iPhone 5 is disappointing, who cares?


Despite selling 2-million pre-orders in 24 hours and getting gazillions of column inches in coverage, the iPhone 5 has been labeled “disappointing” and lacking in “wow” factor.

Analysts still expect it to sell an estimated 45-million units in the Christmas quarter and continues to earn Apple bucketloads of revenue.

What does this dissatisfaction – in some instances schadenfreude by the Apple haters – say about Apple’s latest product? Or expectations about Apple launches? What does it say about us as consumers?

First a little context. Apple has only been making the iPhone for just over five years, having announced it in January 2007 and released it in June that year. It now accounts for over half of the company’s revenue and nearly half of smartphone sales, which is significant because these devices have the highest profit margin. Its overall market share is estimated at about 9% by respected researcher Horace Dediu from Asymco, who believes Apple has “75% of profit share, [and]nearly 40% of revenue share”.

So Apple, with just one handset in an industry where manufacturers have tens of different devices, accounts for two-thirds of all profit. Not bad for a five-year-old.

These figures are not new, nor is the statistic that Apple sells more of each new iPhone model than it did of all previous models put together, as the Economist reported last week.

“Since the launch of the original iPhone in 2007, it has brought in $150-billion in sales revenue, with $74-billion of that in the past year. The iPhone is Apple’s biggest product, accounting for 53% of the company’s revenue. Indeed, if the iPhone were spun out as a separate company it would be bigger than Microsoft, whose revenues were $73-billion last year,” The Economist wrote. Can you blame Bill Gates for not letting his kids own an iPhone?

Business Insider’s Henry Blodgett estimates that “iPhones likely account for more than 60% of Apple’s profits”.

The iPhone 5 may have the same 8 megapixel camera as Samsung’s Galaxy S3 and a smaller screen size (4inches to the S3’s 4.8in) and be technically inferior (if you believe Samsung’s adverts and the Apple haters). But the smartphone industry, like computers and portable media players and online music stores, are all Apple watchers. In Samsung’s case, a California court has confirmed what everyone knows and called them copiers. But the South Korean firm is not alone, every other cellphone maker has adopted the large touchscreen model Apple reinvigorated in 2007. Apple is the benchmark against which other companies, and their products, are measured.

Fireworks and revolutionary leaps forward are expected of every iPhone launch. Like it or not, Apple sets the tone for the industry, and expectations from consumers. As good as phones like the S3 and HTC’s arguably superior One X are, the iPhone will continue to be top dog.

This article originally appeared in The Times.


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