Feature Article

September 13, 2012

The iPhone 5 is Evolution Truly at its Best - It Will be a Huge Launch

During the big iPhone 5 announcement yesterday Apple played a short video that speaks to how the iPhone 5 is manufactured. Aside from the electronic components, there is a critical "mechanical" manufacturing component to the iPhone - as demonstrated in the video - that simply cannot be matched by any other smartphone out there - and this includes Nokia's polycarbonate bodies for its Lumia phones - which are nice but simply cannot match the precise feel one gets from an iPhone. True, this is a subjective issue, but we've never met someone who did not appreciate the qualities of, say, a new Porsche 911 Turbo Carrera - which the iPhone distinctly reminds us of.

Before we go on, if you missed yesterday's big day, details are available, at least from our perspective. Additional announcement details are also available.

The Porsche 911 has a long history, yet today's version of it continues to draw on the same lines as its predecessors - the 911 offers sometimes revolutionary technology yet a key part of its appeal is its powerful grasp of evolution and roots. This is the essence of the iPhone as well. The iPhone 5 doesn't offer anything revolutionary this time around, yet it offers a distinct evolutionary/revolutionary look and feel that no other smartphone can match.

As the video we noted above makes mention of, tolerances on the iPhone 5 are now measured in microns - the differences are so tiny that special cameras are used to measure the front and rear pieces in order to ensure that the right back piece is selected for a given front piece. The camera cover is now made of sapphire crystal - a small touch that may only be appreciated by those of us who love mechanical watches, but which Apple understands makes a unique statement about build quality.

When one sits in a Porsche 911 (or any higher- end car of your own choosing) what wins one over is the combination of mechanics and electronics - in styling, functionality and performance. And of course there is the classic sound of the new car door closing - which on the iPhone relates directly to the uniquely solid feel of its metal buttons. It's the same with the iPhone 5 (and the iPhone 4S, and the iPhone 3GS…).

Assuming it all works as described (we won't know for sure until an actual production iPhone is in hand), the combination of the new design with the substantial enhancements in iOS 6 will be impossible to beat. Samsung has a great deal of innovation to pull off, and it hasn't come close yet to delivering a Porsche 911 feel - the Galaxy S III feels enormously flimsy to us and Android still feels like a work in progress - definitely not an ultra-refined user experience.

How Big a Launch Will it Be?

We're not aware that any industry analysts disagree that the iPhone 5 launch and the number of units that will be sold will break every record in the books. Let's take a look in the chart below at what the originally maligned iPhone 4S did from a launch and overall sales perspective.

That steep curve will certainly continue to become steeper. The iPhone 4 may very well top 10 million units sold inside of the first two weeks of its launch on September 21, 2012. Samsung believes it is likely to sell 30 million Galaxy S III phones through the end of 2012, following almost seven months of sales. Apple is likely to top this in a mere three months. We believe as well that the iPhone 5 will kill sales of the Galaxy S III over the course of the holiday buying season - this, in our mind, is going to be the real test for Samsung: how it will do going head to head with Apple's best effort.

Who will buy the iPhone 5? The folks over at AMTY.com have pieced together a very interesting and entertaining chart on this, which is shown below.

Another key measurement to iPhone 5 sales will be the ultimate pass along rate of older devices. Many of us will upgrade, and many of us are not likely to wait for contract pricing on the upgrades - we'll find ways to make it happen. That means our iPhone 5 and iPhone 4S hardware will probably find its way to other family members. Overall market penetration of Apple devices will increase substantially in this viral way.

Sales for the iPhone 5 will, in fact, be so strong that they will impact the entire smartphone market. IHS iSuppli suggests the following:

Apple’s sales decline in the first half of 2012 contributed to a one percent contraction in the overall global smartphone market in Q2 2012 to 135 million units, down from 137 million in Q1 2012. The arrival of the iPhone 5 will help the global smartphone market return to growth, with projected shipments of 346.5 million in the second half of 2012, up from 272.3 million during the first six months of the year.

What's Missing - Does Anyone Care?

One specific thing stands out relative to the Android market on what the iPhone 5 is missing. That, of course, is NFC - Near Field Communications. According to iSuppli, the Android side has hugely embraced NFC, shipping 106 million NFC-enabled smartphones in 2011 alone. The final numbers for 2012 will be significantly higher. Nokia has also embraced NFC with its recently announced Lumia 920. Aside from its mobile payments significance, NFC is also being used by Samsung for its "touch file transfer" capability. Is this touch capability a killer app and a deal breaker for potential iPhone 5 buyers? We seriously doubt it.

In any case, Apple doesn't seem to care however. The company's introduction of its new Passbook mobile application, at least according to Apple SVP of worldwide marketing Phil Schiller, is essentially what Apple users want. We ourselves believe Apple simply needed to leave a little room for a future interim upgrade, and will deliver NFC if there is sufficient demand for it following Passbook's performance once it gets into the mainstream of iPhone users.

The other missing thing is wireless charging. Nokia's upcoming Lumia 920 has wireless charging built into the phone. All that is required is a charging pad. We ourselves utterly fail to see the benefit here. We're happy with the wire - it takes up no real space, whether plugged into the wall or into our other computers. In fact, we find it aesthetically unappealing (especially from a minimalist perspective) to have to deal with a space-hogging charging pad - which also requires being plugged into the wall!

Where is the real convenience here exactly? Yes, once again, it is a personal choice and subjective issue, but Apple, again according to Schiller, agrees with our perspective. Apple may yet deliver such capability in an interim upgrade, but only if users demand it. We doubt they will.

Ultimately the Phone 5 is evolution at its best - and perhaps that is what is most revolutionary about it.

Want to learn more about today’s powerful mobile Internet ecosystem? Don't miss the Mobility Tech Conference & Expo, collocated with ITEXPO West 2012 taking place Oct. 2-5 2012, in Austin, TX.  Stay in touch with everything happening at Mobility Tech Conference & Expo. Follow us on Twitter.

Edited by Brooke Neuman

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