much information on you
            how can you sleep at night knowing that Apple know your Name, you Address, your phone number, your credit card number, your buying Habit and can even track your movement wherever you go.

          • James King

            I don’t own any Apple products.

            As for Chrome OS, I’ll let the market decide on that.

    • Neil

      “The ergonomic advantages of a real tactile keyboard and a large screen, not to mention its raw power and versatility, don’t suggest to me a device that is cartwheeling its way into the dustbin of history.”

      Apparently, you’ve never heard of RSI injuries. Do you really think a traditional computer provides better ergonomics than a device you can use anywhere in almost any position?

      As for power, the A7 demonstrates that ARM is breathing down Intel’s neck.

      • James King

        RSI injuries do not negate the inherent ergonomic benefits of a large screen and a tactile input method.

        The A7 is far from being a competitive product with Haswell when it comes to performance.

      • qka

        Also, screen as input device is new enough that we haven’t had time for RSI injuries to be associated with the new input method.

    • Kizedek

      “As for Apple? It’s stuck at the high-end. All of its awesome innovation comes at a price… a relatively high one. Apple couldn’t fund its efforts in innovation selling at the price points of PC OEMs. All of Apple’s synergies are created by being positioned as a premium brand. By definition, that means it will never dominate the market.”

      Disagree. It’s not stuck. They can start to go down market when they want to, as they did with the iPod.

      With the 5C, Apple has now emphatically declared that they are sticking with premium products and pricing for now, by design, and not because they are “stuck”. The OEMs were stuck in a race to the bottom with each other: look where they are now.

      Apple’s price points are where they are because Apple’s products can continue to sell at those price points without price erosion. People know the value proposition (which includes paying for OS, software, ecosystem and support).

      Apple isn’t therefore merely “funding its efforts in innovation” as though it is barely covering the costs of some kind of overreaching attempt. It is making good profit on useful and desirable products: again, because the product is so good it can support it.

      Apple actually spends less on R&D, because it knows how to focus and say no. The tooling and production line costs seem to be covered in advance by strategic cash spending as Cap Expenditures.

      Indeed, each product is popular and good enough that it actually runs in the market place longer than expected, and with enough sales, that it quickly recoups fixed operating costs, and its margins actually rise in the long term due to lowered costs per unit over the extended production life of the product. Contrast this with MS taking a 900M hit on the Surface and lowering its price; and killing off products, like the Kin, prematurely.

      Apple makes the kind of profits MS is used to making in software, ones that were traditionally only associated with software (because stamping out a plastic disc or allocating blocks of license numbers is less complicated than device manufacture and distribution). Now MS can’t get its hoped-for profits in software, so it is trying to follow Apple into an integrated approach. Good luck with that.

      • James King

        People seem to forget that when they purchase an Apple product, they aren’t just buying a piece of hardware but tens of thousands of man-hours worth of software, the costs of which have to be covered in the product. Based on its warchest, Apple could definitely afford to go downmarket but then its software development becomes a loss center. Over the long term, that is detrimental to its business.

        If Apple wants to maintain a healthy brand and long-term business, it is best for it to maintain higher margins. That places a natural limitation on its business.

    • stefnagel

      As for Apple … Apple creates great products and charges enough to continue to create great products. As for Microsoft … the era of treating us like poultry in factory farms and shoving its software down our throats is over.

  • TheEternalEmperor

    “Apple is quietly putting together the foundation for the next five to ten years. People seldom pay attention when foundations are being laid…”

    They only pay attention when they are not. Now, it is obvious that Blackberry and Nokia didn’t have the proper foundation.

    It also seems to be clear that Apple is not invulnerable to that either judging from the growing pains of Maps(which, incidentally well for me) and cloud services.

    That being said, Apple seems to do foundation laying better than most. iTunes flew under the foundation radar for years. iPod was going to fail ANY day, when iTunes blindsided everyone with movies, podcasts, apps and books.

    Notice already that foundational 64bit is useless for phones. Will people never learn? “Face unlock, 360 Panorama and Air Gesture, and Widgets” seem to have few questions about their usefulness. Care to wager which of those and 64bit iOS will still be used in two years?

  • TheEternalEmperor

    “Fast Company says that over the entire course of Ive’s leadership, only five designers have ever left Ive’s team with only two actually quitting, the other three simply died.

    The Firm.

  • Idon’t Know

    Great article but mystified as to why you expected iPods or anything else but an iPhone at an iPhone event.

    • steve_wildstrom

      iPods have traditionally been announced at the September event and this was the first year that didn’t happen. Apple did by homage to the tradition by closing the announcement with a performance by Elvis Costello.

      • Neil

        All iPods are now on a two year update cycle except the Classic which will just keep on keepin’ on as is.

        In a perfect world of my making, Apple would re-release the 2010 iPod nano with WiFi and iTunes Radio. Not gonna happen.

        I just feel thankful that after my 2010 nano died in my washing machine a few weeks ago, some refurbs finally appeared on the Apple Store today. I have one en route. I’ll be more careful this time. That postage stamp design and built-in clip was genius.

  • stefnagel

    No iPods. Apple wants us to buy iPad Minis, not iPod Touches? I will. When the Mini has a retina display like my Touch.

    • TheEternalEmperor

      Agreed. I prefer the larger iPad, but the Mini is a non-starter for even consideration until a retina display appears. I’m still impressed by the retina display on the iPad. I cannot ever go back.

      • stefnagel

        Me neither. I picked up a Mini my wife was given at work. No can do. That display is last millennium.

  • stefnagel

    Great article. I have the same sense, not to mention those sensors, that Apple knows. It’s in the game, while the others are still searching for the field on hands and knees.

  • Defendor

    Non iPhone stuff:
    Needs no comment. This is an iPhone event.

    5c:

    Deserves minimal comment, it is really just a thinly disguised continuation of the “last years model with $100 discount” strategy. Added bonus of being easier/cheaper to manufacture.

    5s is the star of the show:

    It is a great Phone HW with lots of improvements.
    A7 – Apple is first to next generation ARM (and I suspect next gen Power VR), this demonstrates the grown CPU design prowess at Apple. Another big jump in performance.
    M7 – Mostly potential today, but again it is another ramp up in what will be standard equipment for Apple. Can’t complain about that.
    Fingerprint Auth. Done right I want that,and it sounds like it was done right.

    Still missing the boat on big screens( 4.7″+). They are mainstream now and Apple is just gifting the market to the competition. Stop giving Samsung a free run of this market.

    iOS 7:
    Still looks as hideous as the Beta. I would be in for Apple HW, but I can’t get beyond the childish looking OS, and often, painful to look at colors. Gradients of neon and pastel. Tacky and juvenile.

    Jony Ive:
    HW design skills don’t necessarily translate into software UI design skills. After seeing iOS 7, they apparently don’t in this case. He is the wrong guy to lead software UI design.

    • TheEternalEmperor

      iOS 7: Shrug. Eye of beholder. I like it. Now what?

      Also don’t agree with not making larger phone missing the boat. Selling all the phones you can make pretty much shows that they are giving up nothing.

      • Defendor

        I never said “no one likes iOS 7”, clearly some do and some don’t. I am in the don’t camp. It pisses me off, because I was set to go Apple until they turned it into an eyesore.

        As far as your claim that they are selling all the can make. It’s demonstrably nonsense. They could certainly build more phones if the demand was there. They only have supply issues around launch time, after that they are demand constrained.

        • TheEternalEmperor

          1) You made a pretty general statement “HW design skills don’t necessarily translate into software UI design skills. After seeing iOS 7, they apparently don’t in this case.” It certainly didn’t sound like you were speaking just for you. It sounds more like you are indicting his proven design skills because you don’t like it. He’s the head of Apple software and HW design. What are you?

          But fine, don’t buy it. More for everyone else.

          2) Nonsense? Selling more phones YOY. No known drop in sells despite the increasing number of larger phones. The best evidence of all is the fact that THEY STILL DON”T FEEL THE NEED TO MAKE ONE.

          So we have your opinion against their numbers. I know which I would trust more.

          • Defendor

            iPhone sales for Fiscal 2012:
            Q1: 37 million
            Q2: 35 million
            Q3: 26 million
            Q4: 27 million

            Pretty damn obvious that they are NOT selling all they can make, but are building to demand, that shrinks after initial release.

            Also this is into an expanding worldwide market, and Apple is growing slower than the market is expanding.

          • TheEternalEmperor

            And that proves that they should make a larger phone…how?

          • DarwinPhish

            Those numbers do not prove your point. Production starts well before launch to handle initial demmand and production may have to ramp down to accommodate other products.

            Price stability and the move to plastic with the 5C are much stronger indication that Apple had supply constraints. Apple also has distribution constraints as it works with far fewer carriers than, say, Samsung does.

          • Defendor

            It certainly does prove my point to anyone with a clue about how modern inventory and supply chains work. They aren’t stockpiling a quarters worth of phones before launch, they might have a weeks worth, if lucky. Modern production systems run “just-in-time” whenever possible. The quarterly sales rate is a clear indication of demand rate, nothing more. Factories actually get better and production rates increase as time goes by, yet the sales rate falls over time. They only thing this can show is falling demand over time.

            So absolutely, unequivocally, they are NOT selling all they can make. They sell into declining demand after the first full quarter.

            at: TheEternalEmperor

            It doesn’t prove they should make a larger phone, but it utterly guts your nonsense objection to making a larger phone. They could clearly build more phones if the demand was there.

            If they had a second phone that would bring in more customers, they would have more demand.

          • DarwinPhish

            Maybe I am just too demanding when someone use a word like “proof”, but no, it really does not. Quoting 4 quarters of sales numbers (which are not broken down by product) as proof of production AND distribution capacity is overly
            simplistic. As much as you might think you might know about modern production systems, I doubt you have great insights into Apple’s specific
            arrangements. Retorting with “just-in-time” production is also overly simplistic. Apple does not own or control all of the means of production and can not simply dial up or down production in response to demand. If the world really worked this way, Microsoft would not have written off almost a billion dollars for the Surface.

            I’ll concede that Apple very likely could have produced more iPhones over the past year. However, the choice not to do so was certainly based on more than just projected demand. Production does not always scale in a linear fashion, especially when your production methods use highly specialized machines.

          • Defendor

            You are just being pedantic at this point. This is pretty much a consistent iPhone pattern. They sell the largest number in the first full quarter of the Phones release on the initial hype. Then the sales fall after that.

            In this case they sold 37 million in the first full quarter, then two quarters later they only sold 27 million. If that was a production limitation, it would need to be explained in the quarterly reports. It was also not yet a transition quarter (the next one at 26 million was) Apple has often discussed production limitations in quarterly calls, but they are ALWAYS in the first quarter ramp up. After the first quarter production is running smoothly and the sales drops are from demand drops.

            There is really no other reasonable explanation than the obvious for the sales pattern of the iPhone. If you want to counter the explanation, you are the one that needs to prove it.

      • Anders CT

        The thing is, that Apple can’t increase the horizontal resolution without breaking tons of apps, unless they outright double the resolution.

        • Defendor

          What? iPhone works in Portrait and Landscape and they could increase one dimension (which is Horizontal or Vertical depending on orientation), so it doesn’t make sense that it would break apps to expand in another.

          They might have to scale OLD apps, or put black bars around them, but it won’t break anything except badly written apps.

          They are not going to stay at this resolution forever. It isn’t a question of IF they will build a bigger screen phone, it is only a question of WHEN.

          The longer they wait, the worse the optics get.

          • Anders CT

            Sure. The iPhone 6 will probably be shy of five inches with a 1280 x 1920 resolution. That resolution would work. It’s just that, the way that Apple has it set things up, they cant just pick any desireable resolution.

            And yes, iOS developers can make apps completely resolution dependent. It’s just, that a lot of devs don’t, because it’s a bit of a hassle and they don’t really need to do it.

          • Defendor

            You mean 1280 x 2272. 😉 They aren’t likely to switch back to 3:2 aspect.

            They don’t have to double. iPhone 5 was proof that they don’t have to. They can also expand. The app community can respond with updates quickly and in the mean time they can simply scale, or frame. Resolution independence not required, just app updates.

            They could double again, or they could expand again, maintaining 326 dpi and growing resolution to 5″. This would be more like 1422×800. This also might be a case where it would make sense to let devs in early so there could be a lot of non scaled apps ready for launch.

            Either option is reasonable. In many ways maintaining 326 dpi is the better long term decision.

            Though 5″ is too large for one size fits all phone. They need to have iPhone 6 in both sizes.

    • Anders CT

      I like the look of iOS7 a lot. It’s the phones i think are not so nice looking. Tall and narrow with a small screen. But those are all according to taste and all that.

      The only thing I took out from the event, was that the pricing of the iPhone 5C, while sensible for Apple, was something of af gift for Android. What can stop Android now?

  • DarwinPhish

    Regarding differentiation and the price spread between the 5C & 5S:

    If you want any of the things the 5S uniquely offers, I believe the $100 price difference is a bargain. In particular, the new M7, the additional processing speed and TouchID have the potential to add new functionality to the iPhone that to many users could well be valued at over $100. Put another way, if the price difference were $200, I do not think fewer 5S would be sold.

    This may not be evident now, but if apps and features enabled by these technologies takes off over the next 6 months, and these technologies get added to other devices (like a refreshed iPad), no one will regret paying the extra $100 for the 5S. In fact, I think there is a very good chance you could see a 5C refresh in less than a year.

  • James King

    My apologies to John, I don’t want to highjack this post but I have a question:

    Let’s say that Android and iOS have indeed commoditized the OS to zero… what would be the incentive for any other company to attempt to innovate in operating systems? Doesn’t that open the door for a reality in which Android and iOS are the LAST companies to offer consumer level operating systems?

    Right now, OS software is a multi-billion dollar industry. If it becomes a zero dollar industry, forget going up against Microsoft, there isn’t a shred of motivation to enter into a market controlled by two dominant players offering their software for FREE.

    This is one of the reasons I’m concerned about a long-term stagnation settling in on the tech industry.

    • DarwinPhish

      Google and Apple still operate profitable business models. Another company, even Microsoft, can create a profitable business without directly charging for the OS. What has changed is that the business model of monetizing an OS solely by licensing it to OEMs is essentially dead.

      • James King

        I guess that is feasible but I have no idea what that would look like. With incumbents like Google and Apple, what company could get funded with something as complex as OS development being a part of its business plan? Only a big organization could take on the challenge and most of the big guys are too risk averse. HP ditched webOS rather than take on the challenge and webOS was actually great IP.

        I don’t necessarily agree with your point about OS licensing because it is still a multi-billion dollar operation. But it will definitely need some type of serious change in order to survive.

        • DarwinPhish

          Google’s model is to give away the OS to sell ads and services. Others have done this with Android (Amazon) others are trying to (Xiaomi) and someone else could (maybe Facebook).

          Apple’s model is to give away the OS to sell hardware, a model older than the licensing model. Samsung and others are working on Tizen, Nokia currently sells devices running the Asha Framework (and before that Symbian), and, very likely, Microsoft will be doing it with their Nokia purchase.

          History will probably show that Microsoft’s success licensing Windows is the exception, not the rule.

          • James King

            Once again, this leaves OS development in the hands of companies with the vast resources to integrate it into a larger effort. The PC market is dominated by Windows, the mobile market by Android and iOS. Where will the next major OS innovation come from? It’s unlikely that it will come from a new venture.

          • DarwinPhish

            I don’t know. Android had rather humble beginnings.

    • JLA

      ‘Let’s say that Android and iOS have indeed commoditized the OS to zero…’

      Lets not, if the OS has no value then Apple and Google would not bother. Clearly there is value in producing an OS, the question is where that value can be extracted. Apples answer is services, Googles is advertising, Samsungs is hardware and Microsofts seems to be Hope.

      • James King

        “Lets not, if the OS has no value then Apple and Google would not bother.”

        This relegates the OS to being part of a larger effort. OS development is extremely complex and expensive. Your response does not answer where OS innovation will take place or where the incentive will come from to take on such a large, expensive endeavor.

  • Peter Buckton

    ” People seldom pay attention when foundations are being laid… …but they should. ”

    Bingo

  • Quicksingle

    The M7 chip is the most interesting aspect of the announcement. Just like Google/Motorola have showed already, this will be an exciting area to watch, especially with wearables on the radar. I`m not sure if I would call the 5C the ” Flagship device ” Last years model in a plastic case maybe. The 5s is still the boss.

  • AhmadZainiChia

    “Does that policy mean that they make more money and sell only to the most engaged customers? You bet”

    Only getting the most engaged customers made me think a bit, and I’d just like to ask for your opinion on this: do you think this is the reason why Apple is not targeting the pre-pay market? Because people who use pre-pay are generally more thrifty (trying not to use the word stingy here) when using data, etc. This would result in a poorer experience, and it is classic Apple that if you do something with their product that results in a poor experience, they’d rather you not do it at all.

    Following this theory further, I posit that the iPod Touch, then is Apple’s play in the pre-paid market. Because if you’re gonna be on prepay, you might as well only use a wi-fi connected device than a cellular one.

    What do you think, does this make sense? And if it does, do you think it’s a good strategy for Apple going forward?

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