There is no Apple iPhone 5. At least not yet. The much-hyped announcement on Oct. 4 revealed that there will be a new version of iOS and an improved iPhone called the iPhone 4S. But the much-anticipated iPhone 5 was never mentioned.
Perhaps the biggest news was that Sprint will finally get an iPhone. But the plans for eventual world smartphone domination by Apple haven’t been shelved. Those plans are just progressing along a slightly different path than the prognosticators thought.
The bottom line is that the iPhone 4S eliminates many of the iPhone 4’s shortcomings. It has an internal antenna switching system that should reduce if not eliminate the problems with the original antenna causing signal loss if held the wrong way. The new iPhone 4S has a much faster processor, better graphics, a better camera and high-definition video. Perhaps more important over the long term is that all iPhone 4Ss will be world phones: They will work with both Code Division Multiple Access (CDMA) and GSM networks. The price will remain the same as it was, with the iPhone 4S starting at $199 with a two-year contract.
The dual network provision is a real convenience for iPhone customers that travel, but it’s better yet for Apple because it simplifies its manufacturing. Apple only needs to make one phone with a choice of case colors. Ultimately, this will lead to a lower cost for Apple when it makes the iPhone 4S. That lower cost could ultimately lead to more iPhones globally, where price is a very significant factor and subsidies are rare.
But Apple isn’t planning to build a global market for the iPhone on just the iPhone 4S. The original iPhone 4 will remain on sale and cost $99 in the United States with a two-year contract. The iPhone 3GS will be available for free with a two-year contract. In other words, Apple is bringing the iPhone out of the realm of luxury products and into the world of real people. As long as one of the carriers that sells the iPhone 4 and 3GS is in your area, there’s little reason not to buy one.
Perhaps the other reason Apple will make a big impact on the world of smartphones is the release of iOS 5, which adds a number of much-needed features, such as Siri, a personal assistant using voice recognition; a version of Safari with tabbed browsing; and iMessage (Apple’s version of BlackBerry Messenger), a notifications bar that’s revealed by flicking your finger down from the top of the screen-like the one in Android devices.
iPhone Needs to Reach Small Carriers
iOS 5 also offers access to iCloud, which can provide wireless backup and music storage and a newsstand feature that provides access to magazines and newspapers. While it’s hard to tell from a remote briefing, it appears that additional functionality has been added to its geographical services, and that iTunes will be more flexible as well.
The iPhone 4S will be available in the United States Oct. 12 and worldwide by the end of October. But the next question is, how long after that will the iPhone be the dominant smartphone model around the world?
At the beginning of his talk, CEO Tim Cook pointed out that Apple only has 5 percent of the world handheld device market. Cook said this was because his numbers include all devices, not just smartphones. He also said that someday all of these devices will be smartphones and that Apple will hold a dominant role.
But to accomplish that, Apple has to do more than just introduce a new version of the iPhone, as nice as it might be. And the company has to do more than drastically lower the prices of subsidized phones in the United States, even though a free iPhone is really cheap. More than anything, Apple has to find a way to make the iPhone carrier agnostic. All of those smaller carriers, from T-Mobile to Cellular South to Cincinnati Bell, also need to have access to the iPhone.
Likewise, the iPhone price outside the United States needs to come down to prices that more people can afford. With iPhone prices in some places being more than $1,000 each, outside the United States, the iPhone is very much a luxury item. While the iPhone sells for reasonable prices in many places outside the United States, such as Western Europe, the vast majority of cell phone users aren’t located in North America or Europe.
This means that for Tim Cook to realize his vision of growing past that 5 percent penetration level, Apple has to do something to make the phone more available. The two big things are to make the phones less expensive outside North America and Europe and to make the iPhone available to users of a much wider selection of carriers.
While Apple has been selling an unlocked version of the iPhone that will work on GSM networks for a while, it’s not priced so that most people other than wealthy users or businesses can buy it. For Apple to move beyond 5 percent, it has to change that approach.