Internal Apple document: FY'14 Planning Offsite
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Apple, on the other hand, should look at these numbers and say "people obviously want something new." Giant phones are being heavily marketed as the new thing, so people are buying them. Not because it feels good to try to shove a small book into a front pocket, or that they love having to use both hands to type out text messages.
A boring business would follow the heard because they don't know how to distinguish customer needs from customer inertia. Apple, traditionally, is very good at knowing when something is a trend, and when something speaks to a deeper human need.
I sincerely hope that Apple has not become a boring company.
It is true that Apple invented the term.
I would respectfully disagree with that as someone who moved from a 4.3" Xperia to a 4.7" Nexus 4 and now a 5" Nexus 5. The extra real estate is a godsend for everything I use my phone for. IMHO, 4.7-5" makes the most sense (perhaps 5.2" as well). At the very least, I think apple should give people a choice of 4" and 4.5"-4.7".
Of course, doing that will introduce a problem since most development on iOS is very focused on optimizing for a single screen experience.
http://www.phonearena.com/phones/size#/phones/size/Apple-iPh...
I don't think that's really a huge footprint difference (1/4" in each direction), but the iPhone 5S has a 4" screen and the Moto X has a 4.7" one.
You don't have to. But I am someone who does. There are many, many people like me who love their phones like the Galaxy Note who feel the same way. If I made a list of the top 5 reasons I really like my phone, 1 - 3 would be screen size.
I have been surprised at how many people have gone from, "let me see that phone, it is ridiculous that you carry the around" to "wow, I never realized how hard my screen is to use compared to this." I know three people who have gotten a larger screen phone because of me in the past 9 months and I don't evangelize at all. They just see my phone and want to try it.
I almost didn't get my Note 2 because I was afraid of carrying around a "small book". To honest it is less obtrusive in my pocket than my Motorola Droid 3 was, that thing sat in my pocket like a thick brick. The single time it can be an issue is getting it in and out of my pocket while sitting and wearing jeans.
I think this is one of the reasons that Samsung has taken such a large share of the market. They offer devices in a variety of sizes, for which they've been criticized, but allows for a perfect size for everyone. I know I could never go back to a smaller screen size.
Really looking for something with a hi-res screen, apple-speed touch latency, maximum but preferably smaller footprint than an iphone 4, and at least as thin as an iphone 5. This should be doable in 2014 and I think would be distinct enough without being ridiculously niche to have a reasonable market segment.
1: http://www.gsmarena.com/motorola_droid_razr_m-4973.php 2: https://www.apple.com/iphone-5s/specs/
They are standard in Europe and much of the US at least. My apparently heretical pov is that the tech should be user centred, not vice versa
The current iPhone screen is too small. I'm glad to see Apple is starting to figure that out.
On the other hand, my wife often has no pockets, and never puts her phone in one. Instead it goes in a purse. For her, and I expect many women, the only thing that matters if it is comfortable to hold and use not how it gets stored between use.
For people who usually have a carry bag, an iPad is not so big or clunky. Having a 4 inch phone to pocket is then good enough.
It's all good that your personal preference is for smaller sized phones. But it's really false to say that bigger screens are just about marketing. Having gone up from a 3.7 to a 4 inch to 4.7 inch device, each of them has been a progressively better experience because of screen real estate. My next phone might be 6 inches, so far bigger is better to me.
If Apple really does pick their phone size based on user experience alone, I think they're doing it wrong. However, I think they got stuck on dimensions set in 2007 and an operating system that isn't flexible enough. (FYI all my devices except my phone are made by Apple.)
The 3.5/4 inch size is very much ingrained in the design of iPhone apps. For example: many apps require reaching into the top left corner for navigation - this has been a HIG recommendation since 2007. Reaching to the top left of a device hard to do on 4+ inch devices. Android and Windows Phone have mostly avoided this, meaning you can operate your phone without reaching into the top left corner. This considerably increases the things you can do on large Android/Windows phones with one hand.
The bigger problem is all of the legacy apps that were designed with pixel perfect backgrounds that weren't meant to be stretched to fill different sized phones. Those have to be redesigned (and probably should have already been for iOS 7) to work for bigger phones.
Also, it is clear that different sizes of phone will still use the 'iPhone' UI idiom, rather than the 'iPad' idiom.
Basically if you are paying attention to Cocoa, you'll know that they're ready.
(Speaking as someone who has a pixel perfect app in the store, popular for it's design, that is very painful to make flexible)
Not really the operating system, so much as the APIs provided to developers, which previously required complex layouts to be hand-coded.
However, constraint-based layout was introduced 3 years ago and is being aggressively marketed as 'the future', although it has required some learning time for developers (and wastage of old devices) to become mainstream.
It is likely that the reason for introducing this several years ago was to ease the future introduction of varying screen sizes. I'd view the delay as a consequence of thinking about the problem in its entirety instead of rushing to play the numbers game.
Apple is already playing in that field with the Retina display.
> I don't think the experience of a 5 inch phone is better than a 4 inch phone.
I'm a pretty tall and well-built man with rather large fingers; even a slightly larger on-screen keyboard is a huge improvement for me.
A few years ago, I also thought the 5" screens were silly, but that was before I had to start wearing reading glasses. I just upgraded my iPhone to an Android phone with a larger screen, and it's so much easier on my aging eyes.
I agree with you that they need to design something great to serve the demand and not just follow others.
However, as an iPhone user, who loves the portability and one-handedness of the small form factor, I am using my phone for 'real work' all the time now, and would really like a larger screen for things like quip and mindnode. I think the demand for different tradeoffs is real.
All modern smartphones are far far far too big.
The dumbphone has its place, and nobody is addressing it right.
If only they would give it a bit of personality (a proper name, for starters) - could be a hit.
I suspect their design values will preclude them from ever making a phablet, and that there is a line in the sand beyond which a device is too large, and at that point they will try to figure out an alternative solution rather than boosting physical phone size, but I don't think the current 5/5s screen size is at that line yet.
iPad + iPhone Nano = winning combination. If Apple makes a 6" iPhone, I'd sure hope they at least retain the 4" version, if not shrink & optimize for a much smaller version. I need a phone that excels at being a phone and integrates well into the iOS ecosystem; got my tablet for applications needing a more complex/larger interface.
Yes, but this is your use case.
While there are a lot of people who share your use case, there are probably a lot more people who don't.
Which is why the product diversity on the market right now is good. There's a decent chance that you'll find a phone that will work for your particular use case.
If the rumors are true and Apple decides to make the iPhone 6 4.7" and 5.5", what do I get next time I'm ready for an upgrade? I think it's silly for Apple to leave money on the table by only selling the current form factor when there's obviously a lot of demand for a larger iPhone, but it's equally silly to ignore the market for smaller phones like every other smartphone manufacturer is.
I have smallish hands and it's just not that big a deal to be honest. My last phone was iphone sized and I wouldn't go back to that size for just about anything.
Funny part is they seem to hate the 5/5s cause its too tall and still prefer the 4s. I know a girl that downgraded back to her 4s because the extra height on the 5 was too much.
With my girl hands I pretty much agree though, I do miss the smaller height of the 4s over my 5. I think when people talk about what phones they prefer they should also bust out their glove size. Mine is a 7, and any phone > 4"ish starts to really frustrate me when I try to text one handed.
Would you still say this when Apple launches a bigger phone? (Rumor has it that their next phone is going to be considerably bigger)
Tangential note: I recently switched from the Nexus 7 (2012) to the LG G-pad and the 1.3" bump in screen real estate has made a huge difference. I hardly ever used the N7, but I use the G-pad every day.
Apple has (almost) always been a marketing company. They appeal to and market a certain kind of culture, which they bundle with hardware and charge a kind of fee for "joining the club" in the form of a brand-based premium over similarly functional competitor devices' retail. That's just how they make their money. Show me an Apple product and I can almost guarantee there is an alternative that performs almost identically in every way, but is 50-95% of the cost of the Apple product.
Their "sexy" is all about marketing; not substance (although the latter is necessary to some minimum level of quality). I don't know if "boring" is the right term to use, but it's not unusual; companies try to differentiate their products from their competitors' with appearance and marketing all the time. What is unusual--as demonstrated by their enormous cash holdings--is how successful they have been at it. But the genius driving that success has passed away. They need to: a) find another Jobs-like genius; b) adapt to the market.
It's 2013, most folks who are buying smartphones are not buying their first smartphone ever, they know what they want, many of them are fairly savvy at this point, and people want larger phones. I have a lot of friends who are extremely technically savvy and are not easily subject to marketing influence, they buy phones based on lots of research and recommendations from friends. Almost universally they are buying 4.7" screen phones, because there are many exemplary models in that form factor such as the HTC One or the Moto X which are excellent phones.
Here's a list of things that would blow everyone else away:
1) NFC realized from the ground up. It absolutely will be a must have in the very near future, and I won't be stuck with a phone that doesn't have it.
2) An enormous innovation in battery tech. I want you to figure out a way to make my battery last 2-4 days on a charge.
3) Some sort of major design innovation. Edge-to-edge screen? That would look incredible; so novel, it'd be impossible to ignore.
4) A software-level overhaul of what it means to have a device on you that is capable of being constantly connected to the internet. It can be an ecosystem (we already know apple is good at building those), or something similar, but the future is one where you don't have to check your phone for anything. It already knows.
That's all I can think of for the moment, but it's clear they need to prove something, and I think they're simply coming up short in that regard.
2) Yes, agreed, and I think they're working on this.
3) Edge to edge causes accidental taps for many users. They may or may not go this way.
4) Not sure what you mean here beyond things like push notifications. I would like more apps to advance-load data and predict my behavior, but I think a lot of this is already possible with background tasking. Not sure why this would have to occur at the OS level.
Lots of apps are starting to load data proactively in the background. That's why iOS settings has the "Background App Refresh" screen (under "General").
No, the problem is they are innovating around what will be in the new commercial. The truth is that smartphones are largely "done". Usually this is when Apple moves on to the next thing but unlike in the past there is no obvious new next thing to move into. Because of the success of the iPhone and to a lesser degree the iPad the expectation among shareholders is that the next thing has to be high-margin like those things are/were.
My guess is Apple plans to deliver larger-screened iPhones, but they want to do it the right way, i.e. without causing fragmentation. My guess is simply scaling up the UI display without increasing resolution violates their sensibilities (not "retina" any more) so it's a question of getting ducks in a row (true scalable UI elements). Note that the iOS7 switch away from skeumorphism and bitmapped UI components does a lot to pave the path.
The idea that a small phone is just better for everyone is -- I think -- silly. Apple just won't release a half-assed product.
Apple should give Mobile Safari an advanced option to always let people zoom. This way, everyone who locks zoom on websites for the sake of clueless clumsy users are still getting what they want, and people who really need zooming for legibility can get what they want too.
Kickstarter, anyone?
Their exact words are "Strongest DEMAND coming from less expensive and larger screen smartphones.
Therefore most Android phones sold to meet this demand are < $300, and not >4"
As I said, most Android phones are not large screened.
My Nexus 4 for example retailed for < $300 and is > 4"
The existence of one such device that is known to have sold poorly, even though it was a good product doesn't tell us anything about that group.
Apple's documents do not show that most Android phones have large screens. That is the original claim you made.
40% of the growth came from phones > $300 and > 4 inches. Only a couple more million units > 4 inches is required from the < $300 group to be the majority. Apple's next phone will have a larger screen because that is where the majority of the growth is coming from.
the nexus 4 is 5 inches and < $300 by the way. 4 inches is quite small in todays market
It's madness that Apple doesn't offer two different phone sizes, the only rational I can come up with is that they blew their load convincing people that their size and form factor was the best best best.
Only for you to dismiss it in infamous HN style, with a complete nonsensical "explanation" and appeal to some evasive magical quality. Jesus.
Certainly there is a segment of the market that likes bigger phones, and I think Apple could capture a lot of that interest with something in the 4.7 range that doesn't sacrifice much of the usability that comes with a smaller phone. I also don't think it's unreasonable to offer 2 sizes, 1 for people with bigger hands. Not convinced they will do that though.
That's because this is Apple's thinking. Not Apple's external messaging that carefully crafts a picture of how they "think."
I sincerely hope that Apple has not become a boring company.
Boring is just a matter of perception, I grew up exposed to Apple's branding and always thought they were boring. They're very much like a career-politician running as a "Washington outsider" but with more success selling it. Cultivating a family-friendly counter culture image was a smart response to the fact their primary competitor was the juggernaut of the day.
If they become "boring", it'll be because their customers perception of them as an underdog to Microsoft has finally worn off, and now they're recognized as top dog to Android. Not in market share but as a luxury brand. Now that I actually think about it, their messaging has been turning towards a "car manufacturer quite pleased with themselves" vibe...
Now that there are viable alternatives in Android, and to a lesser extent Windows Phones, with much lower subsidies, I think you'll see the carriers push these other devices.
And if we move to a model where consumers pay for the full price of the phone (which is what much of the world does today), then you'll actually see iPhone sales fall. Sub $200 low-margin phones are the future. Apple can still do well with a premium phone -- especially if the camera is really good, but I think it's a tougher niche than the high-end PC market.
Apple could probably sell a sub $200 iPhone with no difficulty, and then pay off the subsidy using their other sources of indirect revenue. Of course in that case we will probably see iPhones become even more of a walled garden, and a lot more of a crackdown on jailbreaking.
Too bad for Samsung they don't have one.
Actually, it's project to only grow to about 37% of their total profit by 2020, not exactly "most":
http://appleinsider.com/articles/14/03/24/itunes-and-app-sal...
If you think about it your relationship with Apple as their customer begins with the hardware purchase, but then as you use the hardware you keep feeding money to Apple every time you make an iTunes purchase, in app purchase, buy extra iCloud storage, etc.
The goal is that this residual source of income will surpass the initial income from the sale of the hardware. In that case they could give away the hardware at a very cheap, subsidized price, or even for free and then enjoy the steady stream of money from their other services that run on the device.
http://appleinsider.com/articles/13/07/18/iphone-users-pay-a...
To make even $100 per device, an average user would need to download approximately 1700 apps over the life of the device!
Simpler math: $100 in profits would require something like $370 in app/media purchases. (30% commission, 90% margins on operating iTunes/App Store)
To say nothing of the fact that this would require Apple to turn their back on the past 37 years.
Plus remember that the subsidy is on top of the app purchase dollars they make today, since phones with the subsidy still buy apps. There is no real upside to them on this. Sure they make good money on apps, but its hard to replace effectively free money from the carriers.
Wouldn't this be as problematic for Samsung (or any other vendor with high end offerings, but Samsung is the big dog) as Apple? While Samsung has some sub-$200 phones, doesn't the massive profit from the latest and greatest make that possible?
I like how you appended that course number as a sly insult.
In a perfectly competitive market, perhaps. But there are other forces at play. Why does Whole Foods prosper when you can buy food at Wal-Mart? Why do Priuses still sell when they may not be the most cost effective transportation mechanism (after you factor in initial cost)? Why do people still buy Ralph Lauren and Louis Vuitton? Commoditization isn't inevitable in anything other than the theoretical environment you'd find in Econ 101.
Realistically then, saying something is Econ 101 is saying that "looking at this without considering any of the subtleties of the situation, we have the following result".
Anyhow, the comment was meant tongue in cheek anyhow, don't know why you're so upset. Your retort was bad anyway.
This is actually pretty consistent with Apple's entire history: they've resisted commoditization, even during times when it really hurt their market share.
...maybe you should have also taken Econ 102? A race to the bottom is only the inescapable result in the silliest of toy market simulations. There's almost always demand for premium goods.
As an AAPL holder, it makes me want to get into shorts, but then I'm speculating on the whim of some ass on the TV.
Edit: Clarity
You are right that Apple faces a crisis if their sales drop, so does every other company. The worst reaction though, would be to start competing on prices, and thus quality. This inevitably leads to a race to the bottom, where they're unable to compete against companies that are based in cheap labor countries. Much in the same way as Philips, or Sony couldn't compete against companies like Samsung once they lost their competitive edge in their product categories.
On top of that is the fear of their sales actually dropping if carriers stop doing subsidies altogether (which is the direction they are going).
Microsoft fans have been making this argument for 15 years or more. They said Apple should copy Dell and sell cheap enterprise desktops with low margins because that was where the money was. Then they said Apple should copy Asus and HP and sell cheap netbooks with low margins because that was the future. Then people said Apple should be making a really cheap ebook reader to compete with the Kindle.
People are constantly advising Apple that they should get into low margin markets and compete on price with companies that are barely breaking even. This advice seems to mostly be based on what they want the market to look like, more than how it actually is.
As the US (and the world) moves more to a non-subsidy model I think this disproportionately impacts the iPhone. All OEMs will have to deal with this, but Samsung, LG, Huawei, Coolpad, are used to this world already as they sell really well worldwide. iPhone hasn't figured out how to sell full price phones around the world.
If anything this situation is likely to become more prevalent, not less so.
[1] https://en.wikipedia.org/wiki/Usage_share_of_operating_syste...
The issue they have is that they've so dominated the US in marketshare with a great subsidy model that they've generated record profits. It's hard to come down from that to say, "well our profits will drop substantially, but we're happy at being 20% of the US market -- which is actually much better than our wildly successful PC market".
They can't afford to do that -- unless they have some magic up their sleeve.
This is the exact model Apple's computer division deals with, and they're wildly profitable compared to most PC vendors even though they charge premium prices all around. What's different about phones?
If the iPhone ever ceases to be as profitable it will have a ripple-effect throughout the entire company as they scramble to find the next thing that will replace those lost profits.
[1] http://www.asymco.com/2012/01/30/you-cannot-buy-innovation/?...
I keep seeing people talk like Apple 'lost' the PC wars and will 'lose' the phone wars the same way, yet Apple's PC business is insanely profitable by PC market standards. Commoditization of the PC market hasn't touched Apple's PC business in any way. What it does is lock the other PC vendors into a race to the bottom, leaving Apple as the only company with the resources and brand position to support premium gear at premium prices.
Exactly the same thing is happening in phones. Every single Android phone is in an even battle with every other Android phone. The market for premium Android devices in split roughly evenly between the top half dozen, perhaps even a dozen or more devices. Meanwhile the market for the premium iPhone is split between, er, one device. None of the other manufacturer can afford Apple's software, services and several-year-long device support. This dynamic isn't going to change any time soon.
At some point yes perhaps Apple's huge phone margins may decline, but there's no reason to suppose their premium brand position and margins will disappear completely for the foreseeable future. They've been living that life in the PC market for almost their entire existence. It's what they do.
I do wish that other PC developers would copy the marketing strategy used by car companies: separate branding for their high-end line.
Ford/Lincoln, Honda/Acura... why didn't we have Compaq/HP? They could've kept HP as a brand to be proud of. Google could've used Motorola to fill in low-end products unworthy of the Nexus moniker.
It's coming pretty fast. AT&T is pushing Next pretty hard, which is essentially an interest-free repayment plan spread over 20 or 26 months. If you go to buy a phone now, that installment price is listed first, rather than the contract prices. You still don't see the "real" retail price, but you sure do see that an iPhone is $25 a month and a Moto X is $15 a month. (The Moto X is the cheapest current gen phone they have, I think. Something like a Nexus 5 would be even less but isn't on Next.)
Android: Pause video when you look away, send data by bumping two phones, run multiple apps at once, watch/wrist devices
iPhone: Now in five different colors
Furthermore, Apple hoards cash in a way that Microsoft never did. What this means is that Microsoft was sinking the cash into other business ventures - in other words they created a heavy reliance on those wide profit margins by creating a bunch of units that needed to be subsidized by other units' wide profit margins to survive. By contrast, Apple's taken a strategy of building up an enormous nest egg that they can use to help get them through the lean times should that ever become necessary.
Who'd you say is living at greater financial risk? Someone who makes an enormous salary but is only a brief period of unemployment away from foreclosing on their palatial house and having their Porsche repossessed? Or someone who relatively recently fell into a very high-paying (if not quite so enormously lucrative) job but has stuck with a relatively frugal lifestyle and instead devoted the extra money to investing in more liquid assets?
So, in this part of your analogy, it seems Microsoft is the company you're comparing to a person that is ready to have their possessions repossessed. Is that right? If so, I humbly invite you to look at the facts regarding Microsoft. Microsoft's most recent quarter saw literally record revenue and they blew away everyone's profit expectations.
http://www.bloomberg.com/news/2014-01-23/microsoft-s-second-...
Microsoft also has more cash on hand than the U.S Government:
http://finance.yahoo.com/news/microsoft-starting-hoard-cash-...
I wouldn't be surprised if this (welcome) new strategy isn't at least partially inspired by observing how Apple does things.
Also, for enterprise & institutions using Exchange, many seem to be loving Lync, etc. for IM+ services. Skype seems like a decent long-term play. Also, good for the IP.
I think once a bigger iPhone drops it will put a big gust of wind in their sails but I also think that Apple needs to be skating to where the puck will be if they want to keep their place as the premium manufacturer. If they're 2 or 3 years behind what Android (Samsung really) phones have the narrative that Samsung is more innovative is going to gain steam.
The other looming challenge for Apple is that software services are growing as a differentiator in phone ecosystems. Most of the Google services thoroughly outclass iCloud, meaning that iCloud doesn't give the Apple the competitive boost that it could.
I remember the battery life being just awful on LTE phones until around the time the iPhone 5 came out.
Really amazing how times change. I think it's because when the iPhone came out, no one could think of using their Phone for everything that they are now used for - so it just seemed like overkill. Now for a lot of people, it's their computer.
Apple does consider screen size though, thats why the ipad mini was released and the ipad itself was made even though Steve Jobs hated the idea of a tablet, so it's not entirely unplausable that they would release an iphablet alongside the next iphone, and as this document shows they are aware of the problem.
Apple has also considered the price aspect of the document too, with the iphone 5c, so time will tell what else they'll try.
Edit: Probably the most likely new category would be wearable computing now that I think about it. Longterm perhaps electronics integrated with the body.
That really doesn't strike me as that impressive.
http://store.apple.com/ca/product/HD971LL/A/sharp-32-pn-k321...
Jobs died a relatively short time ago; even when he was at Apple, it's not like they created new product categories all that often - maybe every 3–5 years?
I can't help but feel people have expectations which are a little too high.
More like since the PC. Since then, they've mostly capitalized on market needs that were widely recognized (and, in the case of portable digital music players, that were already widely popular), but where there was an opportunity to execute better than the incumbents were executing. (Not saying this isn't noteworthy, but its very different than creating "a new product category that none of us knew we wanted.")