Apple iPhone 4S: Beginning of the end?

10/4/2011 6:03 PM EDT

I do think this business of "Android catching up Apple" is an interesting one. So many assumptions on what are relevant metrics. I remember a year or so ago seeing the market share charts for Apple, desktops and laptops - showing 5-10% market share overall. Not very interesting you might conclude. And then someone had a chart on Apple's market share for devices costing more than $1,000. Suddenly their share was over 90%. Implied in there is a strong comment on which segment of the market has a decent profit margin and which does not. I would love to see the analysts and the journalist really get their teeth into this level of issue and stick their necks out, with some level of financial model, as to whether increasing market share by grabbing mid-market is a profitable thing or not for Apple.

So, from the perspective of operating a profitable business on behalf of shareholders, what is the point of a large market share? It's the type of statistic and assumption that is regularly reeled off for virtually any business - without actually commenting on the fundamental value of the position. Apple seems to have done a good job going for the profitable section of the markets they attack, largely independent of the overall market share. Is this a good thing or a bad thing? Should they increase their market share to head-off headlines that they are not the largest volume player? Or are they gently executing on a strategy that is successful for them?

10/4/2011 7:38 PM EDT

Very interesting points indeed. Are you successful "enough" if you are wallowing in money? Wall Street usually says "no", prompting the view that they are somewhat divorced from reality...

10/4/2011 8:03 PM EDT

Undoubtedly they will be selling them as fast as they can build them. Not a bad problem to have.

10/5/2011 12:07 AM EDT

"Other" has always been a bigger market share than Apple's. The real question is what GM does "other" get versus Apple. Apple makes more profit, with less market share.

10/5/2011 1:42 AM EDT

I'd like to hear what people think about the iPhone 4S and the direction for smartphones in the next year.

10/5/2011 4:49 AM EDT

@Rick I totally agree with your analysis. I too feel this is the beginning of the end for Apple. I think this is a great oppurtunity for Android manufacturers to grab the market share from Apple. Infact investors too think the same, that is we saw Samsung, HTC, Motorola shares rise on tuesday.

10/5/2011 7:12 AM EDT

As the android will become driver friendly with most of the chip-set presently available for Chinese phones, this figures will drastically change compared to what we are seeing today.

10/5/2011 9:14 AM EDT

As the smart phone market matures and consumers get more choices the market will become ever more fragmented. Apple is perhaps following the best path for them by staying at high end. Market share is not everything. In fact it could have the beneficial affect of giving the Apple brand even more cachet as iphones become less common.

10/5/2011 10:51 AM EDT

Rick. There is an aspect in your analysis that requires revision:
"It's also worth noting Apple has not rolled out a low- or even middle-end smartphone to date."
Apple has a very specific policy of marketing on older generation iPhones for mid/low end teir consumers. iPhone 4 will be sold for $99 and 3GS for $0 with 2-year contract.
This is the most effective product tearing strategy I have ever seen. They have teared offering without extra cost of development cycle!
I think Samsung and other serious players are giving a good fight to Apple, but as of now, the decline for Apple is behind the "reasonable prediction horizon". I think the bigger threat to Apple revenue can come from Amazon or Google if they succeed in content offering arena (music, movies,...).

10/5/2011 11:16 AM EDT

how about apple reducing the prices of iphones similarly in countries like india. In turn they can always generate revenue through applications and other software.

10/5/2011 11:42 AM EDT

I wouldn't call this a mature market in any sense. It has hit a plateau. But that's more a function of letting processor and accessory performance catch up. The current generation, even with dual core, is an incremental jump from the prior. As soon as the innards take another big leap, as they did shortly before iPhone I, then we'll leave the plateau and see a fast growing market again.

Current smart phones and tablets are almost powerful enough to be a desktop applications platform. I've run a word processor and spreadsheet off of Angstrom on an ARM-based Beagleboard. It's close enough to useable to see future viability.

Whether it be a next gen Arm, Atom or something else, when you can slap wireless mouse, keyboard and full-size display connectivity into a smart phone, the world changes again.

While smart phones are quite popular, there is set that still considers them to big, expensive or silly for the capabilities. How will that set feel when you can sit at your desk (home, office or Starbucks) and have your desktop computer in your pocket, just using the wireless peripherals? (Yes, there will be security issues, but you have to assume that they will be solved about as well as they are today).

"The Cloud" gets rep[laced or augmented by "The Pocket." Your full-power computing needs go with you wherever you go. No need to decide between laptop or desktop. All you computing capability, high-performance applications excepted, is in the phone in your pocket.

10/5/2011 12:16 PM EDT

I will add that while the iPhone 4s is an incremental move consistent with Apple's strategic choice for bringing out new "i" products, I would not poo-poo one aspect of 4s that is being underplayed. The Siri speech recognition system is a large step forward for obtaining navigational directions via speech, the ultimate communications medium. Kudos to this Apple technology, probably obtained from third party. Let's hope the consumer likes what he/she hears.

10/5/2011 2:54 PM EDT

Yep! I was a little disappointed when knowing that iPhone 5 will be delayed further and what we can get is iPhone 4S. I'm still hoping to see when Apple comes up with a better idea to make your phone to be the terminal of a large computation power - cloud. It may be even worse if the 5 is just a change on cosmetic but nothing great in terms of new technology. I'm still waiting to see what Apple will do in the coming year.

10/5/2011 2:56 PM EDT

There simply are not 4G LTE networks that are widespread in the USA. Maybe by this time next year.

The 4S does have advantages as it is a world phone; this is attractive to business people and heavy vacation travelers.

The voice recognition, Siri, may be useful but certainly not a super development.

Overlooked is the free 3G phone which will get new people introduced into the Apple ecosystem and spur or maintain future growth rates.

10/5/2011 3:03 PM EDT

It all began with an iPhone...
March was when my son celebrated his 15th birthday, and I got him an iPhone.
He just loved it. Who wouldn't?

I celebrated my birthday in July, and my wife made me very happy when she bought me an iPad.

My daughter's birthday was in August so I got her an iPod Touch.

My wife celebrated her birthday in September so I got her an iRon.

It was around then that the fight started...
What my wife failed to recognize is that the iRon can be integrated into the home network with the iWash, iCook and iClean.
This inevitably activates the iNag reminder service.
I should be out of the hospital by Monday.

10/5/2011 3:10 PM EDT

I don't remember the world proclaiming Apple's death when the 3GS was announced, this strategy is NO DIFFERENT than Intel's Tick-Tock plan.

As for the Andoid market catching up...I'll report back when I don't have to pull the battery on my wife's droid every 24 hours.

10/5/2011 3:28 PM EDT

Ah but same old same old about Apple's demise. Every time thus far the pundits have been wrong. Every_Single_Time.

So why do you think you are the one to get it right? Are you that gifted with sight no one else possesses? Then why are you writing and not winning the lotto? What a genus!

10/5/2011 3:33 PM EDT

I totally agree. 3GS was a big success and I expect 4S to be #1 gift for this holiday season. We all will know better in 2 weeks when we will learn the first week sales of the phone.

On the technical level, I think that Apple is playing it safe holding back the iPhone 5 for next year. 4G LTE networks continue to build out while the baseband chipsets have power management issues. All the criticism that Apple did not decide to be on the leading edge would be replaced (if they announced LTE phone) by complaints about slow data speeds and dropped calls (because of limited LTE deployment) and lousy battery life. People buy Apple for variety of reasons but certainly Apple selected not to tarnish the Apple brand by introducing a product that does not meet the high quality that Apple is associated with!

10/5/2011 3:58 PM EDT

NOT INTERESTED!!!! My humble opinion, I'll stick with my old (ugh) 3G until Apple decides to become an Innovator again. Just saying.... The 4S is an indicator that Apple's innovation may be slowing OR possibly that their vision outpaces technology offerings. Doubt it's that later because others are still innovating. Apple disappoints the Apple Nation for the first time in quite a while! Maybe the Andriod is the answer! Prognosticators appear to be right about Apple's market share dwindling in the future. Apple, please start innovating again and become a technology leader once more!

10/5/2011 4:01 PM EDT

Everyone seems to use hardware as the defining metric for smartphone progress - how many camera megapixels, how much memory, availability of memory card slot(s), # of processor cores and clk speed, size & weight, screen pixels.

It's small, light, and faster than its predecessor, but where this new iPhone shines is in Siri. If it works as well as it does in the demo videos, it will be Apple's defining smartphone moment. Usable voice control and response integrated with all the apps is huge. It changes the UI to voice instead of keyboard control.

I hate most virtual keyboards. They're too small for even my smallish fingers, and I'm pretty manually coordinated, courtesy of classical piano training and years playing keyboards onstage and off.

No, it's not 4G. But Apple has some speedup hocus-pocus, and the new phone's battery life exceeds that of any 4G phone.

So Siri - if it works - will be the major reason I upgrade from my three-year-old dumb phone. I need something that will simplify my life and help me live it fully.

It's about the *user interface*, folks. That's Apple's killer app.

10/5/2011 4:19 PM EDT

There are now so many phones out there now with much more functionality than the iphone that they had to offer a low end entry point. Free is a compelling price. The fashion boys will still stick with Apple because of perception. Tech savvy consumers will probably make a different choice.

10/5/2011 4:20 PM EDT

It's about the content that runs on the device and elegance (ease of use) of the product that defines the iPhone. Sorry hardware junkies but a faster processor or even LTE doesn't mean anything if you can't use the device or have content that runs on it. I laugh when the technorati don't get their dose of hardware nerd-dom and then declare the death of the product. You're looking at the wrong thing.

A prime example of this. I have a friend with his shiney new Samsung Galaxy 2S in our office. He tried for an hour to get it connected into the secure WiFi and had to try numerous combinations of WEP/WPA, etc manually, trial and error to get it to work. I pulled out my iPhone (a 3 yr old 3G mind you!) and in about 5 seconds had it on the same WiFi. The iPhone detected and auto-configured itself without all the fuss of "open" Android. And THAT is why the iPhone is relevant and successful. It doesn't take a Bachelors degree in EE to operate it!

10/5/2011 4:26 PM EDT

And Siri is what distinguishes the UI from Apple-wanabees. If it works as described, consumers will have to "wow" this 4S, as they would any step-function change in THEIR experience. Pundits should give consumers the chance to make up their own mind. But then they would not be pundits, would they?

10/5/2011 4:30 PM EDT

iPHONE HAS JUMPED THE SHARK.
Everyone in my family was waiting for an iPhone that runs 4G on Verizon. Looks like they blew it here, because we aren't waiting another year or even 6 months. Don't care that 4G isn't everywhere -- it's everywhere we are, and frankly the web on 3G is worthless. Based on my family, I'm seeing a 100% defection to Android. They don't get another chance at the five of us for 2 years, now.

This isn't without precedent. Apple got cocky back in the Apple/// days and saw their market share of personal computers go to 3%. Took them a decade and a wholesale change of processor architecture to recover. That's what got Jobs fired the first time, and looks like history is repeating itself -- Apple, no Jobs, marketshare tanks. Play that out to the logical conclusion, I guess that implies iPhone 7 runs on an Intel Atom.

One word of advice, Apple: if you are going to shoot yourself in the foot a second time, aim for the same hole and it won't hurt as much. :)

10/5/2011 4:44 PM EDT

Apple's still the only luxury brand in the mobile device business. They're going to keep doing fine. Curious to Apple isn't only the high profit margins, but the simply fact they haven't always been judged harshly on hardware tech.

Look at the Mac... for years, heck, for decades, it was behind in performance. Yet, considering a leading and innovative platform. Today, it's a bog standard PClone, and yet, also seen by the masses as a leading and innovative platform. The first two iPhones didn't support 3G of any kind; they didn't have full HSPA until the iPhone 4, etc. But that just didn't matter.

So the iPhone 4S is an also-ran in the smartphone race for 2011... but that's not going to matter a great deal to folks upgrading from the 3GS. Or even the iPhone 4... if anything, maybe they get a few less crazies jumping contract for the 4S, as they'll figure on something superior next year.

This isn't the end of actual Apple dominance, since Apple doesn't dominate. Ok, sure, they're the most popular single brand of smartphone. Samsung is a few million behind in a typical quarter... but give it a few more quarters. Meanwhile, Android is outselling iOS 2:1. And while you can point to Android phones hitting the low-end as well as the high-end, isn't that just what Apple's still doing? The iPhone 3GS is not free, the iPhone 4 at $100... same range of pricing across the board for Android. And unless Apple's changed chip suppliers, tons of business for Samsung, still.

What this ends, I think, is the total adoration of Apple in the tech press. Apple's not leading in hardware, not leading in software... maybe still leading in profits. We'll see how next week's Nexus Prime and Android 4.0 announcements go, compared to this week's iPhone/iOS stuff.

10/5/2011 4:50 PM EDT

And for those few who don't think 4G matters, I claim it does for two reasons.

First is simple: you're going to be near 4G soon. The iPhone 4S is released in a few weeks, and it'll presumably sell for a year. That means buyers of this device will be ending their typical US 2-year contracts in 2014. Even if I paid cash, I'm not plunking down $600 or whatever artificially inflated price I'd pay for a smartphone every year. Verizon is claiming they'll finish their LTE rollout -- every cell -- sometime in 2013.

Second reason is simple: EvDO. There's certainly some breathing room in HSPA+, if you can get it. So AT&T users at least have a chance at a speed up in the iPhone 4S, though AT&T has finished their HSPA+ rollout... if you can't get it today, you probably never will. They're spending on LTE now. Verizon and Sprint, meanwhile, may get the iPhone 4S, but it's still coming in at EvDO speeds.. that the maximum 3.1Mb/s down that's usually more like 600-900kb/s down. If you've been in the same room as an LTE or WiMax phone surfin' on your OG Droid (hint: that's me), you do not want to lock into that for another two years.

10/5/2011 10:40 PM EDT

It appears that there has not been any major industrial design updates to Apple's products for a while. The iPhone 4S, MBP, MBA to name a few have retained the same design. Does Apple have a problem signing off new designs without Jobs or has J Ives flown the coop?

10/6/2011 3:23 AM EDT

I agree with the posters who look towards a balance of software versus hardware advances in judging progress. I purchased the Nexus S when it came out knowing that there were a couple of choices at the time with a few more megapixels etc. But... Nexus S gets the android platform updates instantly with no provider fuss/delay.

Google is all about back-end smart service integration. I can say that I have been using the Nexus OS version from day one which effectively does everything Siri beta claims. I rarely use the keyboard since I got it. Nexus has a dedicated search (voice aware) button which follows commands and the dictation is excellent and works for all apps.

Siri is more free form language wise but does it work this way outside the English language? Google looks at the big picture... the Android voice is tied in with the many years of training Google's translation services. Two way calls with Google translating on the fly is where they are heading... I don't see how Apple will compete long term.

10/6/2011 11:01 AM EDT

I think the the fact that they fixed the HW/RF sensitivity bugs is a real plus, I refused to upgrade to the 4 for that reason. Also having better battery life is good. Voice control is a grand idea, I hope it works as well as suggested. What I have to say, is that although Apple has some (to me) serious shortcomings in the SW arena on iPhone, after having a Nokia smart phone (pre touch screen) for 2 years and being frustrated by SW crashes the 3GS was a welcome change. Also since I changed providers calls no longer drop out. My daughter purchased a Samsung Galaxy and was forever complaining about it freezing, and recently changed to a 4 and said it's much better. So, given that the primary use of a phone is to make phone calls, I know I would find freezing worse than my other gripes, so maybe that is the gap that Samsung and others must close?

10/6/2011 12:25 PM EDT

Although most of us are hardware-focused, it seems as if Apple needs to find another service, so they can sell razor blades. Sure, razors are fine too, particularly if they are high-styled. Just a thought. Of course it's relatively easy to copy services, and difficult to express industrial design language through them.

I've never been swept up in the iCult, but I have seen businesses who attempted to deal with Cupertino by supplying to them devastated by the capriciousness typical of Steve's regime. I remember when Firewire was going to be IT for a while, and a small company was assured that their substantial investment in custom hardware for Apple was going to reap rewards. Then, virtually overnight, Jobs decided that Firewire sucked and it had to all be something else. Just like that. That characteristic of Apple will definitely NOT be missed.

Brad Wood

10/7/2011 8:16 AM EDT

I recently got married and my marriage involved the merging of my iPhone 3GS and my wife's droid. Somehow that hasn't gotten in the middle of our marriage ;)

One big thing that hasn't been mentioned yet and is very important to me is the user experience that the iPhone has. The user interface is very intuitive and upon picking up an iPhone one almost instantly knows how to use it. A number of times I've picked up my wife's phone to attempt a simple task only for it to take me several minutes to figure it out.

I don't think the user experience that Apple brings to the table is not something I've seen anywhere else.

Alan

10/9/2011 1:40 PM EDT

I have the Droid Bionic. It is the meanest phone on the market. The 4G LTE is incredible.

Apple is falling behind big time. Major mistake not to have 4G LTE on the phone. They must not have the technical expertise to get it to work.

10/10/2011 6:40 PM EDT

Why people are so eager to see early demise of iPhone and Apple? They should appreciate Apple's design team's contribution to bring novel technology. They should encourage them to do better.

10/10/2011 11:14 PM EDT

Why would anyone bet against a company who has more cash than US Treasury?

Seriously Samsung products uses the cheapest components it can find while Apple has always pride itself in quality, from SW to HW.

The rest are just wannabe.... I would not associate myself with that.

10/11/2011 2:26 AM EDT

Apple is on track for selling 25M iphone 4s in this quarter. "Beginning of the end"! Give us a break.

10/11/2011 3:19 AM EDT

Apple does some things really well, one of them is create a loyal following that become the best advertisers of a product. Sadly their strong market position makes them unresponsive to customer issues, and this has undone many a company. The big question is whether they will learn this before or after a significant No. of customers jump ship. I'm not talking about now, but rather what may potentially happen in the future. It also is heavily dependent on what competitors do, hindsight is so much easier to comment on :-)

10/12/2011 3:27 AM EDT

Well looks like everyone is crazy about iphones..but wonder do they ever use all the features completely...

10/12/2011 1:48 PM EDT

I think the thing you are missing here.... that Apple sells a "state of mind". Its like, not to be taken in a negative way, a cult. You dont see cars driving around with IBM/PC or Samsung stickers on the back window. Apple (Steve Jobs) has created someting the rest never will.

10/12/2011 3:12 PM EDT

I have just bought my first Apple - a Macbook Pro, to get a development platform for iApps. I am struggling with the loss of the PC's Delete key (I never ever used Backspace except for BACK when browsing) and Alt-left instead of CTL-L for word-left. Fundamentals, but I can learn keys and it doesn't affect my PC work.
My overall opinion? If there were only two brands of car, one would be mainstream and affordable, the other would be more exclusive, and, having broken through the cost barrier, would be built to a more luxurious price-performance ratio (name your own cars!). Naturally, the fancier car would be aspirational.
So, if you want to really get rich, build the computer that Apple owners would aspire to -- and then you can name your own price!

10/12/2011 10:38 PM EDT

I'm waiting for school boards to declare Apple iPhones are a necessary part of modern education, and must be purchased for students so that we can keep our competitive edge. Otherwise, Thailand might beat us at texting someday.

10/13/2011 12:34 PM EDT

Beginning of the End?

There is no such thing. People are and will continue to be innovative. I believe Apple will continue to innovate. If not, then others will.

Isn't that what they said about Newtonian physics .. and then Relativity and Quantum Physics turned the whole physics world upside down.

Never say it's the end when it comes to technology or science. History has proven there is no end..

10/13/2011 2:47 PM EDT

Quick disclaimer...I am not an Apple fanboy but I do have an iPad2 and an iPhone4. Everyone needs to understand that there's more to Apple's success than hardware specifications. First off, there are a number of misconceptions. Apple does indeed cover the low-end to mid-end market with the "free" 3GS and the $100 iPhone 4. Sure the iPhone4 is not a low end device but the price is certainly in that range.

Second, iPhones/iPads/Macs are not just fashion statements. The best example is when my Mom picked up my iPad2 to play her favorite slot machine app (I loaded it once for her a while back). She asked "how do I start the game?" I responded in a nice way "Figure it out yourself!" And SHE DID. She looked at the iPad2 and saw that there was only 1 button on the front. She pressed it and the screen turned on to show the little slider. She then swiped at the slider to unlock the screen and then she swiped through the screens to find her favorite slot machine game. THAT says it all right there about the user experience with Apple products (and more specifically iOS). My Mom would make a great Apple spokesperson just from that experience alone.

Another thing to remember is the Apple ecosystem. When my iPhone4 contract runs out I won't hesitate to get the next iPhone...why? Because I will have accumulated 3 years worth of contacts, apps, notes, reminders, calendars, game data etc. etc. And ALL OF IT will instantly be moved over to the new phone. That is probably one big reason why the iPhone4S is already a record breaker...people upgrading their older iPhones because of expired contracts. My coworker ordered a 4S because the contract on his 3GS expired. He did not even consider anything else because of all of the stuff he has accumulated on his iPhone.

10/13/2011 9:43 PM EDT

Thanks for you post! Apple is perhaps following the best path for them by staying at high end. Market share is not everything. In fact it could have the beneficial affect of giving the Apple brand even more cachet as iphones become less common.more info at: http://www.top-shoppingmall.com/security-systems-1.htm

10/16/2011 8:10 PM EDT

This article completely misses the point. RIM could release a phone with a 1600*1200 display, foldable, virtual keyboard, 8 core processor, etc. and it would make not an iota of difference in the market share. IPHONE and Apple finally made it not about the hardware but about the platform and ecosystem.


Unless you are tethering to a big display device, etc. do you really need LTE speeds? I mean really, is 7-14mbps of 3G too slow? I recently downgraded my internet at home to save money ... and I only have a 5mbps link now. I am a techy and frankly, it is never really an issue.


What matters more and more to the majority of buyers is what their phone can do for them and how easily and seamlessly it does that. In that regard, Apple is king. Everything just works and works well. 95% of people do not have time to fight with their phone to get it to work.


And just like there is Dell, HP, ACER, Toshiba, Sony, etc. on the PC space, Samsung is but one player in the Android space. Samsung is a company that has no clue about user experience when it comes to software. Have you ever tried one of their windows based software programs that comes with their phones? It is absolutely brutal. They should be embarrassed. They just don't get it.

10/17/2011 11:14 PM EDT

Ha ha.... Apple has done it again! Siri is changing the mobile user experience.

I am ditching my rubbish RIM!