The Most Significant Story from Apple

Apple launched backwards yesterday, and the crowd cheered.

It has to be great to be Apple and to spoon-feed a willing public.

However, if we look at the strategy of Apple, we can assume they have good reasons for delaying the iPhone 5.

Let’s speculate on what they are:

-The rationale marketing strategy. They did the 3GS, it was logical to do the 4GS. It also associates them with 4G which is a marketing term for many carriers, and a 5G could just cause confusion like the Ozzy Osbourne, Justin Bieber ad has indicated.

-The incremental approach. Siri, their voice interface can be trialed, while, if it was associated with the 5G, it may have tainted the experience.

-The S model is Apple’s way of standardizing the platform for the next release. If they were a geeky company the G models would be considered odd releases and the S would be considered the even releases with full patches.

-The cow has not given all her milk, so why upgrade? As a matter of fact, make the iPhone 4G more compatible with 3G technology, which will make it a better “phone” (you know that part that you use for voice).

That belief can be seen in Sprint’s expectation that they are going to sell 30M iPhones over the next 4 years. That’s a large number and indicates some of the complex problems with Verizon’s vision of the world, and Apple’s. Verizon has moved to LTE and has delivered the wireless broadband network. This follows in the tradition of Verizon: “If you build it they will come,” but Apple’s vision is that they are here already.

Apple is opening up to 3G rather than 4G LTE at this point, indicating their world view is that LTE is really a long term strategy they can wait on. At least until the 5G release, if then.

From Sprint’s side it means a great opportunity to take advantage of the truly unlimited plan for the iPhone. Analysts predict that Sprint can sell about 1 million iPhones in the fourth quarter, and I think that will be a good benchmark to see if the price is the problem.

Both AT&T and Verizon have now put a 2 Megabit limit on their customers, with the mantra at the store being, “most customers don’t exceed that.” 

It is my contention that the younger generation does exceed that limit, and that they are looking for their wireless to be their primary access. In effect, that would mean that Sprint should do far better than the 1 million in the fourth quarter. But there are some interesting dynamics here. If Sprint subsidies the iPhone cost, does that mean that they expect to make money on the unlimited plan? 

Is there a premium to be had in offering the iPhone with unlimited service? If not we can congratulate Apple on their ability to milk the cow.