Analysis: 'Incremental' iPhone 4S still promises to be big seller

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Apple’s new iPhone 4S, despite failing to win over many pundits, bloggers and early adopters, nevertheless seems destined to be as successful as the old iPhone.

When the new smartphone becomes available Oct. 14, so will Apple’s new panoply of Web-based services, dubbed iCloud, and the new version of the phone’s operating system, iOS 5, also for millions of existing iPhones. But almost as important, there will be new carriers, and new pricing for the model family.

In the U.S., Sprint will finally be offering the iPhone. And subscribers there, as well as at AT&T and Verizon, can choose not just the three iPhone 4S models, with pricing unchanged from that of the iPhone 4, starting at $199 for 16GB and topping out at $399 for a new 64GB model. They can also choose a repriced 8GB iPhone 4, at $99, and a free iPhone 3GS. These prices, and the free 3GS, assume a two-year phone contract.

During Tuesday’s announcement, liveblog comments, tweets and social network posting tended to be critical, incredulous, mocking and sometime savage.

More measured reactions from analysts, bloggers and users agree that the new iPhone 4S lacks the technical razzle-dazzle many expected or hoped for, such as LTE cellular connectivity and a bigger screen.

“Were yesterday’s hardware announcements spectacular?” asks Apple-watcher John Gruber, in his Daring Fireball blog. “No. But Apple product announcements seldom are. The ‘show me something new and shiny’ pundits have never understood Apple.”

Instead, the iPhone 4S maintains the exterior shape, dimensions and design of its predecessor, Apple’s most successful product ever. It brings a dramatic increase in processing power, using the Apple-designed A5 dual-core processor; and it supports faster cellular download speeds, 14.4Mbps vs. 7.2Mbps for the iPhone 4, with some antenna tweaks to improve the signal still more. The camera has been upgraded to 8 megapixels and 1080p, and incorporates a range of other advances to improve image quality, speed and convenience. Also new is a voice “assistant” named Siri, based on software Apple acquired last year. Siri could eventually become a more comprehensive voice interface for the phone.

“It’s an incremental improvement,” says Kevin Hoffman, a software developer and author, and someone who owns an iPhone 4, iPhone 3GS, two iPads and two Mac laptops. “For anybody who owns an iPhone 4, unless your contract is flagged for upgrade pricing or you’re getting a new iPhone for the first time, I can’t see the value in it.”

“Apple is deepening its roots in the market, rather than looking for technical distancing from the others [rival smartphone vendors],” says Ken Dulaney, vice president for mobile at Gartner. Echoing a widely held view, Dulaney says incremental hardware innovation “gives Android [phone] suppliers some room to compete.”

“[U]nique features, such as a 4.3-inch screen or 4G [LTE] connectivity, only appeal to the true geeks,” says James Gordon, vice president of IT at Needham Bank, a small community bank based in Needham, Mass. Despite the bank’s size, it is heavily committed to both the iPhone and iPad for employees at all levels.

The 4S lets Apple expand its flagship phone’s model and pricing options. The iPhone 3GS was introduced in June 2009, so two-year contracts are expiring. Since these users can download and run iOS 5, it remains to be seen how many will decide to upgrade to a higher-end iPhone model. And with all three of the U.S. mobile carriers that will offer the iPhone line, smartphone users are far less than half of the total subscriber base. These carriers can now offer an iPhone product across a wider range of price points: starting at “free” for the 3GS and $99 for the iPhone 4.

Needham Bank’s Gordon says the 4S remains competitive and the pricing is right. “I think the 3GS for free spells the death of the non-smartphone,” he adds.

Another enterprise with significant iPhone and iPad deployments is Life Technologies, a biotechnology tools company in Carlsbad, Calif. The newest iPhone “is not going to make much positive impact on [enterprise market penetration],” says Manoj Prasad, the company’s vice president for global applications and testing. But that’s because there are few new features that directly benefit the enterprise. “The iPhone will continue to expand its enterprise market,” he predicts.

Apple’s incremental approach with iPhone 4S “makes sense,” according to Francis Sideco, senior principal analyst, wireless communications, for IHS iSuppli, the electronic component research arm of IHS. In a report, IHS notes that “with the speeds the iPhone has attained with the existing 3G standard known as High-Speed Packet Access (HSPA), there is no appreciable benefit to adopting LTE, especially given the current spectrum and uplink speed constraints for LTE.”

“Apple declined to offer an LTE-enabled iPhone that would have been more expensive, larger and more power-hungry, and instead opted to introduce a device that delivers nearly the same wireless data speed, but with a superior user experience,” Sideco writes.

That user experience remains critical to the iPhone brand. “There’s a lot in there,” says Cimarron Buser, vice president of products and marketing at Apperian, a Boston-based software company specializing in iOS middleware and development frameworks. “And there are all those apps and a very unified user experience. Android feels not quite put together. But Apple has a great unified experience for users.”

That insight was echoed by David Carey, vice president of technical intelligence at UBM TechInsights in Ottawa. In a written statement, Carey notes that the powerful A5 processor enables “more powerful and useful software” including natural voice-recognition, highly rendered game-playing, wireless video mirroring and complex image processing.

“The software experience, enabled by ‘good-enough’ hardware, is arguably what customers care about most in the end,” he says.

[John Cox covers wireless networking and mobile computing for Network World.]

This story, "Analysis: 'Incremental' iPhone 4S still promises to be big seller" was originally published by Network World.

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