The iPhone has underpinned Apple Inc.'s runaway success ever since the company launched the smartphone six years ago. As it prepares to roll out the latest version, however, the tech giant finds itself in the rare position of playing defence.
On Tuesday, Apple is expected to unveil the latest iPhone, and the smartphone industry's intensifying competition means the stakes are higher than ever. Indeed, Apple is expected to produce not one, but two new iPhones – one aimed at the high end of the market, the other at more price-conscious consumers.
In the past, Apple's events were milestones in the mobile technology industry, a chance to see the latest snazzy devices from the most profitable technology company in the world.
This year carries much of the same hype, but also an element of pressure for Apple.
For the first time, it is unclear whether a brand new iPhone is enough to beat back surging competition from a slew of devices running on Google Inc.'s Android operating system – chiefly, devices from Samsung Electronics Co. Ltd., Apple's most serious competitor.
"I don't think [Apple has] ever been under more pressure to leapfrog its previous offerings," said independent technology analyst Carmi Levy. "It takes a lot more to impress the smartphone buyer today than it did in 2007, when the iPhone was first released."
Apple investors, already nervous about the company's cooling growth rate, will also be looking closely at the company's new devices to be unveiled next week, just in time for the lucrative holiday shopping season – traditionally, the strongest quarter for many consumer technology companies.
Apple has so far revealed virtually no details about what customers can expect. But that has done little to stop intense speculation about what might come out of Apple's launch event, and not all of it has to do with smartphones.
Perhaps the most highly anticipated announcement at Apple's event is the new high-end iPhone. In the past, the new iPhone or iPad has generally been the highlight of Apple's press conferences, but this year, there is added pressure on the company to come up with something groundbreaking. After several quarters of mixed results, Apple is in the rare position of reacting to state-of-the-art devices from competitors such as Sony, Motorola and Samsung. Those companies have largely tried to differentiate their phones through novelty features such as stylus pens or water resistance. It is unclear whether Apple will do something similar with the new iPhone, or will opt to make incremental improvements to areas such as processing power, battery life or the camera.
An entry-level iPhone
In the past, Apple has targeted the lower end of the smartphone market by simply reducing the price on older iPhones whenever it released new ones. This time, however, all expectations are that the company will unveil a new device specifically for the growing low end of the consumer smartphone market, with more modest specifications and performance. The move is not without risks, given that such devices tend to generate lower profit margins than their high-end siblings. But the low end of the maket has been by far the fastest-growing segment of the smartphone industry this year. Indeed, on Friday, The Wall Street Journal reported that Apple plans to ship new, low-cost iPhones to China Mobile, one of the largest carriers in the world, with about 700 million subscribers.
Less than a week before Apple's event, Samsung held a press conference of its own, during which it announced a new phone and a new tablet. The most intriguing part of Samsung's event, however, was the introduction of a new so-called smartwatch. The device is built to communicate with the phone in the user's pocket, so people can do things such as read e-mails by looking down at their wrists. The market for such devices is still brand new, even though some startup developers already have functioning devices on the market. In recent months, a number of big tech players, including Samsung and Apple, have reportedly taken an interest in the technology. Should Apple release its own smartwatch, it could recreate the success it had with the original iPod, which entered a still-new music-player market and eventually dominated it.
Developers have had their hands on a beta version of Apple's new operating system for months now, but the general public has yet to see it up close. That will change with the release of the new iPhones, at which point the new operating system is likely to be released to almost all iPhone users. The new software differs from its predecessors mostly in terms of aesthetics, with a bubbly, more colourful layout and icons. It also marks the first time that Jonathan Ive, the man responsible for some of Apple's most iconic hardware designs, has taken a shot at designing the look and feel of the iOS software.
As the first smartphone developer to give serious thought to the device as a game console, Apple has always had a fairly good relationship with mobile game developers. This year, there's a chance the company might devote a little more time and energy to making the iPhone a more direct competitor to handheld gaming consoles from the likes of Nintendo and Sony. This may entail developing a peripheral game controller that attaches to the smartphones, effectively giving them the kind of directional knobs and buttons commonly associated with traditional game controllers. Some third parties already make similar devices, but there are probably many Apple users who would be far more interested in such a device made in-house.