Lets Discuss the iPhone 6 Models - Apple now in 'me-too' mode only following the leaders

Last week I discussed the new Apple Watch. Now lets do the iPhone 6 models. Once the iPhone was exceptional and magical. In the first three years of its life, the iPhone gobbled up market share globally and ran from nowhere to 16% market share of all smartphones sold globally for full year 2010. That was the most amazing launch of any smartphone brand ever before or since (did you notice how Amazon's Fire is not on fire at all). But then it stalled. Apple's individual quarterly market share might jump even over 20% but where is Apple now? Its market share has stalled. Apple's market share was down to 15.5% last year and this year is on track to be down to around 14%. Yes as the global smartphone market keeps growing at massive rates (25% growth this year) Apple also can keep reporting growing unit sales and growing revenues, but the iPhone market share has been falling and at some point the relevance of that issue will come home. Apple is growing unit sales yes but Apple cannot even close enough sales to keep up with the global growth rate. Apple is losing the war while winning some meaningless battles and celebrating those while ignoring the big picture.

Now that being said, Apple doesn't need to be market share winner. When it last tried that (in the PC/Mac wars of the 1990s) Apple went to the brink of bankruptcy. After Steve Jobs came back, Apple learned that they must abandon market share focus and rather serve high-end niche markets. Apple cannot win the global hardware races competiting against low-cost providers. And as I've been saying ever since the original iPhone appeared in 2007, as the low game plays out, Apple will end up with high single-digit market share out of the smartphone market when all phones sold are smartphones (this will happen by 2019 and possibly even earlier). Apple's market share of all phones sold today? 8%. I rest my case.

Some analysts look at the US market, see that the iPhone is the bestselling phone and iOS has market share well into the 30 percent range, and think this is the future. Those are clueless analysts who don't understand mobile. China alone as a market for smartphones is now twice the size of the USA. The US market is literally the laggard market out of the Industrialized World (rich world, 'first world' or 'Western World'). So you are excited about mobile payments on NFC now that Apple finally has bothered to give us. Whoop-te-doo. When did Nokia offer us NFC on its flagships? Four years ago! And that was on Nokia's OS platforms including that supposedly obsolete Symbian! Apple's wonderful money/wallet system? Yeah, Nokia had Nokia Money not announced but in commercial production in India for example (the world's second largest country and the country with the largest unbanked population) where Nokia Money had 13% market share (before idiot Elop killed the project because his favorite Windows Phone could not support NFC at the time). The old joke still holds true to this day, even after Nokia's handset business has ended, that to see what will be in the next iPhone, look at an old Nokia flagship from some years ago. True. Absolutely factually true. And yet obviously those old Nokias were 'not worthwhile smartphones' and 'only Apple invents anything in this industry' haha. American 'analysts' haha.

Incidentially NFC and mobile wallets was not of course a Nokia invention. It was, as is just about everything in our industry, first done in... Japan. When? NTT DoCoMo (a reference customer of mine by the way) introduced FeliCa into limited use in Japan in 2004 !!! Yes ten years ago. Ten YEARS ago. Don't tell me the USA knows anything about leadership in 'mobile'. South Korea has had for example Hana SK mobile payments on NFC for this whole decade (SK Telecom is also a reference customer of mine). And for Americans really to weep, we don't need NFC to do mobile payments. Look at Starbucks (15% of its total USA revenues come from mobile payments in less than 2 years from launch, powered primarily by a simpler technology called QR code). Or look at another US tech darling, Square. They added SMS payments just now a couple of weeks ago. Yes, SMS payments. Where have I heard that before? Coca Cola (another US giant) launched mobile paymenets on SMS when and where? 17 YEARS ago in Finland enabling some vending machines to accept SMS payments. How is that doing today? Latest stats by BookIt say 69% of total Finnish population use mobile payments in anything from paying for yes vending machines to train tickets to fast food restaurant bills. The USA leads, hahahaha. Look at Kenya. Kenya as in 'Obama born in Kenya that Kenya. Literally in middle of Africa, the poorest continent. M-Pesa launched in Kenya six years ago by Safaricom (ie Vodacom Group, another reference customer of mine) and today 51% fo the total Kenya GDP runs through a mobile phone. The rest of Africa is following in close synch based on when they did their first mobile payments launch. Zimbabwe is at 43% of its total GDP already transiting a moblie payment system. Apple. You are 10 years behind Japan and 6 years behind Kenya! Thanks for finally bothering to give us mobile payments finally!

No, what happens in mobile in the USA is not about to be copied in the rest of the world. It is totally consistently true, that everything that happens in Japan, will be copied in the rest of the world. Once again, we see it with Apple and the latest iPhone. So what Americans should prepare for, is that the US market will become more like the rest of the world where 96% of the planet's population lives. And even that last vestige of the argument 'but our economy is the biggest therefore USA rules' is now coming to an end, as the Economist said, by the end of this year 2014, China's economy will become larger than that of the USA. Why did Apple released phablet-sized phone screens? Americans are not driving that shift. It was China. Kantar reported that in March 2014, already 40% of smartphones sold in China had screen sizes of 5 inches or larger, ie 'phablet' size. No my dear American readers, Apple is not reacting to US market needs. USA market is not a leader by any definition in the mobile industry. Apple is reacting to what is happening in China, the world's largest smartphone market, and righthly so.

iPHONE 6 MODELS

So yes, its large screen models this time. Lets see whats now and how. Two new models still released in unison (this is again a stupid idea that Apple keeps doing, why? It would be better served splitting the release times, release one of the year's new iPhone models in the Spring, the other in the Autumn. That way Apple would catch more of the customers in the wild whose contracts end at any of the 12 months. As we know, Apple's current iPhone sales pattern is highly cyclical, a big peak in September-October and then dwindling down to very low levels by August). But now its beyond any doubt, that I was correct when I said that Apple had to split its product line. There were so many Apple fanatics here on this blog who argued that one model per year was enough and Apple would never split its product line. Whose still blogging today haha?

So lets see what the iPhone 6 models look like. These are the main specs:

MAIN FEATURES . . . iPHONE 6 . . . . . . iPHONE 6 PLUS 
Screen size . . . . . . . . 4.7 inch . . . . . . . 5.5 inch
Resolution . . . . . . . . . 1334 x 740 . . . . . 1920 x 1080
Main camera . . . . . . . 8 megapixel . . . . 8 megapixel
Image stabilization . . . no . . . . . . . . . . . yes
Flash . . . . . . . . . . . .. LED . . . . . . . . . . LED
Selfie camera . . . . . . . 1.2 megapixel . . .1.2 megapixel
NFC . . . . . . . . . . . . . yes . . . . . . . . . . yes
Waterproof . . . . . . . . . no . . . . . . . . .. . no
MicroSD support . . . . no . . . . . . . . . . . no
Removable battery . . . no . . . . . . . . . . . no
Fingerprint ID . . . . . . . yes . . . . . . . . . . yes
Wireless charging . . . . no  . . . . . . . . . . no
Dual SIM slots . . . . . . no . . . . . . . . . . . no
Price without contract . $649 . . . . . . . . . $749

Those are quite expensive smartphones with no spectacular specs. Even the iPhone 6 Plus screen size is barely larger than the original Samsung Galaxy Note from three years ago (which had a 5.3 inch screen size). And it is already at design worse than the current screen-boss, Galaxy Note 3, which has a 5.7 inch screen and Samsung is just scheduled to give us the next edition the Galaxy Note 4. Apple enters the screen races with two 'large screen iPhones' where its biggest screen cannot match the top dog of the industry. This is Apple's best moment in the screen races and it starts off this badly. In the next 12 months it will only fall further behind as every rival is eager to prove they can give a bigger screen than the iPhone.

Yes, obviously Apple fans have been dying for larger screens than the past iPhones, so of course the early sales are very strong - those are existing iPhone buyers who would buy the next iPhone almost whatever it was. But on its 'party piece' the screen size, even the 6 Plus fails to match the competition. And it will only get wose from here in the coming months as each next flagship from LG, HTC, Lenovo, Xiaomi etc can easily do a 'larger than 5.5 inch' screen and put the iPhone to shame. 

Which brings us toe the biggest disappointment of the new iPhone 6 models. The camera! Come on! Nokia gave us an 8 megapixel smartphone five YEARS ago. Top 'normal' flagship smartphones run 20 mp cameras today like the Xperia Z3. Thats before we consider the monster cameras like Microsoft-Nokia Lumia 1020 with its 41mp camera. Even Apple itself upgraded its camera to 8mp three YEARS ago. Come on, selling an 8mp camera in 2015 on a 'flagship' is pretty pathetic. And thats before we look at the Selfie Cam. The inward-facing second camera (again something Apple resisted in early iPhones and only gave us from 2010. And yes, haha, Nokia smartphones had second cameras from 2005. I argued on this blog for years that Apple had to do it and Apple fanboys said it would never happen and called me a fool. What do I know about this industry? Whose blogging now). Apple should have taken the opportunity here to up the camera to at least something like 16mp if not 20mp. And the seflie cam by now on a flagship should be 2mp at least. Again, before you argue - what is the point of the seflie? Not my own face in a picture. Its the context of the selfie - where was it, who was also in it. That is why you want a good resolution seflie cam, so we can see where that picture was taken. It needs to be better than this! On a flaghip! On a smartphone sold in 2015!

NFC is another me-too that others have done years ago. The iPhone 6 models did not give us wireless charging of waterproofing or any other leading edge tech. So this becomes a very pedestrian flagship already at launch, well before the rivals react. And Apple continues to annoy its users refusing to give common features like microSD storage cards or removable batteries or built-in FM radio etc. (BTW as you American readers laugh, because your homes and cars are all inundated by FM radios and you couldn't care less to have that on a phone, that is not the same for the rest of the world. I just saw fresh South Africa mobile users stats by the MMA and AMPS 2013 survey, that 42% of South African mobile phone owners listen to FM radio on their phones (and South African mobile phone penetration passed 100% per capita two years before the USA, so before you start to laugh). That may explain why Apple only has 0.7% market share out of South Africa. And it was these kind of bad design decisions that doomed the Nokia Lumia launch under Stephen Elop when he designed the Lumia series to appeal to US consumers (haha, see how that went) but going against the needs of where most phones were sold. Ask Chinese consumers if they listen to FM radio on their phones.  Wanna go check out specs for Lenovo's flagships? They have FM radio. As does Huawei. As does ZTE. As does Coolpad. And as does the latest tech darling out of China, Xiaomi. This is a no-brainer but Apple again leaves out vital parts that are necessary to the rest of the world, while fixating only on what the cool kids in Cupertino think their phone should have. The iPhone 6 was designed only for those few who live on that trivial slab of land in Siliconia while spitting in the face of most mobile phone buyers globally.

In 2009 Apple sold more than three times as many smartphones as Samsung. Today Samsung sells twice the number of smartphones as Apple. What happened? Samsung diversified and spread its product range to cover all major segments out there. Did you know there is a Galaxy serving the Blackberry style QWERTY segment? Yes they sell the Galaxy M Pro which looks like a Blackberry. Samsung has the Galaxy Note 4 if you want a large screen. If you want the best camera ever in a phone, the Galaxy K Zoom is now the top dog on the phoneshooters (20mp camera and 10x optical zoom ie real zoom rather than pixelation magic, plus Xenon ie real flash). If you like the metal frame of the iPhone, now there is a Galaxy in that style, the Alpha (with specs and size matching almost perfectly the iPhone 6). The flagship Galaxy S5 is waterproof. Then there are the low-cost Galaxies all the way down to Samsung Galaxy Y a smartphone roughly with specs similar to original iPhone 2G (2mp camera etc). You can buy one for 81 US dollars without contract - new model - in India today (at INR 4,995). This is how the market leader works, they expand their product line and reach more customers, with products targeted at different segments.  

Again for American readers, you may think 'but my iPhone only costs 199 dollars or 299 dollars'. No it doesn't. That is marketing bullshit. The real price of the iPhone 6 is 649 dollars (iPhone 6 Plus 749 dollars) for the base model (even more if you buy it with more inbuilt memory). What the carriers/operators do in the USA, is force you to sign a 2 year contract and force you to take a 24 month payment plan for that gadget - and they charge you interest on it too. The real price without contract is what most countries have - like for example in Italy and South Korea - and even most of those countries where handset subsidies are still used, will let you pick the option to buy so if you prefer to pay upfront the full price you then get cheaper minutes on you contract (like in the UK). And the subsidies are gradually being phased out globally, the latest country to make a move to reduce the amount of handset subsidies was China earlier this year. I am not talking about fake issues here on this blog, or marketing propaganda. The real price of the iPhone 6 is 649 dollars and the iPhone 6 Plus is 749 dollars. That is for example what they pay in Belgium or in South Africa where I just was. And when the consumer sees the real price they are forced to pay (whether upfront or in a payments-plan 24 month contract), the comparison becomes far more 'real'.

I should again mention that I argued this path for the product split on the new flagship before the model line was split (iPhone 5S and 5C). I said that because of Apple's strong loyalty they should go up-market in price for the top model and pursue far more expensive price points. The iPhoen 6 Plus starting at 750 US dollars is the right step for that. But I also said they have to do their mass-market phone at a lower price point than where they were. That was the fault with the colorful 5C models they were too similar to the flagship 5S and the price was not different enough. Apple haven't learned that marketing lesson yet that every carmaker for example knows. The Mercedes S Class is the flagship and people buy cheaper Benzes. Same for BMW 7 series or Audi S8. But yeah, Apple continues to do it the dumb way, trying every costly alternative before doing what every marketing book says is the logical thing. Sure, go ahead. But if its not with the 6 model range, soon in the next model range there will be lower-cost new iPhones more around 500 US dollars than 650 dollars. (And don't bother to write about last-year's models at discount haha. I mean new phones!) it will happen. EVERYTHING I said Apple HAS to do to its iPhones has happened except for the one wish I have still (QWERTY-slider). So I've correctly anticipated over 30 improvements to the iPhone and iOS line in the past 7 years (mostly just by studying existing Nokia flagships haha)

Look at the price. Consider the Samsung Galaxy W (latest model, model number T255). This is nowhere near Samsung's flagship. But it has a 7 inch screen (far far bigger than either iPhone 6). It has all the usual stuff that Apple now has like of course NFC. The primary camera is 8mp and LED flash but the selfie cam is better at 2mp. Of course it has all the usual things you'd expect Sammy to give us what Apple refuses, like microSD card slot, FM radio and removable battery. What does that cost? US $482 (Korean Won 499,000) gives you matching specs on most areas, is worse literally on nothing, and far better specs on some of the most requested features right now, compared to iPhone 6 Plus. If you buy phones on contract and the difference is slight between models, you won't really care. If you pay full price and 750 dollars gets you 5.5 inch screen but 482 dollars - two thirds the price - gets you also a far larger 7 inch screen.. suddenly the dollars start to matter very much. And this is before we consider Emerging World needs. If you earn so little you cannot afford to buy both a tablet and a smartphone, you buy a phablet and then you get the biggest screen you can. Again this mid-range Galaxy W utterly wipes the floor with the brand new iPhoen 6 Plus (for Emerging World market needs). But if the base iPhone 6 price was 500 dollars (ie 499) rather than 650 then this becomes at least a reasonable race...

VICTIM OF ILLUSION OF FAIRNESS

The iPhone 6 model range is ho-hum 'me too' copycat range now. Nothing spectacular here at all. And look, for the first time in any iPhone launch window, we see a plethora of articles saying that actually a rival smartphone is better. Like this Digital Spy has Galaxy S5 over iPhone 6, Gizmag compares iPhone 6 Plus to Galaxy Note giving most gains to Sammy. PhoneArena compares Sony Xperia X3 to iPhone 6 granting that Xperia is better on most counts. Extreme Tech compares both iPhone 6 models to HTC One M8 and gives verdict to HTC. Digital Trends gives choice between iPhone 6 and LG G3 to the LG. Christian Today compares iPhone 6 to Xiaomi Mi4 and says only reason Xiaomi can't win this fight is because Xiaomi is not yet sold in all the markets Apple is (ie they think Xiaomi is better value). Phone Debate compares Lenovo Vibe Z22 to iPhone 6 and gives it clearly to Lenovo. 

This has never happened! This never happened before to the iPhone that suddenly its new model is not impressing anyone and the current flagship of most rivals is seen as better! I did not have to dig into Google results to find those comparisons. They were the top page result, usually the top result of Google search of a comparison of iPhone 6 vs that given brand. And I think I know why. There is a kind of illusion of fairness in journalism. When a journalist feels obligated to pursue 'both sides' of a story even where one side is ludicrous, like when say Obama says he won't go to war, then the newsmedia go get Dick Cheney to say why Obama is an idiot and of course USA should got to war immediately (or else bring in McCain to say bomb everyone). Sometimes fairness does require both sides of the story but in other cases it should be obvious that the other side need not be heard. We don't need for 'fair' coverage of World War 2 to hear a passionate defense of Hitler's persecution of the Jews. Same thign happens in sports, where if one side gets a number of penalties, the referee suddenly feels 'obligated' to give the other side a penalty next, even on some totally minor infringement (and something that the frequently penalized team may then exploit). So yeah. For six years now we've seen always stories that the iPhone reigns supreme. The journalists have a guitly conscience that they always gave the verdict to the iPhone. Now when its so close, and Apple had so many victories in the past, they will tend to give the 'tie' going to the challenger. Thats why its such a strong chorus on all comparisons.

Will those comparisons sway an existing iPhone users to abandon Apple, of course not. They don't need any convincing anymore. They know what they want, when they walk into the store. But thats return business The new buyers! The first-time potential iPhone clients. They will be reading the reviews. And the sales reps! They will now have potent 'ammunition' to use to sway customers to switch and not buy the iPhone (Apple not known for serving retail channel needs well) to preferring a random Brand X in that market, whose sales promotion offers the best international trip or whatever bonuses for top salesguys. Apple has never felt this level of 'even' competition from rivals before. It will be their roughest year. This does not mean that Apple sales will fall. Apple has the best loyalty in the handset business. But this means three things.

It means the news customer acqusition to iPhone will be weakest its ever been. The growth in absolute unit sales will be worst its been, the iPhone market share for Christmas 2014 and Spring 2015 will be worst its been in years. (when we combine that with declining iPod sales, flat iPad sales and delayed launch of the iWatch to next year, it means very modest Christmas news for Apple). These two smartphones are priced at the top of the price pyramid where competition is rough and rivals are tough. The consumers of smartphones are not now on their first smartphone, they have grown to appreciate certain things and will seek the model they want. These two iPhone 6 models will not set the world on fire in the way that previous new iPhone model upgrades have. Yes the iPhone will set a new sales record of course for Christmas but its market share will be the worst the iPhone has seen for many years and the total annual market share for 2014 will be somewhere down near 14%. As China transitions away from handset subsidies, these two iPhone 6 models will not be very compelling to the Chinese market where local rivals already have competitive offerings and will upgrade their portfolio with even better (more competitive) models for the Chinese gift-giving season (Chinese New Year in early 2015). Thats also where we can expect for example Sony's next Xperia Z4 to arrive and if the current Xperia Z3 seems a better phone (and arguably sexier more cool phone) what will Z4 do in a couple of months' time?

Apple is not doomed. Apple makes the biggest profits in the industry. But these phones serve only the top-price niche while all the growth in smartphones is in the bottom price range. These two models come simultaneously so Apple doesn't gain any 'reaction' model for 12 months while rivals bring new models far faster to the market. The iPhone models now are only 'me-too' copies of what others have, with nothing exciting or eclusive to them but still missing many features considered normal in all phones, especially outside of the USA from microSD slots to removable batteries to FM radios to now increasingly, waterproofing. Samsung has been running a mocking ad campaign about Apple iPhone users and I am no expert no what ad campaigns are good or bad, but that campaign certainly draws attention to the fact that the iPhone model range is always very backwards on its tech. At least the camera should have been upgraded now to something near cutting edge, not that puny 8mp it still carries.

And it means that the iPhone 6 is a rare dog in Apple's offering. Its not possible that all rivals suddenly had a big surge forward (LG, Samsung, Sony, Xiaomi, HTC etc). It means that Apple didn't move ahead nearly as much as it needed to. It means that this was a half-hearted effort. Apple's focus was elsewhere (Apple Watch). They took the eye off the ball. The game is smartphones not watches. This is Tim Cook's strategy mistake. The iPhone is the centerpiece of all Apple iGoodness from Macs to iTunes to iPads to whatever level of sales the Apple Watch manages to achieve next year.

Note this means also that the reality starts to emerge to app developers. The iEconomi is a false promise. It is a niche. Niches are not mass market opportunities by definition. That is why there are already so many 'Zombies' in the app stores. The Apps Stores (all of them, including Google Play) are disasters as economic opportunities, akin to lotteries. But the best chances are in the one with the most users, that is ow clearly never going to be the iPhone or iOS. The iPhone App Store will gradually migrate to serve the two segments where Apple is strong -games and advertising/marketing. Those two sectors count for less than one half of one percent of human economic output. The other 99.5% of human effort will now prioritize Android always as the smartphone platform and pretty well ignore the others (except for games or the advertising industry)

Apple made the iPhone 6 again thinner. And why? Who was complaining that the iPhone was too thick? But what do consumer surveys say year after year, we want more battery life! If instead of making the iPhone 2 mm thinner, Apple had made it 2 mm thicker and if not giving us a renovable battery (absolutely vital to those 800 million people living in areas where electrical supply is not reliable) at least give us 50% more battery capacity to the iPhone! That would have been welcomed by everybody. Seriously. If Tim Cook had shown the animation on screen and said 'we listened to your needs and now the iPhone 6 will have user-replacable batteries' - it would have been the longest standing ovation in Apple history. Even if not that, if Cook had shown a closeup of iPhone 5 and 6, and shown the 6 is slightly thicker - then told the audience, the reason we made the iPhone 6 thicker this time, is so we can fit a battery that has 50% more power - they would have cheered him for a long time. But no. Lets make it even thinner than anyone ever requested. Why? Because some nerd showed us a Chinese phone last year that was half a millimeter thinner... Idiots!

So thats my view. Yes, this was needed. I begged for bigger screen iPhones for years on this blog. We finally have them (and to all who mocked me that there will never be big-screen iPhones: whose still blogging?). The camera is now piss-poor for a flagship. Apple will upgrade it next time. NFC finally came to the iPhone (as I've been begging for years, but I was mocked that it was not needed, nobody would use the mobile as a payment device, whose blogging now?). Yes the iPhoen 6 models will sell very well to existing loyal iPhone owners. But they are spectacularly weak compared to all rivals out there now, in terms of winning new customers to Apple. Apple's bleeding market share will continue and I think this year Apple ends with something around 14% market share (full year) and next year powered mostly by this model range, the iPhone market share continues to fall to something near 12%.

A sign to look out for is any price drops. If the iPhoen 6 models see price drops before Christmas sales 2014 or Chinese New Year sales 2015, that would be a very bad sign. Meanwhile we can monitor the performance of the iPhone models in Kantar's monthly numbers.

For all the haters, I am still BY FAR the most accurate forecaster in the mobile industry. I was most accurate to forecast Nokia's fall, Samsung's rise, Apple's inability to capitalize on Nokias fall, etc. I was the only analyst to issue a regional forecast of where the iPhone would sell (and where not) when it originally released. I was the first analyst to alert the industry when Apple's market share growth had ended, calling it before the numbers were out. I make my share of mistakes as does any forecaster but you can't find any other analyst who has more accurately forecasted every stage of the iPhone saga from before the first iPhone was even shown, to where it is now (including the evolution of the iPhone). No wonder I am referenced in 140 books by my peers, and Forbes rated me the most influential expert in mobile. I have over 500 press references by all of the top press from Wall Street Journal, Financial Times and the Economist on down. This blog has no advertising, I have no reason to force you to provide extra clicks to read the story and I don't ask you to register. I won't spam you. This blog is purely my hobby to share my thoughts as the most published author of the moblie industry (12 books and counting). We've been around for 9 years and have had over 5 million visitors to this blog and most of my readers keep coming back. The discussion in the comments section is some of the smartest in the industry. So there, go on and hate me. I will be here years from now to once again tell you 'I told you so'. 

Comments

[abdul muis]

@Tomi

Great article, as always. Thank you for this amazing pieces. I just wanna add that Huber has an interesting link in the post before this article, that SJ before coming back to apple also said about must lower the price (for mac) to gain market share.

[TDC123]

"Apple had made it 2 mm thicker and if not giving us a removable battery (absolutely vital to those 800 million people living in areas where electrical supply is not reliable) at least give us 50% more battery capacity to the iPhone"

Wow!! this is wierd!!! of these 800 million people living in areas where electricity is not reliable how many can actually afford a Galaxy S5 let alone an iPhone!!! of those how many can afford even a data plan !!! these guys will probably still be on 2G !!!

With regards to tech I bet Apple will have managed to beat all other phones (processors with QuadCore 2.5 GHz clock speed and >=2GB RAM) in all benchmarks using just Dual Core 1.4 GHz with 1 GB RAM. Such tech is designed by apple itself to make battery life more efficient not needing high capacity batteries with higher performance than competition.

And we are still doing a one to one feature comparison.

The title of this post is probably misleading. Isn't Apple 2nd in market shares among handset vendors so they are probably following only one market leader Samsung, and everyone know how well they are doing!!

[Tomi T Ahonen]

Hi Abdul, Baron and TDC

Abdul - thanks and yeah haha Steve Jobs was a genius business manager (as I wrote when he died)

Baron - ok and thats exactly the point. Apple has a subscription radio which does work if you have reliable 3G or 4G networks. But even then its pretty punitive when free-to-air FM is available for all. But yeah, that is Apple's DNA, punish and squeeze its customers for every penny. All rivals have FM radio. I rest my case.

TDC - you clearly are a privleged rich kid in the USA. Just because someone lives in a country of bad electical grid reliability, doesn't mean there aren't plenty of affluent people, indeed very rich people. They too will want premium smartphones. If you think that living in Pakistan or Sri Lanka or Kenya or Nigeria with unreliable electricity means there are no millionaires or even billionaires you are simply an ignorant rich kid who should not be let out of his home before you've studied the world economy a little bit, at say basic high school level.

As to your question about handset vendors in 2013 Apple was third behind Samsung and Nokia.

Tomi T Ahonen :-)

[adi purbakala]

http://fortune.com/2014/09/15/iphone-6-may-not-arrive-in-china-for-a-while/

Carrier reduce subsidize money. Apple got hurt

[Greg]

Insightful thoughts as ever Tomi.

Would love to see you post more on the Carrier/Operator implications of the device wars. Seems as screen size increases there will be more demand for data and consumers will be squeezed further.

$749 is a lot to pay for a computer in your pocket but in terms of yearly outlay, the $1500 + for data contract is ridiculous. Outside of utilities/transport/food surely one of the biggest household expenditures is mobile contracts? Seems the monopolies and collusion from operators are still resisting market forces to lower prices.

If subsidies for the high end smartphones continue to erode, the prices are just passed on to consumers from carrier to device manufacturer. I get the argument that there has been billions invested in infrastructure but this will only continue as 5G, 6G etc are built. When will costs come down, will emerging markets see the same trend and will it take ubiquitous wireless and OTT service like Skype to break the strangle hold?

Would be great to get a post on your thoughts.

[Vikram]

"...to see what will be in the next iPhone, look at an old Nokia flagship from some years ago..."

As usual Tomi talks about specs and features and not implementation. Implementation is the key...not specs on a bullet-pointed list. Did Nokia have a one-Touch biometric security sensor too for their NFC? (Answer: No) Is Apple's implementation of security + NFC superior? (Answer: Yes). Did Nokia's app store make it easy for developers to develop for and users to download apps? (Answer: No) Was Apple's a much better App Store experience for users and developers (Answer: Yes...So was Android's later). Was their browser multi-touch enabled and run on modern web standards in a fast manner when the iPhone was released? (Answer: No). Apple ran on Webkit...which Chrome adopted later.

It really doesn't matter that someone had some badly designed implementation has obvious usability or security issues before Apple. Apple's efforts to create a generally better experience than the others, because they spend the time and money and resources to figure things out is why they consistently offer a superior phone...even if they are expensive.

I do agree with Tomi that Apple could/should reduce their pricing (but not the quality) and that they should offer an FM radio.

"... It is totally consistently true, that everything that happens in Japan, will be copied in the rest of the world..."

It's great that Tomi brings up Japan. It is also interesting to note that the Japanese prefer the iPhone over every other phone.

They must know something.

[Vikram]

More that I disagree with...

"...The camera is now piss-poor for a flagship..."

Actually the iPhone Camera is generally considered by professional photographers to be the best overall in their images. Some consider the Nokia 1020 and such to be better in certain situations.

Come on Tomi, surely you know that megapixel counts aren't everything...this isn't 2002. It's the software processing on the backend that matters and the quality of the sensors.

Again, it is implementation vs. specs on a list.

And Tomi doesn't even talk about the incredible technology that Apple has, like Continuity and Handoff, TouchID (Samsung's garbage fingerprint doesn't compare), Wifi calling, how amazing the A8 processor is... etc...

[virgil]

Apple’s new iPhone 6 has a 31mm f/2.2 lens, an 8-megapixel sensor with 1.5µ micron sized pixels and True Tone Flash. Only the iPhone 6 Plus has O.I.S. Although the handsets look beautifully crafted, from a photographer’s perspective I’d have hoped Apple would have delivered a lot more with their new flagship. Considering how much smartphone technology has moved on since the iPhone 4S was released, it’s disappointing that Apple has done so little to evolve the camera capabilities of its smartphones.
(from the article "iPhone 6 Camera: A photographer's perspective" at http://www.trustedreviews.com/opinions/iphone-6-camera#xRUdTetRvgo89AOP.99)

Yes, the iPhone camera is good, but far from being "the best". See http://cdn.ndtv.com/tech/images/gadgets/sensor_size_comparison.png for example (Tomi likes nokia, so that pic will make him happy :P ). But really, even the Galaxy S4 already had a slightly larger sensor (4.69×3.53 mm vs 4.54×3.42 mm)

[Xperia]

Biggest mistake for these new iPhones is that iPhone 6 is not like a high end model. It is like galaxy mini and not like xperia compact. it does not have a longer battery life, higher dpi, 2GB RAM or OIS. iPhone 6+ has all of those. Comparison between Xperia Z3 compact vs iPhone 6 ...xperia wins by a large margin. Gsmarena endurance rating for Z3 compact is over 100h, for iPhone 5s (and my estimation for 6) is barely over 50h.

iPhone is thinner than Z3C, but it is wider and taller. Size of the phones is very close each other.

[DarwinPhish]

"It means the news customer acqusition to iPhone will be weakest its ever been. The growth in absolute unit sales will be worst its been, the iPhone market share for Christmas 2014 and Spring 2015 will be worst its been in years. "

I'll take that bet!

[Tomi T Ahonen]

Baron 95 !!!

You know the rules. Don't do that. If I have to start my response by saying 'if you read the blog' then its a WASTE OF TIME to my readers. Don't do that. Part of your comment was valid, part was clearly in the blog and totally pointless. Read the blog, it will be clear why i deleted your comment and then only post the part that is relevant

Tomi :-)

[tz]

I'm not sure about the camera - it depends on if going with bigger pixels internally produces a better/clearer picture. One has optical stabilization. Not killer features, the proof will come with actual pictures, especially in low-light. The selfie cam is <2MP? That is stupid, insane or both.

Apple will have Apple Pay, but like some of the other things, Apple is playing Betamax to VHS. How is iBooks doing? Google also has their bookstore. But Amazon dominates - now I can watch prime movies on any Android device. Remember "Ping"? Oh also Apple makes a TV device...

The Apple TV might be more significant. I don't think Netflix pays them 30% or even if it is on. They have iTunes music and video, but does anyone use it? Amazon has its own device, and there's Roku. But this is the ecosystem. Few look at media sales (video, audio, books).

There is the razor - razor blade model - but Apple wants to sell premium devices, then impose a 30% cost on the ecosystem. They are like a government trying to find all the possible ways of taxing every transaction of their vassals.

From the other end, if you have already spent thousands of dollars on apps or media that won't run on anything but an iOS device, you are locked in.

Apple cannot support SD cards. The problem is their sandboxed model. Note: KitKat also tries to sandbox the SD and there are objections, but apparently some of this can be gotten around. There is no user-exposed filesystem on non-jailbroken devices. If there is no filesystem, then even if you have a micro SD (like the 128Gb in my Galaxy 10.1 Note 2004), you can't do anything with it anyway.

On the hardware side, Apple cannot support a removable battery. This requires some kind of way to replace the battery, and everything is glued in. The other devices typically need to be pried open, but the battery is on an connector. (I finally got something other than a Toshiba Thrive when the last spare's screen cracked - removable battery, 1 hour charge time). Apple can if they wish crate a split iPhone device with a battery pack with all their industrial design. I doubt it will happen. It would be thicker. "Oh, but you can buy an external battery pack with expensive complex adapter that lets the iPhone charge".

Eric Raymond long ago noted it was a battle, and Android's OODA (orient, observe, decide, act) loop was faster, 3 months or less. Apple's is still one year. Android is the tortoise that slow and steady, beat the hare. 1000 small incremental improvements will beat all but a game-changer redefining change. I forgot when he predicted Android would pass Apple, but it was before this and it has happened. Apple now has deluxe, luxury, also-rans. The think about quick innovation is you can add stuff, and see if it sticks. Stylus (like my Nokia 810)? Oh it works, we need more. Oh, no one cares, then don't push it.

They won't drop the actual price of the iPhone. They will give a $200 gift card, rebate, or something else.

[E.Casais]

Tomi is going a bit overboard today, but at least he makes forecasts about sales, growth and market share that will be relatively easy to check when the time comes.

There are a number of things that Apple will probably not change any time soon anyway:

1) FM radio? This bypasses Apple cloud services, and Apple has therefore no interest in it.
2) SD-card? Requires a profound change in the UI and mode of operation of the device. Too complicated.
3) Replaceable battery? A departure from Apple design and manufacturing practices and constraints. Not going to happen.
4) Slide keyboard? Goes against the entire touch-oriented design of the devices and OS, and would be probably as painful to integrate as integrating touch was for keyboard-oriented OS and UI. No way.

I doubt that bigger display is strictly proportionally better in the mobile device space (i.e. decreasing returns on usability), so the display dimensions of iPhone 6* are in line with the industry.

The two elements that are a bit of a let-down in a flagship are indeed the camera (but Apple always trailed in that area), and, to my surprise, the absence of wireless charging.

Perhaps Tomi is right: Apple was devoting much time to its smartwatch, and to the development of a payment scheme with NFC, and would not deal with other features for the risk of making a half-baked implementation.

We shall see how it goes. The point that nobody has touched yet here is the impact that a growing number of display variants (different resolutions, definitions and physical sizes) will have on apps and website developers. That is where things might become tricky -- even if Apple does its homework with iOS 8.

[Markj]

Apple is just now in 'me-too' mode? Regarding specs, haven't all the critics, including Tomi, been saying Apple was in me-too mode since back in 2008? Other than multi-touch, some sensors and possibly the 3.5" size display, which debuted in 2007, hasn't Apple been in me-too mode since? Copied 3G then 4G then LTE, copied 5MP then 8MP camera, copied flash (for camera) and OIS (finally), copied 3rd-party downloadable apps and App Store, copied "cut-and-paste", copied 4" screen then 4.7" and 5.5" screens, copied 3rd-party keyboards, copied having more than one new model per year, copied having slightly-lower-cost new model, copied fingerprint scanner, copied maps, copied voice control/personal assistant, copied cloud storage, copied higher pixel-resolution displays (after Retina), copied NFC, copied payments and mobile wallets, etc.

Is there anything Apple hasn't copied from a list-of-specs point of view since 2008? Ah yes, 64-bit wasn't copied (but it's already been done for PCs so still a copy in a sense); irregardless, the critics say it's a useless feature in a mobile device, right?

And even worse, what about the specs that Apple has stubbornly refused to copy for the last 7 years like FM radio, physical keyboards, Flash player, removable batteries, SD card storage, multiple windows, the back button, 2GB RAM, etc? How come none of this has stopped Apple's continued steady handset sales growth?

Plus, hasn't the competition been getting better and better and cheaper and cheaper since 2009? Wasn't the Palm Pre better and cheaper? And the Galaxy S3, then S4, then S5 better and cheaper (since even though they started at the same list price, they got discounted much sooner)? And the Nexus family better and much cheaper? And even some of the Nokia and DoCoMo handsets?

But this year, it's going to be different. Wait, they said that last year; okay, so it will be different by next year. Or the year after.

"At some point the relevance of that issue will come home." But Tomi, when exactly are you predicting is that "some point"? You said watch out for price drops but are you predicting that price drops will happen by Christmas or Chinese New Year? Are you predicting that Apple will never go beyond 8% of handset sales so no more growth beginning now?

[RottenApple]

Ha, ha.

The Apple defenders are really funny.

For anyone not locked into their prison (pardon: ecosystem) it's abundantly clear that all their design decisions are only made to squeeze their users dry. Vital features are crippled because it'd bypass Apple's moneymaking antics.

The worldwide market share numbers tell a clear sign: Apple is not really growing its customer base, and their new products are increasingly geared towards those who are already Apple users.

Fact is, there are strong signs of severe internal rot. But this has one nasty property: Its external effects are not readily visible, the company can go on for several years along the bad path. But the end result is always the same: At some point the rot will break through and the business will collapse. Just look at Nokia or Blackberry. Apple is not even close to these two at the end of their lifespan, right now I'd place them at the same point as Nokia when iPhone and Android appeared on the market. Instead of adjusting, Nokia went along its chosen path like a tank, and for some time it still managed to overrun the obstacles in their way (which of course made the management think that everything was fine), but when the final insurmountable obstacle showed up, they went in it with full speed and never recovered from the damage.

Good business strategy is not about making the most money in the next quarter, it's ensuring that your business still works 5 years down the line - and with some of the things Apple is doing right now I have my doubts about that. As Tomi said (and I also did in a comment in the iWatch discussion), Apple's entire business by now depends on the iPhone remaining in a strong market position. If the iPhone's market share shrinks below a critical point, it can become catastrophic for Apple, because their entire business would break down - not just phones, but also computers, smartwatches and all the money-milking appliances that are hooked into this system. Apple simply cannot afford to continue to play business as usual, they need to grow their customer base, which means they should start to rethink some design decisions that have been driving people crazy for years now.

That alone should be reason enough for Apple to:
a) expand into lower profit segments of the market
b) listen to what users want. Expandable memory and replacable batteries are need-to-have features for lots of people that are constantly being driven away by Apple. That's just supremely stupid.
c) be a bit less greedy.
d) allow the user a bit more freedom. Don't be such a control freak about every minute detail the user may do with their phone!

I know that current Apple users don't care about these things - but as it stands issues like these have been a strong obstacle to get more users onto their platform.

Oh, and one final word about the phone itself: Aside from the larger screen there's not much to write home about. NFC is finally in, but that's it. And of course, instead of developing a unified payment system, Apple again goes the greedy route, cooking up their own thing and creating more mess in the market. I really can't say I'm excited, as a non-gamer this doesn't offer much to me, my current €150 5'' Android phone just does thejob fine, at a fraction of this extortionist price.

[sve]

Apple copies all their competitors' features. Except one: their profitability.

[AppleTurfer]

@RottenApple - Apple's market share has gone down is debatable. Apple's share of the mobile phone market continues to rise. What you have is a erasing of the line between feature phone and smartphone. $100 Android phones are competitors to feature phones, not the iPhone and not the Galaxy line. So, really, if one MUST include the cheap Android phones, might as well consider all mobile phones.

Apple not growing it's customer base? I'm surprised to see you make that mistake. Market share is not the same thing as customer base. Apple continues to grow it's base. The growth RATE has slowed, but they are still growing.

Apple will probably never put in radios. But there are lots of radio apps that are free and thus don't give Apple any money. Wouldn't hold my breath for repleacable batteries, keyboards, and the like.

Apple did finally increase the screen size. We all knew they would. But they are criticized as copying. So which is it? Should Apple copy or should Apple continue to "keep desired features away from customers"?

No, what Apple does is take their time to do WHATEVER they do, to the best of their ability, and according to their own priorities and timeline. Last year Apple worked on the 64 bit chip, 64bit OS, 64bit tools and fingerprint biometrics. This year Apple put out bigger screens after they came up with a processor that could handle the resolution translations such that all the million+ apps that already exist "just work". Look great. Look far better than the apps using Androids method of handling the gajillion different screen sizes and resolutions.

But there's more. They made the phone much thinner to offset how big the screen is and still fit nicely in the hand. To give extra help for one handed use (a high priority for Apple), they came up with an innovate way to help the large screen version via the double tap to bring down the far top of the screen into thumb range.

That's the Apple way and hundreds of millions of customers prefer it.

[Henry Sinn]

One thing I do hope we'll all see from the introduction of the new iThings is further / faster adoption & movement of NFC based credit "card-less" payments (using Mastercard PayPass, VISA Paywave and related Apps on phones)

Apple are probably the only company that can give the birdie to the banks and operators and dictate solutions. (Seriously - WHY do we NEED a SIM card in a phone to make an NFC payment? Look at how your plastic PayPass & Paywave credit card works now.)

Questions obviously remain as to whether Apple with take a cut, or try to take a cut of transactions on top of VISA and Mastercard

Love your thoughts on this in another m-commerce blog Tomi

[TDC123]

@Tomi,

"TDC - you clearly are a privleged rich kid in the USA. Just because someone lives in a country of bad electical grid reliability, doesn't mean there aren't plenty of affluent people, indeed very rich people. They too will want premium smartphones. If you think that living in Pakistan or Sri Lanka or Kenya or Nigeria with unreliable electricity means there are no millionaires or even billionaires you are simply an ignorant rich kid who should not be let out of his home before you've studied the world economy a little bit, at say basic high school level."

WOW! LOL! :D That's a bit presumptuous. I am from India.

Anyway, Apple owns the high end market and I would bet that all the millionaires and billionaires in these regions would most likely be owning an iphone.

[abdul muis]

@Vikram

"Actually the iPhone Camera is generally considered by professional photographers to be the best overall in their images. Some consider the Nokia 1020 and such to be better in certain situations."

Really?? From many blind test in smartphone flagship i.e. Galaxy Ss vs. iPhone vs. Sony Xperia Zs vs. Lg Gs vs. Nokia Lumias, I never saw apple won any match.