By innovation only. Yet another iPhone launch

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Apple’s September 10 event ‘By innovation only’ marked the autumn season of premium smartphone launches. It is also a bellwether of what we can expect from the technology sector.

Mark Twain’s ‘History doesn’t repeat itself, but it rhymes’ fits especially well in the smartphone business. From a consumer perspective Apple’s 2019/20 iPhone range is basically the same phones but with more camera features. Other vendors are going to come out with handsets with more camera and 5G modems.

All of them are going to be trapped in the same pictures-under-glass metaphor. The smartphone industry as a whole (with the iPhone as bellwether) is trapped in its own version of groundhog day.

5G? Not so fast

Whilst 5G sounds good on new handsets, there’s five points to consider:

  • Early generation handsets for a new wireless standards tend to have poor battery lives
  • 5G phones are only as good as 5G networks
  • There aren’t applications to make use of 5G networks
  • A lot of mobile usage happens on home or other wi-fi networks. 5G is competing with your home broadband connection rather than your patchy cellular connection
  • 5G isn’t really about smartphones

When you see all launches (like this picture from the Huawei Mate 30 launch); just remember the five points above and process the slick technology spin through this lens.

5G competition isn't cellular its wi-fi on smartphone

In Huawei’s case they’re basically launching very pretty €1,000+ 5G Mi-Fi hotspots with point-and-shoot camera functionality, since they’re an Android phone without access to Google services. The Porsche Design variants come out at closer to €2,500 – ideal for bored, but patriotic 土豪.

Price inelasticity

Apple’s iPhone X and XS models tested the the price elasticity of premium smartphones. The market spoke. This year’s prices have stayed the same rather than increasing. You could argue that the value proposition has increased through a year’s worth of bundled services. Of course, its only worth anything if you use the services.

Differentiation through services

Seven years ago I was sat in a hotel restaurant in Seoul and overheard Flipboard going through a pitch they wanted to deliver to Samsung. Samsung eventually tried out Flipboard and free content subscriptions to help sell the Galaxy S3.

Apple decided to build their own free subscription model based around streaming video. This is to:

  • Differentiate its new devices from competitors
  • Provide a recurring revenue stream from iPhone users with older devices
  • Utilise the massive data centres that Apple has been building for the past decade

Built to last

The use of superior materials has resulted in iPhones lasting longer. Add this to pricing and for many people, their first iPhone is a pre-owned iPhone. They are handed down in families or to older relatives. This has built Apple a large user base. The big question is whether they can turn this footprint into services.

There is a tension between new phone sales in a saturated marketplace, versus a growing base of service users.

More information

Apple Live Event: Apple Cuts Prices for Sales, New Subscribers – Bloomberg 

Apple Event: Upgrades, Upgrades, Upgrades – Tech.pinions 

The iPhone and Apple’s Services Strategy – Stratechery by Ben Thompson 

Apple is making its iPhones last longer. That’s a good thing | Macworld