Apple Rumors: The iPhone 6, the iWatch and the Apple innovation engine

What and when will the next iPhone appear and will it be the iPhone 6? I blogged back in October 2011 at the disappointing launch of the iPhone 4S which was Apple's first major product launch post Steve Jobs that I thought that there were signs that the world's greatest industrial innovation engine was slowing. This has undoubtedly turned out to be true and Apple are now under serious pressure with their stock falling consistently. I am an avid watcher of Apple rumors mostly because I think they are a fascinating organisation that is going through huge change right now.

What is going on at Apple (I think)…

The press and markets are in a frenzy at the moment as hedge funds and investors drop Apple. They say that Apple are losing the war against Samsung in the high end mobile phone market, have no cheap iPhone option for developing markets and haven't released a breakthrough innovation in years. Here is what I think is going on……

The truth is that Apple have only started to come to grips with the loss of Steve Jobs in the past few months and what's more we shouldn't be surprised.

Steve Jobs was the tech-genius of his generation – a unique and irreplaceable leader. His loss will be felt in Apple and the world for many, many years. From the many people who I have talked to who have worked at Apple – it is an egotistical, difficult and political place to work. Remove the king pin from this type of corporate culture and a power vacuum results. This creates in-fighting and a land grab. Tim Cook has only recently started to come to terms with this with his sacking of Scott Forstall in October after the maps debacle and the appointment of Jonny Ive as a Steve Jobs replacement responsible for both hardware and software.

I think the top team at Apple are only now coming to terms with the absence of Jobs and in a place where they can get back to the tough process of innovation. They have some key challenges which they need to overcome in order to deliver a series of launches and products which will either underline Apple's dominance as an innovator or start the Microsoft style slow steady decline to mediocrity. With the up and coming changes to the iPhone franchise, the iPhone 5S, iPhone 6 or iWatch Apple need to prove their innovation capability in a post Jobs world. 

The most pressing problem for i-devices is software not hardware

iOS which spans iPhone, iPad is increasingly becoming THE operating system for Apple but it is not just looking old and tired but is behind on key usability features. The core strengths of iOS were always its functionality, usability, ease, consistency and reliability. It is still easy to use, consistent and reliable but it is now lagging in core features to make life and communications more functional. Android and Blackberry 10, even Windows 8 Phone, now have a significant advantage in really useful features that bring information, communication and organisation to my day. For example Blackberry with it's Personal and Office modes, or Windows 8 Phone with live tiles that tell me the weather, or Android with it's more integrated message centre. All these developments have left iOS lagging. Witness the wild success of the Evasion Jailbreak on iOS devices: 8,000,000 downloads so far to see how much demand there is for more functionality and flexibility. 

Here I am hopeful that the integration of software under Jonny Ive will deliver major benefit and improvements in functionality.

I think iOS 7 is going to be a big deal and it needs to be.

It needs to take the elegance and robustness of iOS and combine it with a more integrated and seamless communication feature set. Email needs to be overhauled, messaging needs to become integrated, communications from contacts integrated across channels, there are many improvements that can be made. It will also have a facelift I think. All this needs to be delivered in the next iPhone device which leads me onto my next thought on Apple rumors….

iPhone 5S will be next around April 2013, then the iPhone 6 in late November

Apple iphone 6 iphone 5SWhen is the next iPhone due? There is no doubt in my mind that Apple are convinced that the iPhone 5 is a good product and a worthy competitor to the Samsung SIII – Apple still believes in high end design principles based on consumer usability rather than fancy feature packing. And shipments back them up! The iPhone 5 continues to sell in huge numbers it was the No. 1 selling smartphone in Q4 2012. Yes the momentum in the market is for bigger smart phones. Samsung will reportedly launch their SiV in March and are manufacturing 100 million units. However I think that the next iPhone release that Apple will launch is a iPhone 5S with better specs, new iOS 7, a better camera, fingerprint reader (based on their acquisition of Authentec) and possibly NFC in April 2013. This next-generation iPhone would constitute a really good package that would sell on a par with the Samsung SiV. Pundits need to remember that there are millions of people locked into iOS, apps and music that can't easily change to Android or another system. This lock in keeps them loyal – with new hardware they stop being frustrated. 

However I do think that Apple will launch a larger screened (up to 5 inches) iPhone by late in the year. I think it will be longer not wider but will contain an IGZO screen that are stunning, thinner and better on battery life. This would represent a very strong new iPhone 6. It could be thinner, higher resolution, with longer battery life and with continued improvements in iOS 7 would again represent or be on parity with the best hardware in the market.

I also think that the cutting edge latest iPhones will continue to be premium priced. I cannot see any logic in Apple starting to launch cheaper products made out of worse materials. The only substantive difference between Apple hardware and others is it's feel, durability and premium quality. A Google Nexus 4 or a Samsung SIII just feel cheap compared to an iPhone. That's not to say that Apple won't refresh the iPhone 3 or 4 with updated specs and possibly cheaper, easier to manufacture changes that would mean the price point can drop to suit Chinese and developing market consumers.

The big test of the Apple innovation engine is coming 

With Google Glass, various start ups pushing wearable technology and the continued copying of Apple ideas and design ethos – Apple face a stern test. The strength of Apple as a company is that they take ideas which are breaking through and design them brilliantly so that they stand the test of time, and are so far ahead of the market that they retain a price premium for years. That's what the iPhone and MacBook Air have done. 

Let's be clear Google Glass is still a concept – they cost $1500 for goodness sake – hardly a mass consumer price point. What Apple are working on, from what I hear are technologies that create new mass markets. Wearable technologies are undoubtedly the next big battle ground. Whether it is an iWatch or an arm based iPad or indeed glasses Apple need to deliver a product which is truly functional, useful, elegant and able to capture the imagination and wallet of the mass consumer market. My personal take is that Apple will launch an iWatch either towards the end of this year or in Q1 2014. I doubt it will be before then because they will need to overcome the significant manufacturing, durability and functionality issues that will come with wearing the hardware on the wrist so close to the skin.

But let me underline that Apple needs to do something big.

They are a secretive company, they don't show off early stage products like Google have done with Glass. Jonny Ive says that the iPhone took nearly a decade of pushing and development to get to launch. Apple don't have a decade but given they are still the only fully integrated hardware and software company in the world they have some time to get their next big innovation ready – but, as they know, the clock is ticking not just on them creating an innovation but underlining that they have finally moved into a post-Steve Jobs innovation engine. 

What's your view on Apple rumors, the iPhone 6, the iWatch and Apple's innovation capability – why not leave a commnent?

UNDER COOK-ING APPLE

Today was a BIG day in the life of one of the world’s great companies and brands – Apple. “It’s a beautiful day in Cupertino” was the twitterers’ most frequent comment this afternoon as tension built for Apple‘s “Let’s talk iPhone” event scheduled for 1pm West Coast US time.

Would they? Wouldn’t they (announce the iPhone 5)? Hardware or software focus? How would the largely unknown Tim Cook’s first outing as CEO go down?

For months Apple has been dominating headlines: from Steve Jobs stepping down as CEO to their vying for the spot as the largest company in the world by market capitalization with Exxon to Android signing up 1m activations a day.

The pressure from customers, shareholders, employees and the media was and is immense.

So what was the impact of all this on the brand, reputation and trust that millions of customers, investors, and journalists have in this iconic brand? Well I’m going to go out on a limb, and I don’t get any joy out of this (even though I’m writing this on a PC), that based on today’s presentation there are definite blemishes appearing on the Apple shine. Whether these blemishes turn into rot for the business remains to be seen but they are worth delving into.

Firstly, the good-ish news. The presentation finished with a major flurry which was the announcement of Siri – “a humble personal assistant” – as she/he/it put it themselves. This is a voice activated assistant feature which has the potential to be a major breakthrough in human-machine interactions making life simpler for the many of us who battle with too large thumbs and “how do you do that again” forgetfulness. The demo was impressive and the functionality clearly class leading. The implementation of this technology for human benefit is where Apple is fantastic but the worrying element here was that this technology was gained through their acquisition of Siri in April 2010 for around $200m. It was a smart move to acquire but it’s not a home-grown innovation.

The major issue for Apple which will, I suspect, hammer their share price for the next few days was that they didn’t announce a new iPhone but an upgrade to the iPhone 4 called the iPhone 4s. They called it “a completely new inside” – based on the A5 chip but it looks identical to the iPhone 4. The lack of the iPhone 5 is bad given that they now haven’t launched a truly new model in over 16 months and that pent up demand is massive. Apple’s pace of innovation is slowing and I don’t believe that with the iPhone 4s they will give enough people enough of a reason to upgrade. This means that they are missing growth and market share protection opportunities.

In this first post -Jobs event they relied on software, namely Siri and iOS5 to carry them through. Whilst there are many good features included they are primarily just catching up to features already available on the latest Android handsets. The lack of true innovation here was underlined by the 5 minutes spent talking about a hardly earth shattering feature to send physical greetings cards through the post via Apple to anyone around the world.

These issues were compounded by the presentation being quite boring and more corporate than I’ve ever seen from Apple before (however I was only following it on Engadget and Twitter – maybe it was scintillating in the hall?). For the first 45 minutes from the reporting I read the loudest cheer seemed to be for an iPod nano clock face featuring Mickey Mouse! The now legendary presentation style was polluted – lines such as “integrated clip” as a major feature of the iPod nano made it through the editing process. Slides and slides of the A5 chip in the iPhone 4s dominated with stats such as “26% better this” and “7x better that”. After an hour Twitterers were clamouring for a headline announcement – the 140 character frustration was palpable. What was lacking were any real strides forward in terms of Apple’s core competence which is making technology beautiful and simply to use. I’ve no doubt the iPhone 4s is better than the iPhone 4 but I don’t want one enough to make me switch. That, for Apple, is a problem.

After all is said and done and the yards of coverage are analysed the deeper issue here is whether the Apple brand and organisation can continue in a post-Jobs world to deliver outstanding innovation and design that commands irrational loyalty, trust and price premium. What was delivered today was largely incremental improvement. Steve Jobs was said to have a “reality distortion field” that allowed the organisation space to create whole new paradigms with products such as the iMac, iPod and iPhone. They truly led the market by understanding consumer needs – not at a “focusgroup” level by responding to what is said – but by looking beyond the surface and harnessing this as a driver of wild organisational imagination.

I hope we haven’t seen the beginning of the end of the Apple of old and the beginning of a more “corporate” less outstanding company. Either way the pressure on Tim Cook and his team won’t be any less tomorrow than it was at 12.55pm today. I wish them luck.

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UPDATE: I’ve just been reading the first analyst reactions and they seem positive towards the iPhone 4S but not from an innovation perspective but rather because of increased distribution via the deal that Apple have struck with Sprint. Whilst this undoubtedly increases the addressable market my fear is whether this indicates that going forward Apple’s growth under new CEO Tim Cook will be less about game-changing innovation and more about business tactics. Is this always the way when a numbers led CFO takes over from a visionary founder?

Justin

justin@basini.com