iPhone 5’s Lack of ‘Wow’ Factor Levels The Smartphone Playing Field

by Trefis Team
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Apple (NASDAQ:AAPL) announced the much awaited launch of the iPhone 5 at a media event Wednesday, confirming most design and specification related rumors that had circulated the web prior to the launch. The next-generation iPhone features a redesigned new look, sporting a larger 4-inch retina display and a form factor that is slimmer and lighter than the previous version, the iPhone 4S. On the inside, the phone has received some well-anticipated upgrades in the form of a faster A6 processor and a baseband chipset that supports 4G LTE speeds, as most had hoped for. The new phone will be available for pre-order starting September 14th and go on sale from September 21 onward.

While the event may not have shed any positive surprise in terms of a new feature or an unexpected design change, with the media event proving to be a dampener of sorts for many, we see this having little near-term impact on iPhone sales which may in fact receive a boost from the pent-up demand going into the holiday season. Morever, this is probably an indicator that the smartphone industry has reached a stage where little in terms of a revolution is possible, while immense scope still remains for incremental evolution of existing features. However, with the basic smartphone paradigm set, Apple will probably need to work harder in the coming years to differentiate itself from rivals such as Samsung, whose Galaxy S III is seeing strong demand, and Microsoft, which is making a reinvigorated assault on the mobile industry with its new Windows Phone 8 OS.

See our complete analysis of Apple here

Competition heating up but emerging markets key

Samsung, for one, has gained a lot of smartphone market share recently. Last quarter saw Samsung take a decisive lead in the smartphone market, selling almost twice as many smartphones as Apple. As a result, its market share doubled to more than 36% in Q2 2011 from about 18% during the same period last year. While most of its market share gains have come at the expense of struggling rivals such as Nokia and RIM, and as a result of the number of low-end Android smartphones it has flooded the markets with, Apple will be wary of the recent success that Samsung’s Galaxy S III has enjoyed at the top-end of the market. Samsung announced recently that it has sold more than 20 million units of the flagship phone in about 100 days since launch. (see Samsung’s Galaxy S III Success Ups The Ante For iPhone 5)

Microsoft, on the other hand, has a lot of catching up to do but it has an able partner in Nokia. The tech giants, who are collaborating to create a third ecosystem of mobile devices alongside Google and Apple, may have failed to create much buzz with their recent announcement of Lumia WP8 phones. But some innovative features that made their way into Lumia such as wireless charging and the novel Pureview imaging technology could help differentiate the WP8 smartphones from the iPhone and most Android devices. These combined with the intense marketing that will follow the Windows 8 launch could help WP8 devices emerge as a serious contender in the smartphone market. (see Nokia Announces Lumia WP8; Likely To Wait For Windows 8 Launch Before Shipping)

With competition heating up and the difference between the iPhone and rivals gradually diminishing, Apple will look to the largely unexplored emerging markets to keep the upside potential intact. China, for example, holds a lot of promise for Apple considering the huge 2G subscriber base that the carriers there are trying to transition to 3G (3G penetration is currently only about 18% in China and growing at a good rate). A deal with China Mobile, the largest carrier in the world by subscriber base, looks likely now that it seems Apple has used Qualcomm’s MDM9615 chipset for LTE, which incidentally also has TD-SCDMA support. This could instantly double iPhone’s addressable market in China and act as the next big boost to its stock, considering that the iPhone accounts for more than 55% of the company’s value by our estimates. (see China Mobile In Talks To Offer The iPhone; Can Alone Take Apple Past $800)

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  • commented 5 years ago
  • Nothing to say 'WOW', Well I would agree thats a general perception and probably also justified given the last two releases of iPhone have actually introduced something fresh to the table, great rectangular design and retina display in 4th version and Siri in the 5th version which have has been followed largely by all the key competitors, this time around however as far as the features are concerned nothing revolutionary as such from Apple to boast of, probably they set the standards too high for themselves. However I feel that the new iPhone design is underrated on paper and would actually speak about revolution while in use primarily because of two reasons 1. The larger yet lighter and extremely usable design as compared to the peers with wider screens and noticeably heavier than the new iPhone, if its about a stationary gadget on the table it hardly matters but something like a phone I would definitely prefer iPhone over others. 2. Further enhanced Siri to include sports and food, these are precisely calculated steps from Apple in the right direction as far as expanding Siri's service base is considered and would definitely extend the advantage for them on the AI front. Not to forget Apple is still the best in class when it comes to user experience.
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  • commented 5 years ago
  • 72 hrs after launch, Apple announced sellout that
    will require a wait of another two weeks for those
    wanting to purchase the iPhone 5. Trefis advice
    is slipping badly lately.
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  • commented 5 years ago
  • What would it take to (WOW) some people. I don't see very many consumers preordering a Samsung phone. The consumer has spoken and if you go back 2 years Apple's iPhone was ahead of all of its rivals they WOWed then and they will WOW in the future. The other companies copy what Apple seem to do naturally design and integration of technology into our daily lives. Steve made sure careful plans were laid before he left us