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Digital River - Talk to the Experts

Apple's Cold and Blustery Crossroads

By Chris Maxcer MacNewsWorld ECT News Network
Sep 19, 2013 5:00 AM PT

What we're seeing from Apple right now -- and how consumers respond -- will not only determine the company's future, but also shape our love for its products. It all hinges on the new iPhone 5s and iPhone 5c.

Apple's Cold and Blustery Crossroads


No way. Come on, you might be thinking, aren't the iPhone 5s and iPhone 5c just incremental updates to the iPhone 5? How can you turn a mild evolutionary release into something so important?


High Stakes

The incremental release of the iPhone 5s and iPhone 5c represents Apple's core business model -- the way it creates and designs innovative products. Consider: First, we get the iPhone. Then the iPhone 3G, which is a pretty good leap forward both in hardware and in the software that came with it. Next, the iPhone 3Gs, which was a blip forward.

Then, the iPhone 4 -- and boom, baby, Apple was rocketing forward both in innovation and sales, despite the little antennagate issue. Next, the iPhone 4s. Nice enough, right? Then the iPhone 5, and wow, that was a pretty sweet new design where all the pieces and parts came together -- form factor, screen, camera, battery life and weight. Very impressive.

So the pattern is set. Next, you've got to believe that the new iPhones really are incremental, too. I do. Here's why: The introduction of the iPhone 5s and the iPhone 5c seems to indicate a change in the model delivery lineup -- two new products, after all. Not really, though. It's only a small change.

The iPhone 5c is essentially last year's iPhone 5 gussied up in a pretty package with a better front-side FaceTime camera and cool colors. The polycarbonate is interesting, but the price point isn't exactly all that new -- after all, the "old" iPhone 5 would likely have adopted similar price points had Apple not opted to mess around with plastic.

As for the iPhone 5s, it's still a wonderfully crafted marvel, but it lacks the visual pow of a major leap forward. It's still a stepping stone sort of product in the big scheme of things. Sure, the new Touch ID fingerprint scanner is getting rave reviews, and the 64-bit A7 processor architecture, including the M7 motion coprocessor, is all wicked cool. Still, you can't make internal improvements and slap a gold and space gray paint on the outside and call it truly new.

My point isn't whether it's truly new or not, though. It's that I believe most consumers will see and recognize the iPhone 5s as essentially a souped-up iPhone 5 -- and that makes all the difference in the world.

Intense Pressure From All Angles

Over the last year, Apple has weathered serious bouts of criticism. A lot has been levied by so-called financial analysts. Some are wildly out of touch, some are likely attempting to mess with the stock price, and some are honestly trying to read the wind for their customers. The upshot is that in general, the analyst-oriented point of view suggests they are losing their belief in Apple's business model and ability to innovate.

We've been hearing variations on this claim for months on end: Apple must create a big-screen iPhone at a cheap price not only to grow its business but to even survive getting trampled by a horde of big and cheap Android devices.

Along with all this fear and doubt, people are equating Apple's stock price with its business plan and the health of its business. Sure, the two things can be connected, but Apple's success will have little to do with its stock price. Apple does not need its stock to perform well to run its business model and return enviable profits, again and again and again. With billions in the bank, money is not a limiting factor for Apple.

However, with the stock price comes investor pressure, and while it's only the idiots who think Tim Cook has to go, the pressure remains.

There's more, though, and I'm not talking about the few people who leave Apple for bigger screens and the promise of something different. There's pressure in that people think Apple isn't innovating any more. I said think. Those of us who pay attention know they're innovating on the things that matter -- and ignoring the things that don't, like a major form factor update that falls out of Apple's normal development cycle.

That's why the success or failure of the iPhone 5s and 5c is so critically important. Is a major new iPhone invention really needed or not?

The storm is raging around Apple -- heck, we're even seeing university professors make claims that Apple is doing "more to make the iPhone a fashion statement than to provide functional innovation."

So what's it going to be? Are consumers around the world going to look at the new iPhones and collectively shrug their shoulders and buy something else? Something bigger, cheaper, better? Or are they going to vote not only with their wallets but with their time? After all, a smartphone is also about the ecosystem and the use of it.

If any of the naysayers' visions of Apple's future are even remotely true, I'm thinking now is the time that will bear them out.

If they're misguided -- if the iPhone 5s and 5c sell like crazy -- well then, the consumers of the world will validate Apple's vision.

I know where I stand.

MacNewsWorld columnist Chris Maxcer has been writing about the tech industry since the birth of the email newsletter, and he still remembers the clacking Mac keyboards from high school -- Apple's seed-planting strategy at work. While he enjoys elegant gear and sublime tech, there's something to be said for turning it all off -- or most of it -- to go outside. To catch him, take a "firstnamelastname" guess at

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