The Most Eagerly Awaited Smartphone: the iPhone 4 - Apple increasingly preaching to the choir

There are those who've been around the mobile industry a while longer than Apple, who joke that to see what will be new in the next iPhone, just pull out a 3 year old Nokia.

There is surprisingly much truth to that joke in this, the newest iPhone. But Apple has added new clever bits. How will this iPhone 4 do in the market place? I am afraid Apple is increasingly 'preaching to the choir' and seemingly only offering something for those who already own an iPhone, rather than take on the big rivals who seem to target the iPhone on all fronts.

WHATS NEW IN iPHONE 4

So what is new? This is straight from the Apple website, so please Apple fan-boys, don't crucify me for nitpicking on the meaningless. These are Apple's five big news items in the iPhone 4. Apple's biggest achievement to celebrate is 'FaceTime' video calling. To achieve this, Apple has installed a second VGA camera facing the front (ie on the same side as the display). This is the secondary camera, the primary camera still faces to the back of the iPhone, the same configuration now as has been the format with most other 3G cameraphones.

The second source of celebration by Apple is what they call 'Retina Display' which means a 4 times more sharp display by resolution (in the same size 3.5 inch screen as in all previous iPhones). The new resolution is 940 x 640. The increase in the clarity to the iPhone screen is clearly visible to the naked eye (similar to how early dot matrix printers - with visible 'dots' of 'computer printouts' compared to laser printer outputs that seemed to look like they came from a printer. Visibly more sharp.

The third achievement is multitasking. The fourth improvement is HD quality video recording and editing. And the fifth improvement is a 5 megapixel camera and LED flash.

This is what Apple itself celebrates as the new features of iPhone 4, that Apple claims is the biggest thing to happen to the iPhone since the (original 2G iPhone). I would immediately scream to point out that the difference of the 2G iPhone from 2007 and the iPhone 3G from 2008 is a far more comprehensive upgrade and improvement than this iPhone 4. So while the iPhone 4 is the best iPhone yet, and the changes are significant, the biggest improvement 'ever' to an iPhone was what happened with iPhone 3G in 2008. But yes, Apple are masters of the showmanship, and they want to make big claims.

Those are not the only changes. The new iPhone has clearly visible design matters, a clear 'facelift' in the style of car makers who come to the mid-point of the lifespan of a model, and a few years after the original is released, they do a facelift version. This iPhone 4 does not have the type of iPhone rounded back as we've come accustomed to. It is very square, reactangular, in profile (more like other phones?). The iPhone for the first time comes in two colors, black or white (and isn't that also typical of normal phones, that there are options in the colors of the case). And Apple even now offers colored 'bumpers' in rubber and plastic - hey, thats just like Nokia phones a decade ago! Plastic color hilights.

And yes, the one button design is also now history. Apple finally admits that the user gains a significant advantage out of some dedicated buttons, like standard volume controls for playing music. There are actually several buttons now on the iPhone 4. Its not a QWERTY keypad haha, but Apple has clearly abandoned its 'we only need one button' thinking and now is adding user input methods through dedicated buttons. (I think this is very good). But isn't that yet another way that Apple is going mainstream?

The iPhone adds a third dimension to its sensors, which should make some games even more intuitive to play. The processor is faster, the battery lasts longer. And at least in the USA (and I am guessing therefore most of the world) the price of the new iPhone 4 is exactly what used to be the price of last year's iPhone 3GS. And like last year when the old model, iPhone 3G was sold at a severe price discount in its second year, now the iPhone 3G has been discontinued, but the low price point is taken by the iPhone 3GS. In the USA, that means the cheapest iPhone 4 costs 199 dollars on AT&T 2 year contract with subsidy, and the new price for the iPhone 3GS is 99 dollars with AT&T subsidy.

And its the slimmest smartphone on the market (according to Apple). Isn't this the Razr strategy when Motorola kept giving us an ever slimmer premium phones. Oh, but that was before Apple joined the industry, perhaps they didn't notice that we once went through the slimming contest, whose phone was most like the thickness of a credit card, haha.

APPLE LOYALISTS WILL LOVE IT

This is 'everything you ever loved in your iPhone, but more and better' - Now you get your LED flash and 5 megapixel camera that so many begged for. Now you get multi-tasking, what many more apps and tech oriented geeks were pleading for. Now you get HD quality video recording, and yes, video calling. If your iPhone 3G model is about two years of age and its time to think of an upgrade, this new iPhone 4, adding on features we got in the 3GS model. So anyone who had been living with the original iPhone 2G, now there is so much awesome Apple goodness in the iPhone 4, there is no reason to wait anymore.

And that is I think where the 4 times sharper screen will play a big part. Any existing iPhone owner will of course compare the two screens side-by-side. The iPhone 4 screen size is no bigger. Identical is size. But its incredibly sharp. So any video or any picture or any website etc, will be visibly more crisp and compelling on the iPhone 4 - when comparing to any older iPhone. The comparison is even more obvious and vivid explicitly because the screen size is the same. 

The new OS for the iPhone supports many other advanced smartphone features in addition to multi-tasking. It has folders, and even allows iPhone users to customize the home screen (again, folders and customizable home screens, these are years-old standard fare for such 'old fashioned' smartphone operating systems as Symbian haha). 

Statistics from all markets where we have heard of them into the public domain, including Nielsen just on the US market reported last Friday - Apple iPhone owners are the most loyal repeat buyers of any smartphone brand. They are already pre-disposed to prefer an iPhone. Now Apple gives them even more "iPhone-niness", clearly the iPhone 4 is in many demonstrable ways visibly, concretely, practically better than all previous models including the iPhone 3GS. Existing iPhone owners will find overwhelming reasons to upgrade to the iPhone 4. But... as the smartphone market is in hypergrowth stage, just keeping existing customers is not enough for Apple. They have to grow, and now I think their recipe of keeping Apple loyalists happy, is not enough.

US WILL LOVE iPHONE 4

In the US market, there is no collective consumer memory of a decade of Nokia smartphones with Symbian operating systems, doing almost all these things that Apple is now 'innovating'. In the US market, astonishingly, many smartphones do not offer video calls, so while this is nearly decade-old technology, in the US market, Apple seems to be offering 'leadership' haha. In the US market, 5 megapixels in a camera is considered quite advanced still today (in Japan and South Korea any self-respecting cameraphone has at least 13 megapixels of resolution). The LED flash also has plenty of mileage in the US market, again advanced cameraphones like SonyEricsson's Cybershots, various Samsungs and yes, top end Nokias, have the Xenon type flash which is far more powerful.

But I know that, and you, our regular reader, knows that, but most US consumers don't know that. To them this iPhone 4 is an amazing improvement over what was clearly the 'best smartphone' last year, witnessed by the number of iPhone clones now on the market from the Androids on down. Apple has managed to create an alternate reality for the US market where it is seen as the inventor and innovator, not the copier. And in the US market, I am sure the iPhone 4 will sell well. There is a nice heavy market of iPhone 2G and iPhone 3G models that need to be replaced.

REST OF WORLD UNDERWHELMED

Beyond the USA, it gets more tedious. When Apple said they did the multi-touch and capacitive screen and sensors and app store, that all played well in Europe and Japan etc. But now? They roll out their new phone where the top feature is... video calling? Video calling? The last time videocalling was 'cool' was around year 2000. Just about anyone who has a 3G cameraphone made by European or Asian brands, has had video calling for at least half a decade. Truly underwhelming. And honestly, the service is so low among consumer preferences, that most analysts have stopped reporting video calling feature usage. Stopped reporting its usage. I found stats from the UK regulator for 2007, where only 1% of consumers were using 3G videocalls, even though most UK 3G services included an allowance of 'free' 3G videocalling minutes and the 3G penetration rate per capita in the UK in 2007 is about the level of where the US is right now. This, the biggest change Apple celebrates, is not going to be seen as a big improvement in Europe or Asia.

I was digging through my statistics resources and could not find recent stats on 3G videocalls from any of the advanced markets in 3G like Japan, South Korea, Finland, Sweden, Norway etc... Not even bothering to report them for many years. Literally, the industry lost all attention in videocalls already BEFORE the original iPhone 2G had launched haha..

But the part that will really annoy the carriers/mobile operators of Europe and Asia, is that Apple's video calling is not compatible with standard 3G videocalling. So now we have a weird fight against Metcalfe's Law (the utility of any network increases in the square of the number of the members of that network - ie a telephone network that has 8 users, compared to a network with 4 users, has twice the users, but 4 times the benefit to all members). So we have a 3G consumer market, globally with 600 million paying 3G users, most of whom have a 3G cameraphone that includes video calling ability. And Apple's proprietary FaceTime launches now, not even compatible with the 85+ million population of old iPhones, iPod Touch's and iPads, - FaceTime is only compatible with Apple iPhone 4, the first of which start to ship June 24. This is madness (to Europeans and Asians where literally hundreds of millions can do standard 3G videocalling, and all 3G carriers/operators have set up the 3G videocalling ability - they have even done the international 3G videocalling interconnects! so you can make 3G videocalls across countries and continents)

Then Apple touts multitasking and the LED flash and a paltry 5 megapixel camera resolution. Again years old technology. Apple seems almost to be drawing attention to the fact that it is behind on all these things. Its not that someone else points out that the emperor doesn't have clothes, its the emperor himself who yells, I have no clothes.

Apple celebrates 5 major changes to the iPhone line, and Steve Jobs proclaims this makes it the biggest improvement in the iPhone of all time. Yes, in the US market, each of those 5 changes has merit, because the US consumer has not yet experienced very advanced phones, by and large. But in the rest of the world, Apple is kicking sand in the eyes of its own loyal supporters. How can they now go 'celebrate' years old staples like video calling with the second inward-facing VGA camera, or multitasking, or LED flash with 5 megapixels in camera resolution. Its like suddenly a car manufacturer brags about its newest model having fantastic innovations of windows that roll down, and adustable seats, and an automatic transmission. Sorry, those were innovations in a bygone era. Today any car maker should be able to offer those as standard.

HD quality video recording is more current tech, but not bleeding edge. Many rivals can match that in similarly priced smartphones.

BUT THE DISPLAY IS MAGNIFICENT

So it comes to the ultra-sharp display. Yes, that can be cool, but now rivals offer 4 inch and even 4.5 inch screens - that have far more sharp resolutions than the iPhone 3GS (while not quite as sharp as iPhone 4). Is that really worth it to go iPhone? Again, sorry for bringing up Nokia (but I am ex Nokia and know the Nokia past product line-up and its phone features the best), but lets go back again and see who showed Apple a better resolution screen. The original iPhone 2G (and upgrade 3G and upgrade 3GS all) had a screen resolution of 480 x 320. The new 940 x 480 screen resolution is not quite 4 times as good (technically, its 3.9 times as sharp). Now, what was Nokia's next flagship phone after the original iPhone 2G launched in June 2007? The next Nokia top phone was the E90 Communicator (what I've often called the best Nokia phone ever and by far the best phone of 2008 - and certainly a far better smartphone than the iPhone 3G - something many industry analysts and phone review magazines etc agreed). So how was the E90 screen - it actually has two, as its a palmtop form factor - but the E90 Communicator main screen is a 4 inch screen - larger than the iPhone's 3.5 inch - and had a resolution of 800 x 352 which is 1.8 times more sharp than the any Apple models of that time, or even up to newer Apple models a year later.

So the original iPhone screen resolution was 'not perfect' - says Apple itself, because it has improved the resolution. The screen resolution is a very important factor to smartphones - says Apple as it selects the screen resolution as one of the five big changes to this latest iPhone 4. And who was the smartphone maker, who looked at the original iPhone 2G, and in less than a year, released a phone with nearly twice as sharp a screen? Nokia of course.. To see the future of the iPhone, look at an old top-end Nokia haha..

MILDLY DISAPPOINTING

To the rest of the world (where in Europe, Australia and advanced markets of Asia they have a long history of advanced smartphones) this could have been the 'great' iPhone. And it offers almost nothing. Bug-fixes only. A cosmetic face-lift (plus literal face-lifts and botox with the color bodies and the wacky colorful 'bumpers'). Apple could have gone for a significantly bigger screen, 4 inches to keep up with the Joneses, or push the envelope to 4.5 inches or even beyond. No, the screen seems pedestrian in size now at 3.5 inches. Obviously no cool sporty trimmed-down lower cost 'Nano' model. And no QWERTY. And I know I know, Apple will resist the QWERTY option, but if not a QWERTY-slider model, then give us something to go against the rising tide of Androids. 5 megapixel camera with LED flash? Apple is really not trying its best, when even Nokia's cheaper N8 gives us 12 megapixels and Xenon flash.

It won't mean that "nobody" buys iPhones abroad. But what it does mean - very periolously - that those foreign customers will be very easily tempted to consider a rival - an Android maybe from HTC or Motorola or SonyEricsson or LG. Or to see what the new Samsung Bada is like. Or check out how the Blackberry merges QWERTY with touch screens. Or see Microsoft's new Kin phones. Or go with the trusty Symbian Nokias, which after all offered 3G and MMS and video recording and 2 cameras and video calling (and 3G videocalling) and multitasking and an app store and TV out and folders and user-customizable home screens and 5 megapixels and flash (and on and on and on) - over 3 years ago. And Nokia still gives all those things most of us truly do appreciate - a QWERTY or T9 keypad as an option in addition to touch screen in many models, and the replacable battery, the micro-SD memory card slot, Flash compatible software, etc etc etc.

WAS YESTERDAY'S COOL

Apple was the hot phone in 2008 and 2009. Then came the rush of the Androids. Today over 60 models made by over 20 manufacturers - including 7 of the world's 10 largest dumbphone makers. The first market where the big Android invasion came ashore was the USA in Q1 of this year, and Android shot past the iPhone in the market share of new smartphones sold in Q1. Now in Q2, Android is increasingly invading major other markets vital to Apple, from Japan and China to Europe - and already today Android globally is selling at the same rate as the iPhone. And this while Apple's been around for 3 years and Android only half that. And most Android manufacturers have not had phones out for more than some months.

The iPhone 4 will be loved by Apple loyalists. It will be a very compelling upgrade for most current iPhone users with iPhone 2G or iPhone 3G models. For a short while in June-July-August of 2010, the iPhone 4 will hold its own against rival Androids and other smartphones, but this is nowhere near the great leap forward to keep the iPhone 4 the most desirable phone for the next 12 months.

I do think that Apple is now on a strange path to oblivion. The mobile industry is one where every time a given player has tried to do its own non-standard thing, the global standard version has won. Look at GSM vs all other digital standards like CDMA, iDEN, etc. Look at 3G, again the global standard, UMTS, also known as WCDMA which totally dominates over the rival 3G standards CDMA2000 and TD-SCDMA. Look at the success of SMS text messaging or MMS multimedia messaging etc. There has to be a standard, and it to be offered on an interconnecting principle. Japan has had the world's most advanced mobile phones for more than a decade, but they do them on proprietary standards and they have not been able to turn that leadership into global success.

Yet Apple comes at us with ever more control and limitations. The iPhone App Store has been having more troubles, the iAd platform as well, and now Apple forces video calling to be done on its devices only on its proprietary FaceTime solution. Apple seems to be headed to an ever tinier circle of Apple fanatics with non-standard parts, non-standard apps, non-standard solutions, and annoying all partners along the way. Look at its very public fight with Adobe for example around Flash. What is the hassle now with Admob? (I only saw the headline, it seems like yet another battle, like earlier Jobs saying he wants to be the thought police for the world, to make sure there is no pornography on the iPhone and its family. Imagine the iPad, how obvious it is as the delivery platform for Playboy and other adult magazines. If Apple won't let adult content in, then rival tablets will take giant leaps ahead in market share. Didn't we learn this lesson already with video rentals?) And look at how long Apple fought against MMS - now it lists MMS proudly as a major feature in the 'short list' of top features for both the iPhone 4 and the iPhone 3GS.

AND THE APP STORE

(I am sorry, I accidentially deleted these two sections when moving the article from PC - I was editing this on the plane - to the blog). So lets talk App Store and Videocalls part 2. First App Store. Even here the news is not good for Apple. A year ago they had the space almost all to themselves. Passing a billion downloads - now well past 4 billion cumulative and over 2 billion level annually, the Apple iPhone App Store is the one with the most downloads. Yes. But the others are rapidly catching up.

GetJar has already become the second smartphone app store to pass 1 billion downloads. And Nokia's Ovi store is generating downloads at the level of half a billion downloads per year and ramping up fast. And many who were disillusioned with Apple, have been shifting development to Android, where they have similar types of handsets but not the restrictive Apple rules. So if the App Store was a competitive advantage for Apple, it is finding a ton of strong rivals as most app stores (there are over 30 of them already) are still in early launch stages.

BUT APPLE CAN STUNNINGLY SURPRISE US

The one last thought I had, was back to video calls. I do want to make this observation. Apple has a knack of taking something people thought was hard to use (like PC operating systems, smartphones) or very poorly used (like smartphone apps) or seen to be in decline (like portable musicplayers like the Sony Walkman before the iPod) and turning it into a huge, unanticipated success. Videocalls have been around in 3G for a almost a decade. They have been underwhelming as a market opportunity.

I was quoted in Global Mobile on 26 Feb 2001 which wrote "Tomi T Ahonen, head of 3G business consultancy at Nokia, questions whether video services will be able to deliver anticipated revenues. The biggest service to disappear off the 3G radar screen is video telephony,' he said. Ahonen said that the application had, last summer, been expected to contribute 5% of next-generation revenues. This had since fallen to between 1% and 2% of revenues, he said."

So the industry has felt 3G videocalls are a poor opportunity. Perhaps Apple can revitalize this. I cannot see us all installing FaceTime, but it is possible that Apple manages to convince us to start to use videocalls, and the forward-facing second camera that most of us already have on our 3G phones.. Don't be surprised if Apple achieves this for our industry. But please mark my words, that 3G videocalls will always - ALWAYS - be bigger in total traffic and revenues, than Apple's proprietary FaceTime videocalls..

IN SUM

First, its the best iPhone ever. Clearly. And a big improvement. It will sell very well in America this next year. And it will be the very highly favored smartphone replacement model for any existing iPhone 2G or iPhone 3G user. A big market is 'guaranteed' for Apple, in the 30 million to 40 million range for the next 12 months.

But Android has 60 models by 20 manufacturers. Blackberry is bigger than Apple and once again, Apple yields the bigger QWERTY market to RIM, to Nokia, to Microsoft and to all those Android makers who are smart enough to include at least one QWERTY model in the lineup. Apple? When will you give us a QWERTY slider or folder iPhone? You have already admitted that one button is not enough. When will you go for that market - there are literally millions of Apple fans who want an iPhone with QWERTY but won't buy a non-QWERTY phone, so they now go with Blackberry etc... And Microsoft - a global giant corporation twice the size of Apple in annual sales, is now full steam in the game and has launched its first branded smartphones. And HP, bigger than Microsoft and Apple combined, the industry's biggest player - bought Palm and will turn that around to challenge Apple. And Samsung, the world's second largest dumbphone maker, launched its Bada operating system and has sold more touch screen phones than Apple every year since the iPhone launched. Samsung will soon sell more touch screen Bada based smartphones than all iPhones sold per year - this is inevitable within about two years, due to Samsung's far greater distribution and far lower price points and far wider product range. And then there is the gorilla in the room, Nokia and its Symbian and the best distribution, the best sourcing and of any handset maker, the world's best record for invention and innovation in smartphone design. Still today, inspite of all that tremendous success and hype around Apple (and RIM), Nokia's smartphones alone outsell the total annual output of Apple and RIM - combined. And this is before we get the first 'iPhone killer' from Nokia, its N8, due out shortly.

The US market will love the iPhone 4 and will mistakenly think that is the cutting edge in smartphone design. Because of that, the iPhone 4 will sell very well in America and the local press and analysts will continue to praise Apple. Meanwhile the iPhone market share will continue to be flat for the year, falling towards the end of the year, and Apple's market share growth will indeed have stalled (as I predicted). Apple cannot get out of the market share trap until it spreads its design across more than one new model per year. Expect Apple to make announcements in that direction during the next 12 months. I am very sure the market share performance will be such a disappointment over at Cupertino, that they will finally admit that they have to go into a multiple models strategy (as I have been pleading them to do for nearly 4 years now).

Thats my first impression of iPhone 4.

Comments

[iPhone 3g Cases]

I was reading something else about this on another blog. Interesting. Your position on it is diametrically contradicted to what I read earlier. I am still contemplating over the opposite points of view, but I'm tipped heavily toward yours. And no matter, that's what is so great about modernized democracy and the marketplace of thoughts on-line.

[Mens True Religion]

If the iPhone has had no (or only minor) merits all this time - why has it done so well in the rest of the world? Not dominating, of course, but doing quite well. You seem to have disdain for the stupid American consumer who knows no better -- but what of the Japanese? Are they stupid too?

From your reasonings, the iPhone should have never sold more than a handful of phones in the technologically more sophisticated "world outside the US".

You now tout Google's Android. Why? Why should Google be making a phone in the iPhone's image instead of Nokia's? Why is Nokia reducing it's guidance on phone sales in light of the competition when Nokia phones are YEARS more advanced?

Your reasoning seems so sound except that, if it was "all that" -- then there's simply no explanation for the iPhone's success - nor Androids for that matter.

What I see missing from your analysis is that Apple does things BETTER....fewer things but executed better. Plenty of consumers are much more happy to have things simpler and better.

[Yves Saint Laurent]

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[world-battery]

Does the lack of UX smoothness on the side of Nokia/Samsung/HTC/etc. preclude them (still) from gaining mind share, even if they are gaining marketshare?

[Monclervest]

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[Monclervest]

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