My Thoughts on the New iPhones

This Friday, September 20, Apple will start selling the new iPhone 5c and iPhone 5s. Here are my thoughts on the 2013 iPhones.

iPhone 5s

The 5s is the ‘s’ version of last year’s iPhone 5. Is the 5s considered a “disappointment” like most ‘s’ models? After all, it’s the same as the iPhone 5. Except it has a much faster 64 bit CPU. And a much better camera system. And a motion processor. And a fingerprint scanner. But other than that it’s, you know, the same.

I think that the 5s is a misunderstood device by the media. Pundits don’t see the innovation of the 5s. Apple calls it “forward looking” meaning the iPhone 5s is about its potential, not the out of the box experience. Out of the box the 5s will run all older 32 bit iPhone software like any other iPhone. The excitement is in the new applications that it will be able to support that older models won’t.

The 64 bit A7 CPU allows for fast processing of large amounts of data. Think of manipulating photos and movies or advanced 3D games. The potential for specialized enterprise apps (such as medical imaging) is also impressive.

The M7 motion sensor chip when paired with iBeacon support in iOS 7 allows for a whole new way for your phone to interact in a retail environments (large stores, malls, etc.). People can use their phones to find out about sales or find the products they want. Also think about the use in museums, amusement parts, and the like where the 5s can be your guide.

The fingerprint scanner is interesting in that it will have people enabling security on their phones who never would have before. This might not prevent device theft, but it will help keep their data safe.

I’ve heard that yields on the fingerprint scanner have been quite poor which will make the 5s difficult to get for some time. WSJ is saying that supply will be “grotesquely low”. Apple has not been accepting pre-orders of the 5s so if you want one you’d better be quick on the website Friday night or wait out in front of your local store.

The new color (gold) adds another set of SKUs to manage and creates a similar problem inventory management issue that the 5c has. How many gold ones does Apple have to produce? How many will retailers need to stock?

iPhone 5c

Apple’s new mid-priced iPhone, the iPhone 5c, is an interesting device for several reasons. It is the first new iPhone Apple created that is not at the top of its line. The 5c is designed to be sold at the middle tier price; $99 with 2 year contract or $549 off contract. The internals are not new, but rather it has the same specs as last year’s iPhone 5. (Same screen, processor, camera, etc.) The 5c puts that technology in a new colorful plastic case that is a little larger and a little heavier than the iPhone 5.

The 5c also is the first time when a mid-tier model can cost as much as the upper-tier model. A 32GB 5c costs $199 (on contract) which is the same as a 16GB 5s. If a customer has $199 to spend, which model will they choose?

Pictures of the 5c had been leaked for months, so I think the industry had a pretty good idea of what it was going to look like. The biggest surprise about the 5c was the price. The 5c turned out not to be the “cheap” iPhone every pundit had predicted and Wall Street wanted. Its price point indicates that Apple’s strategy is to increase margins and profits, not global market share. Apple wants to position itself as a premium brand that is worth more. The question is at what point do developers prioritize Android over iOS?

We won’t know how much it costs Apple to build a 5c as opposed to a 5 or 5s until someone (like iFixit.com) tears one of these apart and analyzes the parts. I suspect it will be significantly less than an iPhone 5 costs to build but not enough to bring it down to the hoped for figure of $300.

The 5c was made available for pre-order on September 13 and as of the 17th has not sold out yet. This worries some analysts that the 5c will be a flop but I am not particularly surprised by this. People who pre-order iPhones are the hardcore phone lovers and they are not the target market for the 5c. Those people will want the bleeding edge device – the 5s. I believe that the 5c will sell very well in retail settings where people can see them and hold them.

To be honest, Nokia and Microsoft should really take the 5c as a big compliment. After all, imitation is the sincerest form of flattery. The 5c with iOS 7 seem to take a lot from Nokia’s Lumia line of phones running Windows Phone. Nokia has been selling colorful plastic bodied phones for some time and iOS 7’s flat look borrows considerably from Windows Phone’s look.

The 5c presents an interesting inventory management problem. The 5c comes in five colors and that is a lot of SKUs for Apple to produce and for retailers to stock. It is hard to know which colors will be most popular until the market decides. This can be a nightmare for retailers who don’t want unpopular colors taking up shelf space or to turn away customers because they don’t have the model the customer wants. This is very similar to the problem with the first iMacs of the early 2000’s.

Should you upgrade?

If you have an iPhone 4s your contract is coming to an end and you can buy a new phone at the subsidized price. Either the 5c or 5s would be a worthy upgrade. The larger screen, better camera, and LTE support are all big improvements over the 4s. Personally I’d advise getting a 5s for the superior camera and processing power. If you’re signing up for another two years you should always get the best phone you can. An iPhone 5c may feel really old in two years.

If you have an iPhone 5 you have a harder decision as you will have to pay full price for the phone as you are likely only one year into a two year contract. The iPhone 5 has a pretty good resale value so you can sell it to offset the cost but that’s a lot of work and money out of pocket for the update. The 5c offers nothing over the 5 other than pretty colors and a larger, heavier body. The 5s does offer advantages but are they worth the money and hassle? The camera on the 5s is likely the most compelling consumer feature but the camera on the 5 isn’t at all bad. I’d advise waiting for next year’s iPhone 6. That’s what I’m going to do!

Conclusions

I think the new iPhones will do very well for Apple. The 5c will bring in people who want an iPhone but don’t want to spend top dollar. Yes, it’s last year’s technology but don’t underestimate the power of a colorful case to draw in customers. These are customers who don’t care about specs, want a phone that is fun, and like the Apple brand. They’re the kind of people who answer the question “What kind of iPhone did you get?” with “A blue one.”

The 5s will surely appeal to those who want the best Apple has to offer. The interesting thing will be if developers build applications that only the 5s can run because of the extra processing power or motion support. I’m looking forward to see in the coming months the types of applications that get released.

 

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About Lee J.

Mobile Guy!
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