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  • Surprise: iPhone 5 is Still Tops!

    July 11th, 2013

    So you’ve probably read all the chatter in recent months that the iPhone 5 was a huge failure, that it didn’t meet Apple’s expectations or the expectations of industry and financial analysts. This meme has played out over and over again, even though Apple continues to report higher year-over-year sales for iPhones.

    Well, there’s one analysis, from Canaccord Genuity, an investment bank that claims to operate in 12 countries, which reports that the iPhone 5 remains a success around the globe, and was the top seller last month “at essentially all global carriers.” Now the assessment comes with some cautions that I’ll get to in a moment. But understand this news comes only a couple of months after Samsung’s highly praised Galaxy S4 smartphone appeared. So we’re talking about a product that’s aging according to smartphone industry standards, having been introduced last September, yet it still outdoes its fiercest competitor.

    To be fair, this survey is a half-full and half-empty document with some downsides, aside from not being based on actual sales from the manufacturers of course. One is that Samsung is catching up to Apple; another is that Samsung is ahead of Apple when all handsets are counted. But that’s nothing especially surprising. Apple sells a current model iPhone and two older models. Samsung sells loads of different handsets, some of them exclusive to a specific country. There’s no way you can possibly do a direct comparison, except for alleged sales totals. Besides, Apple still earns higher profits per unit. Although Samsung also gets good profits, it’s doubtful they come from all those cheap handsets with which they clutter the market.

    Yet another caution is the claim that sales of high-end smartphones are softening, which may be based on the fact that the Galaxy S4 isn’t meeting expectations. I suppose we’ll see what happens when the next iPhone appears.

    One problem, as I’ve said before, is that Apple is judged by a different standard. The company is expected to reinvent a market every six months, even though such revolutions are rare, even for Apple. I understand the “what have you done for me lately” concept, but it’s not that Apple is actually late in delivering new products. But maybe they were early, witness the fourth generation iPad, which came out last fall. That model would probably have arrived this spring otherwise, at which point Apple would have been credited with delivering a new product on schedule. Besides, Apple has already promised new gear for this fall, so wouldn’t the complaints be justified if they failed to fulfill those promises?

    Certainly, we know what some of those products are now, because they have already been announced. There’s the Mac Pro, for example, which can certainly be credited with being one of the most unusual personal computer designs in recent memory. Some want to connect it to the failed Power Mac G4 Cube (from cube to tube), but Apple is touting power ahead of the unique looks this time. Sure, some may rightly complain about the lack of internal expansion. But those who need the most expandability are already using external peripherals, since the existing Mac Pro doesn’t offer enough expansion for the needs of some. Apple is betting that six Thunderbolt 2 ports will provide greater flexibility. I suppose we’ll see what sort of peripherals accompany the Mac Pro when it actually goes on sale. Anyone who complains about that now is wasting their time, and ours.

    iOS 7 is also getting its share of brickbats, but it seems that many of the criticisms focus on the new theme, rather than functionality. You almost think some of the complainers just can’t get past the thin lettering. But it least Apple can, since it’s reported that iOS 7 beta 3 uses thicker fonts in some places, supposedly to improve readability, particularly in bright surroundings. Once the final version is released, we can see how it works in the real world. Indeed, some of the most vociferous complaints may come from people who don’t seem to have used the betas; they just looked at the pictures.

    As to the iPhone, there seems little doubt that there will be a new version by September, and maybe there will be a cheaper model as well. That Apple continues to sell older iPhones makes it clear they understand that many customers don’t care about the top-of-the-line, or just don’t want to pay extra for the luxury. The real question is whether a cheaper iPhone will be affordable without a carrier contract. Regardless, Apple is not going to go to the gutter to compete with Samsung and other handset makers on price. After all, who makes money on that cheap stuff anyway? Samsung is already warning Wall Street about reduced profits.

    In any case, the argument over Apple’s alleged failure to innovate after the death of Steve Jobs in 2011 will never end. It doesn’t matter how well Apple does when the quarterly financials are released later this month. Some are never satisfied, at least where Apple is concerned.



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    4 Responses to “Surprise: iPhone 5 is Still Tops!”

    1. Ted Schroeder says:

      When it comes to Apple’s critics, I think this guy’s blogpost on the Harvard Business Review is quite good:

      http://blogs.hbr.org/pallotta/2013/01/the-market-wants-apple-to-unve.html

      And though it’s a little on the conspiracy theory side, I think many of the critics (Forbes, Fortune) are co-operating with the big players in the stock market. It’s the old Jim Cramer strategy* writ large.

      Overall, I’m worrying about the whole walled garden/proprietary format thing versus open formats. I think that users more and more want something (whether it’s movies or documents or whatever) that play well with others. I think that the days of a Word doc being king of the hill, so to speak, are slowly coming to and end. People would like their movies to be able to play anywhere, not just on a particular device. And people would like documents in formats that do not need a specific application. There’s no particular app you need to open a jpg, so why should I need MS Word to open a .doc file or have to use Apple TV to watch a movie?

      Apple may be noting such sentiments – there are rumors that iWork for the iCloud will be free to all users of iOS devices. It might be worth thinking about making the web version free to everybody.

      More my perception based on anecdotal evidence than my own opinion.

      Also, I’m a little worried about what seems like Tim Cook’s decision to release new versions of products all at once in the fall to capitalize on the holiday buying season. It seems like it dilutes the buzz of each new thing and crowds the market.

      * http://www.youtube.com/watch?v=c6gxPCurDJs
      He starts talking about how he manipulates AAPL at about 3:35.

    2. Articles you should read (July 11) …. says:

      […] “Surprise: iPhone 5 is Still Tops!: So you’ve probably read all the chatter in recent months that the iPhone 5 was a huge failure, that it didn’t meet Apple’s expectations or the expectations of industry and financial analysts. This meme has played out over and over again, even though Apple continues to report higher year-over-year sales for iPhones.” — “The Tech Night Owl” (www.technightowl.com) […]

    3. Constable Odo says:

      Forget it. Apple is getting creamed by all of its rivals. Look for Wall Street to tear Apple shareholders to shreds come July 23rd. Timid Cook is less than useless as a CEO. Both Jeff Bezos and Larry Page know how to run highly-valued companies. All Timid Cook can do is stockpile cash that’s doing absolutely nothing for shareholders. Apple could be using that money to build the best smartphones money can buy, but Apple gets continually upstaged by Android smartphones that are made out of plastic with the highest specs under the sun. There’s almost nothing that stands out on the iPhone that puts Apple well out in front of the pack. Android smartphones shouldn’t even be in the same league as iPhones if Apple spent more money on R&D. Samsung can take any iPhone design and in a month make it better for Android. There must be some reason why Apple has become the laughingstock of the tech industry and it’s a near universal conclusion that Apple has nothing more to offer after Steve Jobs died.

      • @Constable Odo, Without dissecting this nonsense phrase by phrase, let me just say that a smartphone is not necessarily better because it has more specs. I can tell you about the shortcomings of the Galaxy S4, for example.

        Your universal conclusions are not, my friend, universal.

        Peace,
        Gene

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