Apple – Rumour is not reality

Apple’s rivals will be resting bit easier tonight.

• The launch of the iPhone 5s and 5c show that Apple is still uninterested in the low end and remains unwilling to address the demand for larger screens.
• Apple launched two new phones to replace the iPhone 5 at an event at its headquarters but showed very little that was new and innovative.
• The iPhone 5s is an update to the iPhone 5 that adds a fingerprint sensor to the “wake” key, an upgraded apps processor (A7), a new component that tracks all motion data as well as an upgraded camera and flash.
• This device will come at the same price as the iPhone 5 ($649 16GB unlocked).
• The iPhone 5c is essentially an iPhone 5 in a polycarbonate case (5 choices of colour) with a few upgrades such as a larger battery and a better camera.
• The iPhone 5c will be available for $100 less at $549 for a 16GB unlocked version.
• There was no sign of: Apple TV, a larger screen iPhone or new iPads all of which had been rumoured.
• Apple has played a very delicate game in releasing a cheaper iPhone as the threat of cannibalisation is very real.
• However, there are significant differences between the two versions in terms of hardware and look and feel to justify the small price difference and so cannibalisation is not really is an issue.
• The real issue is that at $549, Apple is still doing nothing to address the low end which will relieve the likes of Windows Phone and Android.
• Furthermore these devices do nothing to address consumer demand for larger and brighter screens.
• This is a segment that Samsung has created and it is still growing nicely.
• In failing to address it, Apple is foregoing a substantial revenue opportunity.
• Furthermore, the relatively small and pokey screen of the iPhone 5s and 5c make the device look tired and old next to the Samsung Galaxy S4 and Note III.
• The iPhone 5s may have new wonders hidden inside but potential buyers are unlikely to notice having been put off by the small screen.
• Net-net Apple has done enough to protect the slice of the market it occupies and extend slightly into lower price categories but there is nothing revolutionary here.
• Hence, I don’t see numbers or market share changing much leaving the current status quo undisturbed.
• Apple remains inexpensive relative to its cash generative ability and bank balance but there is nothing in these devices that is going to re-ignite belief that another growth spurt is around the corner.
• I prefer Microsoft or Yahoo!.