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Apple’s low key announcement of the new iPhone 5S and multi-coloured iPhone 5C came and went without much fanfare. The technology press certainly weren’t impressed and market commentators were indifferent. Does this spell the beginning of the end for Apple? The answer is clearly no.
Why? Because Apple are actually selling more iPhones globally than ever before. In fact, Apple gained market share in the United States (USA) in the quarter before the announcement of the iPhone 5S. And so while the Apple share price is down from its recent highs and the easily bored technorati are complaining, Apple’s loyal and growing customers, the people that matter to their bottom line, seem to be supremely happy.
Furthermore, the new iPhone 5C and 5S launched with firm commitments from NTT DoCoMo in Japan, and will for the first time, launch simultaneously in the USA and China. The new iPhones have also been certified by the Chinese government for use on all China’s networks, and a deal with China Mobile, the world’s largest mobile operator is apparently in the works.
Just these two development will drive massive growth for Apple in the next year. The new devices also support all the various LTE bands in operation across the globe, and significantly those in operation in China, for the first time. As a publicly traded company Apple is certainly very aware that its legendary profitability and margins, almost unique in the technology world, need to be maintained and in fact grow. Apple has a sound strategy of maintaining margins and growing profits into the future. However, Apple are still not in the business of making low cost phones for emerging markets, and may never ever enter this space.
The magic trick people missed
Apple’s iPhone 5S doesn’t appear to be ground breaking. But once again Apple has read the market differently and that may benefit them moving forward.
The key advance is the new A7 64 bit processor. The full benefit of this may only be felt a few months, or years, down the road. Apart from added responsiveness and snappier game play, 64 bit processing is a fundamental shift in the technology that underpins mobile computing.
Allied to the new A7 processor is iOS 7 which is a massive and radical departure from any previous version of iOS. Not only is the look and feel completely different from previous operating Apple systems it is also fully 64 bit capable. The genius of iOS 7 is that despite its radical overhaul, both in look and feel, as well as technical underpinnings, to make it both 64 bit and 32 bit compatible, many will find it very familiar and comfortable to use, after a short easy learning curve. This combination of advances took the mobile world by surprise, with even Samsung, who are no slouches at chip design themselves, looking to play catch up with the new A7 processor.
The technical innovations did not end there. Coupled to the A7 processor was another smaller, but no less radical innovation, the M7 dedicated motion co-processor chip. This chip knows when the iPhone user is running, walking, and even driving. This type of contextual information coupled with massive processing power, along with the other services Apple offer, such as maps, sports apps, and even Siri, opens up the frontier for a whole new generation of intelligent and useful interaction with your mobile device.
Furthermore, Apple has provided new APIs, or links to the hardware and software within iOS 7, which were not available in previous versions of the operating system. In doing so, Apple opens the door for developers to create new apps with new revolutionary capabilities on a device that has more processing power and sensor capacity than many current PCs or smart devices.
Apple is therefore pointing the way forward in this market, in a manner which many may not have seen. Few people today leave their home without their mobile phone, most even keep it in their pockets when at home, and most also keep it next to them when they sleep.
No other device in history has been so firmly attached to as many people. Your mobile device may be all you need to track your life in all possible ways. Apple clearly have their eye on the quickly emerging market for health and wellness coupled with location services, all connected via mobile data to the web. This potentially huge market currently includes smartwatches, a device much rumoured but not released by Apple, and other wearable sensors.
Apple also has taken biometric identification mainstream, with the fingerprint reader on the iPhone 5S, and it is expected that all the other manufacturers will rush new product to market in response.
The new Apple
Apple is no longer the company that Steve Jobs ran. That may not be a bad thing. It took Steve Jobs over 10 years to bring Apple back from near death, and then three more years after the iPhone launch to reach the more recent heights. Apple as a company has to remain relevant, of that there is no question. Innovation is however baked into their DNA, and their current products range represent some of the finest consumer products in almost each of their respective categories.
Innovation can’t be scheduled to please the tech press nor the investment community. Innovation will come when the ecosystem and the inventor is ready. Innovation and industry changing products such as the iPhone, often have extended periods of refinement and polishing before the next big thing comes along. Apple may very well not invent the next big thing, but they do know how to make cutting edge, highly desirable product.
More than almost any other company in technology today, Apple also knows how to play the long game. True innovation should not be confused with massive feature sets and clever variations on a theme. As an example, Apple ushered in the post PC world almost single handily, by creating not only the cool hardware, but by facilitating and creating a complete ecosystem of hardware, software, developers, and accessory suppliers.
It is interesting that it is only in the last year that first Google and then Microsoft have moved into the position where they can control the entire ecosystem through the purchases of Motorola and Nokia respectively.
The key to Apple’s current and future success is that Apple stick to their DNA and play the long game, by making, and selling products, and critically services, that hundreds of millions, and in fact billions, of people across the globe will gladly pay for.