This year’s iPhones were the most innovative yet
This year, Apple released 3 new devices to their iPhone portfolio, using them to address gaps in their offering and in a bid to establish a strategy likely to increase their chances of success going forward.
It’s a difficult time for Apple. The company faces plateauing sales of their iPhone products and has said, publicly, that they won’t be reporting device sales in the future, prompting one well-informed pundit to point out the obvious. Apple wouldn’t keep sales statistics to themselves if the numbers were good.
Below: Apple’s iPhone sales have started to level off.
Additionally, this year’s launch comes against a background of perhaps the most innovative development in smartphones since the release of the original iPhone by Apple in 2017 – Samsung’s foldable tablet.
Below: Samsung’s new 2019 Smartphone range will include a foldable device.
Source: Samsung Press Release 8.11.18
The impact of these competing influences is substantial. Nearly 60% of Apple’s revenue now comes from iPhone sales. While Android devices are more prolific, they tend to be sold at lower price points. As a result, Apple makes more than half of all the revenue derived from the smartphone category, worldwide. In short, when iPhone sales level, off, so will Apple’s revenue, profit and share price growth.
The best features you might not have even noticed from Apple
So what is Apple doing, to address the situation? We are so used to the September release of each year’s iPhone that industry journalists now trot out their articles seemingly without deep analysis. Some may even have become immune to watching the movements happening beneath the surface, which by Apple’s real strategic intents.
Here are the main features you might not have noticed covered in the press, from this year’s iPhone releases and what they mean.
- They’ve put Artificial Intelligence is now at the core of their roadmap: It’s no exaggeration to say that this year’s most significant iPhone innovation from Apple was the inclusion of Artificial Intelligence (AI) at the core of their iPhone roadmap. Apple included a ‘Bionic’ chip in the iPhone last year, designed to perform the complicated mathematical algorithms required by Machine Learning (ML) applications more quickly and efficiently. This year, they beefed up its performance and, perhaps even more significantly, opened the capability to developers who write applications for their phones – usually a sure-fire way of telling what Apple considers important. To the user, AI applications offer more personalized interactions and new user features which would not otherwise be possible. One good example is Apple’s camera – which no longer ‘takes pictures’ in the classical sense. The lens on the new iPhone will capture all of the information available to it – allowing the user to then craft their image afterward – for example adjusting the depth of field for the picture or adding effects. The same Bionic engine will make it easier for app developers to offer augmented reality experiences, Animoji’s, facial recognition and, in the future, a broad range of more engaging, personalized features, highlighting apps that are used more often and relegating those which are not.
- They’ve finally included better ‘OLED” screens – to close the gap against rivals: The importance of the quality of a phone’s screen cannot be over-emphasized. It’s the primary feature of your smartphone’s user interface and, to be honest, it’s one critical aspect of user experience in which Apple has lagged the market. Nokia was the first to include AMOLED (Active Matrix Organic Light Emitting Diode) screens – which offer brighter, better colors when they were still a force to be reckoned with in the phone market. Samsung’s Galaxy devices have used AMOLED screens since 2010. Apple’s devices used the main alternative screen – backlit LCD on every iPhone it’s produced, until this year. This year’s iPhones close the gap and remove one of the only negative differentiators of their devices. It’s likely that every new iPhone release will have an OLED screen from now on.
- The new type of SIM card – an eSIM: An eSIM is an Embedded SIM-one which is already built into the phone you buy, and which can be programmed with the correct settings to connect you to supported wireless networks (provisioned) over the air. Apple has been operating behind the scenes with the GSMA, (the Groupe Spéciale Mobile Association) to get the eSIM in place for almost a decade now. The GSMA is a global body that sets the standards for phones. It’s the organization that makes sure they all work on the phone networks which have been built around the world. The eSIM reduces the hold phone companies like AT&T and Verizon have on their sales channels and could offer new revenue streams to the company. (See conclusion.)
- Better battery: Improvements in battery life are the number 1 most requested feature from Apple’s customers, according to a recent survey undertaken by web research company Survey Monkey. Apple has delivered on that unmet need in this year’s devices – although, incredibly, it didn’t make the headlines. Underneath the ‘hood’ of this year’s iPhone is Apple’s proprietary A12 chip, the first, Apple says, to use 7-nanometer architecture to cram even more processing power into a tiny chip. This year’s iPhone processor is capable of executing an incredible 5 trillion calculations per second. The processor has been designed to have multiple cores, some of which deliver ‘efficiency’ benefits and some of which are employed at times (for example using the camera in super slow motion mode) when speed is of the essence. The result is an ‘on the ground’ improvement of between 30 minutes and 1 hour, a nontrivial upgrade in a single generational improvement.
Bringing it all together
Under pressure from falling sales levels and competition among their Android counterparts, Apple has responded with some incredibly innovative functionality, as we’ve seen from the list above. Each of these enhancements offers a short term benefit but offers promise for a much more differentiated iPhone in the future.
I suspect that their focus will not end there.
Below: The iPhone makes up most of Apple’s revenue.
Source: The Overspill of October 2018.
Consider the growing proportion of Apple’s revenue which is coming from the ‘services’ section – far more reliable than hardware sales of products like iPhones. Apple services are things like Apple Music, cloud storage and, when it’s launched, their new TV product, designed to compete with Amazon and Netflix, who both operate in the important area of TV/video entertainment delivered by IP networks.
If industry rumors are to be believed, Apple may well have an even more surprising approach to extending the innovations it’s provided this year, in 2019 and beyond. It seems likely, if the rumors are to be believed, that Apple will launch it’s own network services: In simple terms, Apple customers will be offered the option to connect to an Apple-branded voice, data and SMS plan, potentially with some included content from their Apple TV service.
Viewed from a distance, connecting the dots between the proportion of people buying their iPhone through non-telco channels and the eSIM’s far more digitally based experience of purchasing a device offers the option for Apple to offset falling device sales by taking a larger share of wallet in the form of these new network revenues.
You might also like to know about the latest iPhone Features
Alongside this, they’ve removed two significant problems – the relatively poor screens and battery lives their products have suffered. And added AI as a critical component of more personalized user experiences from now on.
Apple is under pressure but this year’s iPhone line up has the coolest features we’ve ever seen.
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