This strikes me as very boring, non-Apple style thinking. I don't think the experience of a 5 inch phone is better than a 4 inch phone. But it is a bigger number and thus easy to market. And things that are easy to market are the playground of boring companies.
Apple, on the other hand, should look at these numbers and say "people obviously want something new." Giant phones are being heavily marketed as the new thing, so people are buying them. Not because it feels good to try to shove a small book into a front pocket, or that they love having to use both hands to type out text messages.
A boring business would follow the heard because they don't know how to distinguish customer needs from customer inertia. Apple, traditionally, is very good at knowing when something is a trend, and when something speaks to a deeper human need.
I sincerely hope that Apple has not become a boring company.
"I don't think the experience of a 5 inch phone is better than a 4 inch phone."
You don't have to. But I am someone who does. There are many, many people like me who love their phones like the Galaxy Note who feel the same way. If I made a list of the top 5 reasons I really like my phone, 1 - 3 would be screen size.
I have been surprised at how many people have gone from, "let me see that phone, it is ridiculous that you carry the around" to "wow, I never realized how hard my screen is to use compared to this." I know three people who have gotten a larger screen phone because of me in the past 9 months and I don't evangelize at all. They just see my phone and want to try it.
I almost didn't get my Note 2 because I was afraid of carrying around a "small book". To honest it is less obtrusive in my pocket than my Motorola Droid 3 was, that thing sat in my pocket like a thick brick. The single time it can be an issue is getting it in and out of my pocket while sitting and wearing jeans.
I love my Note 2. It is close to perfect in the size category. As part of my job I sometime test on a 4" iPod Touch, and it feels to very tiny. I can't remember how I even used my old iPhone 3G. Typing on the 4" was painful; the hit target was so small.
I think this is one of the reasons that Samsung has taken such a large share of the market. They offer devices in a variety of sizes, for which they've been criticized, but allows for a perfect size for everyone. I know I could never go back to a smaller screen size.
Yeah I do some testing on the 4S and it feels tiny now compared the my 5S. As for the typing though, software plays a big part in this too. I absolutely hate the default keyboard on my HTC One and I have no problems with my 5S and even the smaller 4S.
I will likely end up upgrading my iphone 4 to a 5 instead of a 6 if the rumoured size increase happens. The only reason I still use an iphone is the smaller screen size. I would bet that Steve Jobs had the nous to make sure that the iphone comfortably fits in the front pocket of a pair of jeans.
The rumor sites have them bringing out two models - one a bit bigger and one much bigger. If anyone brings out an android nano I'll defect immediately (having been on iphone since day 1).
The Droid Razr M is about the same size, at 4.82 x 2.40 x .33 inches[1]. It's only .09 inches wider, and .03 inches deeper than The 5s, and it is actually .05 inches shorter[2]. I'm not sure if you'd still find that too big though.
Really looking for something with a hi-res screen, apple-speed touch latency, maximum but preferably smaller footprint than an iphone 4, and at least as thin as an iphone 5. This should be doable in 2014 and I think would be distinct enough without being ridiculously niche to have a reasonable market segment.
You aren't likely to get apple-speed touch latency outside of apple. They have worked much harder on this than everyone else and do a much better job of it. Sadly for you, I don't see them releasing something that small again. The 4S is still a decent phone, but you might have to settle for the 5 sized phones. Unlikely they ever release something smaller at this point.
One of the reasons I didn't want any smart phone was the size (I had a small flip phone from Virgin Mobile); but now I'm used to my iPhone in a Book Book.
On the other hand, my wife often has no pockets, and never puts her phone in one. Instead it goes in a purse. For her, and I expect many women, the only thing that matters if it is comfortable to hold and use not how it gets stored between use.
I was ready to buy a nexus 5 which is much smaller until I tried my friend's one - it feels like I tried to stuff a shoe in there by comparison. Having bought on spec, they agree that it is disappointingly huge and wish they went for an iphone.
the old iPhone screens are too small. current isn't bad at all. perhaps a bit smaller than ideal, but not really "too small" (at least it isn't too small for tens of millions of people)
So you haven't tried it. Good deal. I wear regular fit pants and have absolutely no problem putting the phone in my pocket with plenty of room to wear.
There is definitely a sweetspot. I understand 4 inches is very small for any mildly serious task, it can be done but it's painful. But IMO 5 or 6 inches don't feel so liberating. It's better, but not that much, and at the end of the day I really want an iPad to do any task that will last more than 5 min.
For people who usually have a carry bag, an iPad is not so big or clunky. Having a 4 inch phone to pocket is then good enough.
Should point out the most popular devices, Samsung's Galaxy S3 & S4, are 4.7" & 5" phones. The Galaxy Note series is 5.3", 5.5", and 5.7" respectively.
"I don't think the experience of a 5 inch phone is better than a 4 inch phone. But it is a bigger number and thus easy to market."
It's all good that your personal preference is for smaller sized phones. But it's really false to say that bigger screens are just about marketing. Having gone up from a 3.7 to a 4 inch to 4.7 inch device, each of them has been a progressively better experience because of screen real estate. My next phone might be 6 inches, so far bigger is better to me.
If Apple really does pick their phone size based on user experience alone, I think they're doing it wrong. However, I think they got stuck on dimensions set in 2007 and an operating system that isn't flexible enough. (FYI all my devices except my phone are made by Apple.)
> However, I think they got stuck on dimensions set in 2007 and an operating system that isn't flexible enough. (FYI all my devices except my phone are made by Apple.)
Not really the operating system, so much as the APIs provided to developers, which previously required complex layouts to be hand-coded.
However, constraint-based layout was introduced 3 years ago and is being aggressively marketed as 'the future', although it has required some learning time for developers (and wastage of old devices) to become mainstream.
It is likely that the reason for introducing this several years ago was to ease the future introduction of varying screen sizes. I'd view the delay as a consequence of thinking about the problem in its entirety instead of rushing to play the numbers game.
Is it? When Apple introduced other screen sizes in the form of tablets, they required completely new layouts. Will they do that again for larger phones?
The 3.5/4 inch size is very much ingrained in the design of iPhone apps. For example: many apps require reaching into the top left corner for navigation - this has been a HIG recommendation since 2007. Reaching to the top left of a device hard to do on 4+ inch devices. Android and Windows Phone have mostly avoided this, meaning you can operate your phone without reaching into the top left corner. This considerably increases the things you can do on large Android/Windows phones with one hand.
The dev tools have included variable sizing help for several years now. Anything being made now should be using these features to deal with different sized phones, even if just the 4 size and 5 size. Certainly it will make some people's lives difficult it they increase the width of the next phone, but developing new apps now it is easy to handle.
The bigger problem is all of the legacy apps that were designed with pixel perfect backgrounds that weren't meant to be stretched to fill different sized phones. Those have to be redesigned (and probably should have already been for iOS 7) to work for bigger phones.
This. Now that there has been time for apps to be updated for iOS7 and the iPhone 5 size, the transition to variable sizes will be a much lower impact.
Also, it is clear that different sizes of phone will still use the 'iPhone' UI idiom, rather than the 'iPad' idiom.
Basically if you are paying attention to Cocoa, you'll know that they're ready.
(Speaking as someone who has a pixel perfect app in the store, popular for it's design, that is very painful to make flexible)
yeah i've got a few apps like that as well. I've updated some, and kept some that are more popular. Not sure what I'll do with a bigger phone. we'll see how they look I guess. Not sure if the work is better spent updating old apps or making new ones.
" I don't think the experience of a 5 inch phone is better than a 4 inch phone."
I would respectfully disagree with that as someone who moved from a 4.3" Xperia to a 4.7" Nexus 4 and now a 5" Nexus 5. The extra real estate is a godsend for everything I use my phone for. IMHO, 4.7-5" makes the most sense (perhaps 5.2" as well). At the very least, I think apple should give people a choice of 4" and 4.5"-4.7".
Of course, doing that will introduce a problem since most development on iOS is very focused on optimizing for a single screen experience.
Seconded. When I was using my Note 2 I found myself not using my laptop as often. (After dropping my Note 2) I am back to using a Moto G nowadays and despite it being an amazing phone for $200 - I find I am going back to using my laptop more, entirely due to screen size.
In my case, I want a larger screen, but I don't want a huge device that doesn't fit in my pocket, either. If they were to push the usable screen out to the edge of the device, I could have both.
I was surprised at how unobtrusive my Note 2 is in my pocket. When I got it, I made sure I knew the return policy and had a backup phone picked out in case it was a pain. Honestly, it is less noticeable than my Motorola Droid 3 was. That phone was think and felt heavier. I generally keep my phone in my left front pocket. When driving, I almost never didn't know my phone was in my pocket. With the Note, I sometimes have to glance down or pat the pocket real quick to make sure I picked up my phone.
Everyone's pockets are different. I know Galaxy Note (5.5" screen) owners who comfortably keep their phone in their front pocket. I know iPhone (4,4S) owners who can't fit their phone in anything but their back pocket or purse. I personally find any phone uncomfortable in a jean pocket, regardless of size.
Apple has to live in the real world. It's actually reassuring to me that they are able to consider these kinds of facts. It's certainly the job of Schiller and the marketing team to understand what the market is doing.
I agree with you that they need to design something great to serve the demand and not just follow others.
However, as an iPhone user, who loves the portability and one-handedness of the small form factor, I am using my phone for 'real work' all the time now, and would really like a larger screen for things like quip and mindnode. I think the demand for different tradeoffs is real.
I've had only iPhones until this year, my only tablet is an iPad, I work on a Macbook Pro 17''. Last month, I got a Nexus 5, because the screen (4.95'', 1920x1080 pixels) is just so much better. I can read ebooks very comfortably on it, it totally replaces a Kindle for me. There are apps like Calibre Companion which I don't have on iOS, and there are no apps on iOS which I miss on Android (except my own :-)). Before I got the Nexus 5, I thought the iExperience is still too good on mobile to be matched. Now I think Apple should be very very VERY scared.
This strikes me as very boring, non-Apple style thinking.
That's because this is Apple's thinking. Not Apple's external messaging that carefully crafts a picture of how they "think."
I sincerely hope that Apple has not become a boring company.
Boring is just a matter of perception, I grew up exposed to Apple's branding and always thought they were boring. They're very much like a career-politician running as a "Washington outsider" but with more success selling it. Cultivating a family-friendly counter culture image was a smart response to the fact their primary competitor was the juggernaut of the day.
If they become "boring", it'll be because their customers perception of them as an underdog to Microsoft has finally worn off, and now they're recognized as top dog to Android. Not in market share but as a luxury brand. Now that I actually think about it, their messaging has been turning towards a "car manufacturer quite pleased with themselves" vibe...
Every time I have purchased a smartphone in the last 5 years I have got one with a larger screen than the previous I owned. It is fantastic. Up to a certain limit (probably another quarter- to half-inch bigger than my Nexus), bigger is definitely better for me. And my wife. And basically everybody we know. That said, whether it's boring or not, Apple has a problem.
Apple has (almost) always been a marketing company. They appeal to and market a certain kind of culture, which they bundle with hardware and charge a kind of fee for "joining the club" in the form of a brand-based premium over similarly functional competitor devices' retail. That's just how they make their money. Show me an Apple product and I can almost guarantee there is an alternative that performs almost identically in every way, but is 50-95% of the cost of the Apple product.
Their "sexy" is all about marketing; not substance (although the latter is necessary to some minimum level of quality). I don't know if "boring" is the right term to use, but it's not unusual; companies try to differentiate their products from their competitors' with appearance and marketing all the time. What is unusual--as demonstrated by their enormous cash holdings--is how successful they have been at it. But the genius driving that success has passed away. They need to: a) find another Jobs-like genius; b) adapt to the market.
I'm getting older and find I often need to take off my glasses (I'm short-sighted) to read my iPhone 5's screen. I would cheerfully pay $100 extra for an iPhone with a bigger screen.
My guess is Apple plans to deliver larger-screened iPhones, but they want to do it the right way, i.e. without causing fragmentation. My guess is simply scaling up the UI display without increasing resolution violates their sensibilities (not "retina" any more) so it's a question of getting ducks in a row (true scalable UI elements). Note that the iOS7 switch away from skeumorphism and bitmapped UI components does a lot to pave the path.
The idea that a small phone is just better for everyone is -- I think -- silly. Apple just won't release a half-assed product.
Especially with all the websites locking zoom! Please quit doing that.
Apple should give Mobile Safari an advanced option to always let people zoom. This way, everyone who locks zoom on websites for the sake of clueless clumsy users are still getting what they want, and people who really need zooming for legibility can get what they want too.
You know what I'd buy in a heartbeat... an app that coordinates with other users of the same app to launch a DDoS attack against websites that disable pinch-to-zoom, or that railroad you over to a stupid mobile site.
I'd really rather just zoom. There's no real mode switch for me any more. To me, zoom is just a UI option that's a part of the mobile browser experience. Also, sometimes reader mode doesn't work, since it depends on one of a few technical tricks. Zooming is just basic geometry. If Apple wanted to, it could always be active, and it would always work.
You think that people want a device with nearly 50% more screen area because it's a "bigger number"? That's delusional.
It's 2013, most folks who are buying smartphones are not buying their first smartphone ever, they know what they want, many of them are fairly savvy at this point, and people want larger phones. I have a lot of friends who are extremely technically savvy and are not easily subject to marketing influence, they buy phones based on lots of research and recommendations from friends. Almost universally they are buying 4.7" screen phones, because there are many exemplary models in that form factor such as the HTC One or the Moto X which are excellent phones.
I agree 100%. Apple's biggest problem is they've ceased innovating. Was a flimsy fingerprint reader really supposed to be the killer app of the iPhone 5s? Jesus.
Here's a list of things that would blow everyone else away:
1) NFC realized from the ground up. It absolutely will be a must have in the very near future, and I won't be stuck with a phone that doesn't have it.
2) An enormous innovation in battery tech. I want you to figure out a way to make my battery last 2-4 days on a charge.
3) Some sort of major design innovation. Edge-to-edge screen? That would look incredible; so novel, it'd be impossible to ignore.
4) A software-level overhaul of what it means to have a device on you that is capable of being constantly connected to the internet. It can be an ecosystem (we already know apple is good at building those), or something similar, but the future is one where you don't have to check your phone for anything. It already knows.
That's all I can think of for the moment, but it's clear they need to prove something, and I think they're simply coming up short in that regard.
> I agree 100%. Apple's biggest problem is they've ceased innovating. Was a flimsy fingerprint reader really supposed to be the killer app of the iPhone 5s? Jesus.
No, the problem is they are innovating around what will be in the new commercial. The truth is that smartphones are largely "done". Usually this is when Apple moves on to the next thing but unlike in the past there is no obvious new next thing to move into. Because of the success of the iPhone and to a lesser degree the iPad the expectation among shareholders is that the next thing has to be high-margin like those things are/were.
2) Yes, agreed, and I think they're working on this.
3) Edge to edge causes accidental taps for many users. They may or may not go this way.
4) Not sure what you mean here beyond things like push notifications. I would like more apps to advance-load data and predict my behavior, but I think a lot of this is already possible with background tasking. Not sure why this would have to occur at the OS level.
Edge to edge display does not have to mean edge-to-edge touch sensing. You can be smart about what to sense where and when. (I.e. when your screen can detect more than two separate points of contact, you can dynamically ignore those at the edge when appropriate.)
Lots of apps are starting to load data proactively in the background. That's why iOS settings has the "Background App Refresh" screen (under "General").
The pros of a larger screen vastly outdo the cons. I can't even imagine the tiny screens I used to deal with, and my next phone, I'm definitely looking for something even larger.
It's madness that Apple doesn't offer two different phone sizes, the only rational I can come up with is that they blew their load convincing people that their size and form factor was the best best best.
It could be some psychological mumbo-jumbo about blowing their load, or it could be that it is actually taking work to prepare the UI toolkit and manufacturing processes needed to make multiple sizes of iPhone.
I agree. I spread my hand out and my thumb and pinky touch the edges of the long side of an 8x11 sheet of paper. I'd rather use an iPhone as a projectile than a productivity device.
Apple is periodically a boring company. It just made better macs for a decade, and slid into irrelevance. Then they got (back) a CEO that made their products relevant again. Then he died. So I'm predicting history will repeat itself.
That's not really a fair characterization. 1990s Apple did indeed only iterate its Macs until Jobs returned, but they absolutely didn't stop trying to innovate – they just didn't do it with focus. I mean, Apple invented the PDA without its co-founder at the helm, and repeatedly tried to put a revolutionary operating system on the Mac, but failed due to institutional bloat and uncertain leadership.
I actually think it's very inline with their thinking. Apple has always (since Jobs came back anyway) focused on being smart/choosy about their product lineup, but IMO they chase good design, not what's new. If the two happen to coincide with each other, great, but if not, design over something out of this world new. They were in the right place at the right time for the original iPhone, but I think that was an anomaly due to lazy competition. I think Nest had/has similar culture, and they were kind of a spin off from Apple anyway (designer of the iPod or something like that?). Thermometers are not new, but they managed to clean it up a bit (I'd like to see the same happen to receivers, why is the UI so terrible for them still).
I suspect their design values will preclude them from ever making a phablet, and that there is a line in the sand beyond which a device is too large, and at that point they will try to figure out an alternative solution rather than boosting physical phone size, but I don't think the current 5/5s screen size is at that line yet.
Have you actually tried using a 5 inch phone? I think you may change your mind if you haven't. Trying to use someone's iPhone X after using my Nexus 5 is quite frankly laughable to say the least.
I hear this alot, and I wonder: is that because I frequent developer forums, where the users are mostly male? I'm a guy, but have really tiny hands (smaller than my wife's, and most every girl I ever dated) I have an S3 (and S5 on order), and have had most iPhone models. The larger phones really are uncomfortable for me, but I suppose the same is true if you reverse it (smaller phones are uncomfortable for larger hands ... I heard the reason why Shaq sucked at the free throw line was because to him, shooting a basketball was like a normal person trying to shoot an orange)
You're not alone, I have noticed as soon as you get out of most tech circles and look at mostly women only things, that is nurses/etc... they tend (tend is key here not always) to prefer iphones.
Funny part is they seem to hate the 5/5s cause its too tall and still prefer the 4s. I know a girl that downgraded back to her 4s because the extra height on the 5 was too much.
With my girl hands I pretty much agree though, I do miss the smaller height of the 4s over my 5. I think when people talk about what phones they prefer they should also bust out their glove size. Mine is a 7, and any phone > 4"ish starts to really frustrate me when I try to text one handed.
While we're generalizing I seem to know many women who will then outfit their Iphone 4(s)/5(s) with big bulky Otterboxes or other huge cases that negate the natural size advantage of the iPhone.
I have the iPhone as a phone. I make calls with it, keep it in my pocket, and other uses are secondary (albeit common). Insofar as it's uncomfortably small for some uses, that's why an iPad is usually in arm's reach. Sure, 5" is more usable for many applications than 4", but ~10" is much more so. Make the phone more than 4" and I'm apt to just not carry it, as it won't reasonably fit in my pocket and looks/feels like a wall held to my ear.
iPad + iPhone Nano = winning combination. If Apple makes a 6" iPhone, I'd sure hope they at least retain the 4" version, if not shrink & optimize for a much smaller version. I need a phone that excels at being a phone and integrates well into the iOS ecosystem; got my tablet for applications needing a more complex/larger interface.
While there are a lot of people who share your use case, there are probably a lot more people who don't.
Which is why the product diversity on the market right now is good. There's a decent chance that you'll find a phone that will work for your particular use case.
What concerns me (and I'm sure many others who don't like the idea of a larger iPhone) is that the iPhone 5s is currently the only flagship phone under 4.5". Sure, you can get smaller budget smartphones, but if you want a small high-end phone, it's Apple or nothing.
If the rumors are true and Apple decides to make the iPhone 6 4.7" and 5.5", what do I get next time I'm ready for an upgrade? I think it's silly for Apple to leave money on the table by only selling the current form factor when there's obviously a lot of demand for a larger iPhone, but it's equally silly to ignore the market for smaller phones like every other smartphone manufacturer is.
I feel the same way. If I were designing my own iPhone, it'd be as light and thin as the current-gen iPod touch, but with the height (and so screen size) of the iPhone 4 series.
How does one use a 5-inch phone one-handed? My thumbs aren't large enough to hit the extremes of a 5-inch screen. (fully-grown American of European descent with a height exactly at the center of the bell curve)
Swype style keyboards work wonders. Double tap + drag to zoom.
I have smallish hands and it's just not that big a deal to be honest. My last phone was iphone sized and I wouldn't go back to that size for just about anything.
I can barely use my Moto X one-handed (e.g. standing on a bus). I must be one of the only people on the planet who a) does this and/or b) does not have monstrously large hands. :P
While I disagree that screen size is all about marketing, I switched from a Galaxy Nexus (4.65") to the iPhone 5s and have found that the smaller screen hasn't bothered me at all. This was my biggest concern in switching and I am actually a little surprised that it hasn't bothered me. Generally, I always want bigger and bigger screens, I'm the guy that wants 3 27" monitors to work on, a 70" TV, etc., etc.
Tangential note: I recently switched from the Nexus 7 (2012) to the LG G-pad and the 1.3" bump in screen real estate has made a huge difference. I hardly ever used the N7, but I use the G-pad every day.
When someone makes a phone that separates the screen, input and processing into three physically different pieces (different in shape, volume, mass) that are connected by a micro local network I will buy it in a heartbeat.
Granted the "iPhone Shuffle" is usually considered a joke, it would fit what you & I want: scrap or aggressively minimize the screen, focus on I/O via earpiece, cram "amazing talk time" motion-charging battery & radio into clip-on unit, and seamlessly integrate with the iOS ecosystem a la usually-nearby tablet.
The dumbphone has its place, and nobody is addressing it right.
Looks promising ... 'cept that what it is remains unclear. Seems sort of a robust wireless headset extending the phone which remains in your pocket...but it's a lot smarter than just a headset...but it's...uh...a lot of cost/effort to save just pulling out the phone. Getting there, got a ways to go. Put the actual cellular radio in there and you've got something.
There are options between "huge phablet" and the current iPhone size. I've play with the HTC One for development, and while I like my iPhone 5S better, the size is nice. I wouldn't even consider getting a Note, but going from 4 to 4.3,4.7,and maybe even 5 could be nice.
Certainly there is a segment of the market that likes bigger phones, and I think Apple could capture a lot of that interest with something in the 4.7 range that doesn't sacrifice much of the usability that comes with a smaller phone. I also don't think it's unreasonable to offer 2 sizes, 1 for people with bigger hands. Not convinced they will do that though.
In my non-scientific observations, some women seem to really like giant phones. They typically keep the phone in a purse, so the bigger it is, the easier it is to access. They also tend to use the phone in a two handed operation.
My wife avoids using computers after work. Her phone is in essence, her surrogate for an iPad (which she used to love until she got her 4S), laptop and camera. For her, a 5" screen is a plus given her use case.
A few years ago, I also thought the 5" screens were silly, but that was before I had to start wearing reading glasses. I just upgraded my iPhone to an Android phone with a larger screen, and it's so much easier on my aging eyes.
The main use case for the bigger screen, that I've seen, is people watching video content. This is a very common use of the smartphone in places like Singapore. I was surprised how many people had smartphones and used them despite only having 3G service -- it's because they preload with video to watch on transit. I assume much of Asia is the same way.
I have looked at the slides. Look at the last one. By far the most growth is coming from < $300 phones, which are distinct from the >$300, >4" phones, where there is also strong growth.
Therefore most Android phones sold to meet this demand are < $300, and not >4"
As I said, most Android phones are not large screened.
Fair enough but for that to imply anything about 'most android devices having large screens' you'd need to show that most devices in the < $300 group also have large screens.
The existence of one such device that is known to have sold poorly, even though it was a good product doesn't tell us anything about that group.
Apple's documents do not show that most Android phones have large screens. That is the original claim you made.
Apple faces a severe potential financial crisis in coming years -- one that dwarfs Microsoft's. They rely so heavily on the premium subsidy for their revenue that if the subsidy is merely brought down to normal levels they will see a huge drop in revenue -- and this assumes that they keep selling the same number of phones.
Now that there are viable alternatives in Android, and to a lesser extent Windows Phones, with much lower subsidies, I think you'll see the carriers push these other devices.
And if we move to a model where consumers pay for the full price of the phone (which is what much of the world does today), then you'll actually see iPhone sales fall. Sub $200 low-margin phones are the future. Apple can still do well with a premium phone -- especially if the camera is really good, but I think it's a tougher niche than the high-end PC market.
Microsoft fans have been making this argument for 15 years or more. They said Apple should copy Dell and sell cheap enterprise desktops with low margins because that was where the money was. Then they said Apple should copy Asus and HP and sell cheap netbooks with low margins because that was the future. Then people said Apple should be making a really cheap ebook reader to compete with the Kindle.
People are constantly advising Apple that they should get into low margin markets and compete on price with companies that are barely breaking even. This advice seems to mostly be based on what they want the market to look like, more than how it actually is.
I keep seeing people talk like Apple 'lost' the PC wars and will 'lose' the phone wars the same way, yet Apple's PC business is insanely profitable by PC market standards. Commoditization of the PC market hasn't touched Apple's PC business in any way. What it does is lock the other PC vendors into a race to the bottom, leaving Apple as the only company with the resources and brand position to support premium gear at premium prices.
Exactly the same thing is happening in phones. Every single Android phone is in an even battle with every other Android phone. The market for premium Android devices in split roughly evenly between the top half dozen, perhaps even a dozen or more devices. Meanwhile the market for the premium iPhone is split between, er, one device. None of the other manufacturer can afford Apple's software, services and several-year-long device support. This dynamic isn't going to change any time soon.
At some point yes perhaps Apple's huge phone margins may decline, but there's no reason to suppose their premium brand position and margins will disappear completely for the foreseeable future. They've been living that life in the PC market for almost their entire existence. It's what they do.
> What it does is lock the other PC vendors into a race to the bottom, leaving Apple as the only company with the resources and brand position to support premium gear at premium prices.
I do wish that other PC developers would copy the marketing strategy used by car companies: separate branding for their high-end line.
Ford/Lincoln, Honda/Acura... why didn't we have Compaq/HP? They could've kept HP as a brand to be proud of. Google could've used Motorola to fill in low-end products unworthy of the Nexus moniker.
Good point. You don't see the swarm of MacBooks all over campus because of carrier subsidies, you see it because every other company makes miserable plastic crap laptops. Even if a company sells a notebook that provides a comparable experience to a Macbook, the company soils its own reputation with the crappy ones so people are suspicious of the higher-end.
To be clear I think Apple has a great model, but they need to be realistic that it won't last. The only markets in the world that the iPhone has substantial market share is in countries with subsidies (at least I believe so). In markets with no subsidy, Android is killing.
As the US (and the world) moves more to a non-subsidy model I think this disproportionately impacts the iPhone. All OEMs will have to deal with this, but Samsung, LG, Huawei, Coolpad, are used to this world already as they sell really well worldwide. iPhone hasn't figured out how to sell full price phones around the world.
That 'android' that is killing is AOSP, not GMS, and the accompanying users are the least valuable to operators. Where the market is not saturated, any customer is a win, but in saturated markets, the competition is to skim premium customers out of the churn.
If anything this situation is likely to become more prevalent, not less so.
> As the US (and the world) moves more to a non-subsidy model I think this disproportionately impacts the iPhone.
This is the exact model Apple's computer division deals with, and they're wildly profitable compared to most PC vendors even though they charge premium prices all around. What's different about phones?
The computer division is funded by the overall success of Apple. It allows the computer division to have a bigger budget to spend on things like marketing and R&D. It's not a coincidence that the computer division has been doing so much better since Apple had other mega-successes that serve as the cash cow for the entire company.
If the iPhone ever ceases to be as profitable it will have a ripple-effect throughout the entire company as they scramble to find the next thing that will replace those lost profits.
Actually, Apple spends remarkably little on R&D, perhaps even to a fault. The third chart on this page from Asymco [1] is interesting, especially considering Apple's R&D is for computers, phones, and whatever other lines they're developing, and the R&D for a company like HTC is likely to be clustered around its narrower product lines.
Apple doesn't focus on market share and it never has. Instead they focus on profit. Take (for example), the personal computer market. According to wikipedia, Mac OS X has around a 7% market share[1] yet Apple's larger competitors like HP and Dell are barely making any money while Apple is still making huge profits. (Not as much as on their iOS businesses of course.)
Apple does focus on marketshare, but a different market than most pundits look at. Even when they launched the iPhone Steve Jobs had a specific marketshare target (I think it was 1% or something).
The issue they have is that they've so dominated the US in marketshare with a great subsidy model that they've generated record profits. It's hard to come down from that to say, "well our profits will drop substantially, but we're happy at being 20% of the US market -- which is actually much better than our wildly successful PC market".
They can't afford to do that -- unless they have some magic up their sleeve.
Wouldn't this be as problematic for Samsung (or any other vendor with high end offerings, but Samsung is the big dog) as Apple? While Samsung has some sub-$200 phones, doesn't the massive profit from the latest and greatest make that possible?
It's problematic for a lot of manufacturers, but it's what Google, Amazon, and even MS are pushing for, since their business is software (Google through ads, MS) and commerce (Amazon). Not to mention it's the eventual result of a competitive market (Econ 101).
Not to mention it's the eventual result of a competitive market (Econ 101).
I like how you appended that course number as a sly insult.
In a perfectly competitive market, perhaps. But there are other forces at play. Why does Whole Foods prosper when you can buy food at Wal-Mart? Why do Priuses still sell when they may not be the most cost effective transportation mechanism (after you factor in initial cost)? Why do people still buy Ralph Lauren and Louis Vuitton? Commoditization isn't inevitable in anything other than the theoretical environment you'd find in Econ 101.
Ha ha, excellent stuff. Econ 101 is Econ 101 because it is simplistic. It's like saying "Pi is 22/7. This is high-school mathematics, guys". The whole thing is made simple so you can grasp some concepts. You learn the complexity when you progress through the classes.
Realistically then, saying something is Econ 101 is saying that "looking at this without considering any of the subtleties of the situation, we have the following result".
If you'd taken any econ you'd know that differentiating factors exist which essentially create a 'new' market. Whole Foods doesn't compete in the same market as Wal-Mart. Louis Vuitton doesn't compete with (insert nameless brand... Not sure, my wife likes high-end things).
Anyhow, the comment was meant tongue in cheek anyhow, don't know why you're so upset. Your retort was bad anyway.
There's a very large segment of Apple's customer-base that are in a different market, even if there appear to be competing products. Some developers have no interest in anything other than a MBP. Ditto for a large number of iPhone and iPad users. There will always be those who switch, in the same way that someone may shop at Whole Foods and decide that it's not worth the price.
This is actually pretty consistent with Apple's entire history: they've resisted commoditization, even during times when it really hurt their market share.
> Not to mention it's the eventual result of a competitive market (Econ 101).
...maybe you should have also taken Econ 102? A race to the bottom is only the inescapable result in the silliest of toy market simulations. There's almost always demand for premium goods.
At the peak, Microsoft's profit margins on their core products where hovering around 90%. If I remember right, Apple's profit margins on the iPhone peaked at a bit short of 75% with the 4S, and have generally been sub-60%.
Furthermore, Apple hoards cash in a way that Microsoft never did. What this means is that Microsoft was sinking the cash into other business ventures - in other words they created a heavy reliance on those wide profit margins by creating a bunch of units that needed to be subsidized by other units' wide profit margins to survive. By contrast, Apple's taken a strategy of building up an enormous nest egg that they can use to help get them through the lean times should that ever become necessary.
Who'd you say is living at greater financial risk? Someone who makes an enormous salary but is only a brief period of unemployment away from foreclosing on their palatial house and having their Porsche repossessed? Or someone who relatively recently fell into a very high-paying (if not quite so enormously lucrative) job but has stuck with a relatively frugal lifestyle and instead devoted the extra money to investing in more liquid assets?
Someone who makes an enormous salary but is only a brief period of unemployment away from foreclosing on their palatial house and having their Porsche repossessed?
So, in this part of your analogy, it seems Microsoft is the company you're comparing to a person that is ready to have their possessions repossessed. Is that right? If so, I humbly invite you to look at the facts regarding Microsoft. Microsoft's most recent quarter saw literally record revenue and they blew away everyone's profit expectations.
Microsoft wasn't always so prudent with its money. I was meaning to compare to when Microsoft's favorite thing to do with cash was to burn it. Remember Skype?
I wouldn't be surprised if this (welcome) new strategy isn't at least partially inspired by observing how Apple does things.
What is this Skype thing you speak of? I can't tell if that's the burning of cash or planting a tree... since that business unit will likely be decent on paper until it becomes pretty great on paper. I mean who would be using some voice/video calling software over their existing data connections instead of paying for per-minute land line rates through their telco's?
Also, for enterprise & institutions using Exchange, many seem to be loving Lync, etc. for IM+ services. Skype seems like a decent long-term play. Also, good for the IP.
It is a matter of staying ahead of the curve and not let your competitors catch up. Whether that means in terms of marketing, or product quality doesn't matter. So far plenty consumers are convinced that Apple's prices are justifiable and don't have a reason to switch an ecosystem they have invested in.
You are right that Apple faces a crisis if their sales drop, so does every other company. The worst reaction though, would be to start competing on prices, and thus quality. This inevitably leads to a race to the bottom, where they're unable to compete against companies that are based in cheap labor countries. Much in the same way as Philips, or Sony couldn't compete against companies like Samsung once they lost their competitive edge in their product categories.
I think you missed my point. They face a crisis even if their sales do NOT drop. They face a crisis if Verizon says to them, "We are no longer willing to give you a subsidy premium. You will get the same subsidy rates as the Samsung Galaxy Sx." Apple will continue to sell at the same rate, but their revenue will drop substantially.
On top of that is the fear of their sales actually dropping if carriers stop doing subsidies altogether (which is the direction they are going).
>And if we move to a model where consumers pay for the full price of the phone (which is what much of the world does today)
It's coming pretty fast. AT&T is pushing Next pretty hard, which is essentially an interest-free repayment plan spread over 20 or 26 months. If you go to buy a phone now, that installment price is listed first, rather than the contract prices. You still don't see the "real" retail price, but you sure do see that an iPhone is $25 a month and a Moto X is $15 a month. (The Moto X is the cheapest current gen phone they have, I think. Something like a Nexus 5 would be even less but isn't on Next.)
As long as Apple keeps making the best hardware available they will have my money. Are you willing to put your hard earned dollars on the line shorting AAPL? If not why?
AAPL is not treated rationally by Wall Street. The stock has been bad mouthed every quarter for years. Last quarter, they ONLY sold 52M iphones instead of the analysts' projection of 54M. Stock drops.
As an AAPL holder, it makes me want to get into shorts, but then I'm speculating on the whim of some ass on the TV.
You can conservatively play an irrational suppression of Apple's stock price by selling out-of-the-money covered calls against your position. Highly liquid market, immediate income in your pocket. Your worst cases are 1) The stock goes down (you were apparently holding anyway, but now you have more cash); or 2) The stock is called away during a run-up (so you pre-sold some fraction of your potential profits to the option buyer).
Maybe someone can correct my uninformed opinion on this (plus I've had the same iphone 4s for about two and a half years), but doesn't it seem like all the cool stuff is happening on Android?
Android: Pause video when you look away, send data by bumping two phones, run multiple apps at once, watch/wrist devices
The problem is, these "cool" things you mention are mostly just marketing and don't work very well. I have only heard complaints about Galaxy Gear. Same for the eyeball tracking stuff on the new Galaxy phones--it just doesn't work very well.
My understanding of Apple's business model is that they plan to make most of their money from the 30% commission on in app purchases, and their share from media sales made through iTunes. The sale of the hardware is just a way to get a purchase platform in the hands of the consumer.
Apple could probably sell a sub $200 iPhone with no difficulty, and then pay off the subsidy using their other sources of indirect revenue. Of course in that case we will probably see iPhones become even more of a walled garden, and a lot more of a crackdown on jailbreaking.
My understanding of Apple's business model is that they plan to make most of their money from the 30% commission on in app purchases, and their share from media sales made through iTunes.
Actually, it's project to only grow to about 37% of their total profit by 2020, not exactly "most":
To be more clear when I said "most of their money" I did not mean most of their total revenue for the company, I meant most of the money they make from you during their relationship with you as their customer.
If you think about it your relationship with Apple as their customer begins with the hardware purchase, but then as you use the hardware you keep feeding money to Apple every time you make an iTunes purchase, in app purchase, buy extra iCloud storage, etc.
The goal is that this residual source of income will surpass the initial income from the sale of the hardware. In that case they could give away the hardware at a very cheap, subsidized price, or even for free and then enjoy the steady stream of money from their other services that run on the device.
Apple make money by selling hardware. First they sell you iPod, which you like very much and start looking for their mac. Then the iPhone come out and you like them too. Next one is iPad, guess what, you already know how to use them. They drive apps price to 0.99 and make their OS free, what does that tell you about their way to make money? Apple at heart is a hardware company with very good software engineer.
Apple makes such huge money off of subsidy, I don't think they can make that money back from app commissions. I've heard the subsidy north of $300/phone. That's a LOT of in app and media purchases to get that back in 2-3 years.
Plus remember that the subsidy is on top of the app purchase dollars they make today, since phones with the subsidy still buy apps. There is no real upside to them on this. Sure they make good money on apps, but its hard to replace effectively free money from the carriers.
I think this is a case of Apple's stubborness giving them a little bite in the ass. It took them a long time to come out with the iPad mini because they didn't believe in the inbetween tablet size, and now it's taken them far longer than it should've to come out with a bigger iPhone. Apple was late to the party with 4G as well.
I think once a bigger iPhone drops it will put a big gust of wind in their sails but I also think that Apple needs to be skating to where the puck will be if they want to keep their place as the premium manufacturer. If they're 2 or 3 years behind what Android (Samsung really) phones have the narrative that Samsung is more innovative is going to gain steam.
The other looming challenge for Apple is that software services are growing as a differentiator in phone ecosystems. Most of the Google services thoroughly outclass iCloud, meaning that iCloud doesn't give the Apple the competitive boost that it could.
N.B. that the _smaller_ ipad was the untapped opportunity. Plenty of people choose the iphone precisely because it is smaller. If Apple want to find the undiscovered new market again, they should look at an iphone mini, not a me-too iphone maxi.
I remember when everyone was bagging on the iPhone for being 'so big'. "who is going to put that damn thing up to their face? They look hilarious! What is this, 1990?"
Really amazing how times change. I think it's because when the iPhone came out, no one could think of using their Phone for everything that they are now used for - so it just seemed like overkill. Now for a lot of people, it's their computer.
Maybe that should be taken as an indication that there isn't any one size that will suit everyone's needs. Some people want a phone that is larger than an iPhone and some people want one that is smaller than an iPhone. Those people are served well by other phone manufacturers who have a variety of sizes, but aren't well served by Apple who only makes one size of phone.
Apple makes their iphone screen that size because it is part of their tailored user experience (ie: you can reach each part of the phone with your thumb and developers can target that screen size) and because of uniformity (You know a case will fit and you know what to expect). If apple started making their phones larger it would disrupt that experience they built and would introduce fragmentation.
Apple does consider screen size though, thats why the ipad mini was released and the ipad itself was made even though Steve Jobs hated the idea of a tablet, so it's not entirely unplausable that they would release an iphablet alongside the next iphone, and as this document shows they are aware of the problem.
Apple has also considered the price aspect of the document too, with the iphone 5c, so time will tell what else they'll try.
That didn't happen in my world. The iPhone was always small. Even when it was new the competitors where bigger. The HD2 had a 4.7" display, the iphone had a 3.5". I got a Nexus One, with a sightly larger display and i considered it too small right from the beginning.
I'm surprised keyboard size is mentioned only once so far. When I have to type Chinese a bigger screen is a lot more accurate. I switched to my current iPhone 5c from a Lumia 920. Typing Chinese has been a major setback for me. (Typing English is not that much different though)
For Apple to maintain the lead they have had they need to continue to innovate new types of products, not just keep improving what they have. I think there is plenty of opportunity for this. Think smart appliances, houses, cars. The question is whether they still have the ability to do that with Jobs gone. Time will tell.
Edit: Probably the most likely new category would be wearable computing now that I think about it. Longterm perhaps electronics integrated with the body.
The problem with wearables is that it's far easier to design a new wearable than a mobile OS. So this field is swamped with competitors ,some of are pretty innovative and some are very good at the cost game , and collectively they try many possible products.On top , there's no ecosystem to build(app store) so copying is far easier. Same goes for smart appliances.
They've done some impressive things on the hardware front recently--the Mac Pro redesign and streamlining their MacBook line come to mind--but since the iPhone 4, which had some incredible innovations like the antenna and Retina display, their mobile line has only seen predictable iteration. I expect the iPhone 6 to be a significant deviation in form factor from the iPhone 4/5/5S because Apple is run by smart people who are rarely late to the party.
No doubt. They are still doing great things. But, especially in the case of the smart phone market, the competition is catching up. Or at least coming close enough for a lot of consumers. In order for them to maintain the kind of dominance they are now used to, I think new types of products will be necessary. FWIW I'm not giving up my iPhone anytime soon and would be lost with out my Macbook Air.
This is all over the internet today. Why is this a bad thing? Everyone knows the smartphone market is maturing (or matured) Samsung/Google has exhausted all its options (all screen sizes) where as Apple still has the bigger screen sizes to release. So we know Apple atleast one more product cycle to go through.
Apple needs to show customers what they want, that's the real issue. Since Jobs died, Apple hasn't really created a new product category that none of us knew we wanted. Instead, they've made defensive moves by making their existing products cheaper and more attractive.
Since Jobs died, Apple hasn't really created a new product category that none of us knew we wanted.
Jobs died a relatively short time ago; even when he was at Apple, it's not like they created new product categories all that often - maybe every 3–5 years?
I can't help but feel people have expectations which are a little too high.
This. In its 35+ years Apple created - or at least codified - the personal computer, the mp3 player, and the modern smartphone. I think it's closer to a big new product category every 5-10 years, really.
> Since Jobs died, Apple hasn't really created a new product category that none of us knew we wanted.
More like since the PC. Since then, they've mostly capitalized on market needs that were widely recognized (and, in the case of portable digital music players, that were already widely popular), but where there was an opportunity to execute better than the incumbents were executing. (Not saying this isn't noteworthy, but its very different than creating "a new product category that none of us knew we wanted.")
It's a court exhibit, filed in Apple v. Samsung.
It shows up on the pacer docket.
It's authentic (AFAICT), presumably part of discovery apple was required to turn over to samsung.
Apple, on the other hand, should look at these numbers and say "people obviously want something new." Giant phones are being heavily marketed as the new thing, so people are buying them. Not because it feels good to try to shove a small book into a front pocket, or that they love having to use both hands to type out text messages.
A boring business would follow the heard because they don't know how to distinguish customer needs from customer inertia. Apple, traditionally, is very good at knowing when something is a trend, and when something speaks to a deeper human need.
I sincerely hope that Apple has not become a boring company.