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iPhone 4S: a winner, if not a game-changer

Apple’s much awaited announcement of the Apple iPhone 4S last week was accompanied by some disappointment in the media and analyst communities. Telco 2.0 thinks it will be a success, if not a game changer, and embodies some important strategic moves for Apple.

This post gives our outline views and a round-up of market commentary - you can find our in-depth strategic analysis on on Apple here and at our EMEA Brainstorm in London 9-10th November. Our reflections on Steve Jobs’ untimely death and remarkable career are here.

So, here’s what the iPhone 4S offers in summary.

  • The main similarity with past iPhones is that the iPhone 4’s industrial design and look-and-feel (a phrase we wouldn’t be using were it not for Steve Jobs) have been maintained.

  • The software, however, gets the new iCloud and wireless sync features Apple announced earlier this year, plus the Newsstand in the App Store.

  • There’s also been a deeper hardware refresh - the A5 applications processor is another of Apple’s homebrew (or rather, ex-PA Semiconductor) products, giving it two cores and more power, and the baseband processor and RF chain are coming from Qualcomm and will support dual-mode (i.e. GSM/UMTS and CDMA) operation.

  • There’s a better camera and some new prices across the range of iPhones on sale: 4S, 4 and 3GS.


As ever, the run-up to the launch was frothing with rumours, excitement and speculation growing among the circles of Apple lovers and Apple watchers who were wishing for the next spectacular Jobs-esque product announcement. In the event, the launch seemed something of a disappointment - there was no iPhone ‘5’ and no new form factor, so the most obvious and tangible signs of a revolution were missing, and expectations were seemingly dashed.

However, Telco 2.0 broadly agrees with the analysis of our new Associate Horace Dediu (who’ll be with us at the EMEA event in London), that the “lack” of the iPhone 5 will have no negative impact on sales, as most of the potential early-adopters are tied into contracts for their iPhone 4s. Instead, the iPhone 4S will flush many of the legacy fleet of 3GS and earlier devices, as these users are coming to the end of their contracts and the devices themselves are feeling the effects of hard service. Meanwhile, the run-on of new 3GS will serve to expand the total addressable market. Horace points out that Apple now has a line-up of iPhones for every pocket, and has a crack at estimating the ASP.

ReadWriteWeb accidentally confirms Horace’s analysis by polling its own staff, a select group of early adopters if ever such was assembled, and finding that they’re either all tied into iPhone 4s or else determined to stick with high-end Androids.

Disruptive Dean Bubley, also of Telco 2.0, theorises that Apple is carrying out a major review of its silicon strategy, possibly aiming at a new common platform for all its mobile devices and squeezing out the remaining Infineon and Intel chips from its product lines, and that as a result there is unlikely to be a major product launch until the new baseband SoC and its associated parts are ready.

After all, despite suggestions to the contrary, Apple is running on its down-ticket iProducts like the iPods and iPod Touches, which suggests both that nothing really unusual is in the pipeline and that they need a platform for multiple mobile device types.

The camera has had a lot of investment, and Ars Technica’s camera geeks have a detailed review. It’s an 8 megapixel unit and supports 1080p HD video recording, but the headline numbers don’t reflect some of the improvements in things like sensitivity, autostabilisation, and IR filtering.

Business Insider rounds up the bear case here, but it’s heavily dependent on the assumption that Apple “failed” to launch an iPhone 5 rather than, for example, not having had any intention of so doing. In fact, a cynic might suggest that Tim Cook would be basking in Jobsian adulation had he simply incremented the product designation to match the version number of the OS (it’s iOS 5) and the CPU (it’s the Apple A5). Even the Insider agrees that the iPhone 4S is likely to fly off the shelves.

Apple also announced pricing for the iPhone range. The new gadgets start at $199 for an 8GB version, ramping up to $399 for 64GB, while the current iPhone 4 is run on at $99 and the iPhone 3GS becomes free with an operator contract. Sprint Nextel is going to offer open slather data service with an iPhone 4S for $69.99 a month.

The biggest new thing in the 4S, though, is Apple’s first tentative reconnaissance of the undiscovered continent of voice. “Siri” is Apple’s voice-command application, or “personal assistant” - you ask it questions, it converts your voice to text, and runs it through a natural-language processing app to derive commands that it then executes.

It’s going to be fascinating to see how this pans out. Orange UK once upon a time had a personal secretary service, Orange Wildfire, which they shuttered in 2005 to the horror of a small but highly engaged and committed user base. More recently, Swisscom Mobile developed Me2Me. However, there’s always been some trouble in getting wider user buy-in - rather like Apple before the iPhone, come to think of it.

Voice recognition is computationally expensive, and also the sort of thing that benefits from huge web-scale databases of stuff. On the other hand, the telco options (which were network services) have suffered from the call setup time and the variable quality of the link. We don’t yet know what the balance between local and cloud processing is here - Apple typically inclines towards applications and data being resident on the device, and makes major efforts to provide enough power to make that happen. It will also be interesting to see what sort of developer API it provides and what the app developers come up with.

There’s a rundown of its features here. Ars Technica points out that if it works, it’s pointing straight at Google’s mobile search. Search Engine Land has a slightly fannish piece, but does unpack the cloud vs. local issue, and points out that Siri “sometimes” needs a WLAN connection. We wonder what Packetstan would make of that.

AllThingsD reports that AT&T has 200,000 pre-orders for the devices already.

Finally, over in the anti-iPhone 4S camp, Samsung is suing Apple to stop them shipping iPhone 4S devices, on the basis of some of their patents in the UMTS air interface. This is a tit-for-tat move after Apple’s legal action against the Samsung Galaxy S II.

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