Apple fans have high hopes that the next iPhone will introduce some long-awaited improvements, but even if it turns out to be just an incremental improvement over its predecessors, experts say it’s likely to be the best-selling smartphone of all time.
The next iPhone — or iPhones — will begin production this quarter, The Wall Street Journal reported Wednesday. The company plans to start production of the new model in the second quarter of the year, and is working on a less expensive version with a plastic case that could be on the market by the latter half of the year, people familiar with the device’s production told the paper. (Apple did not respond to requests for comment.) After six versions in six years, and despite strong competition from Samsung, “Apple has set the bar so high, it’s even difficult for them to keep up with expectations,” says technology analyst Jeff Kagan.
Regardless of what features will (or won’t) be included, the next iPhone will likely be better than the last one. And, analysts say, that’s all many consumers really care about. “Already, the iPhone 5 has sold more than the 4S,” says Brian Colello, an analyst at Morningstar. The company sold a record 47.8 million iPhones in the first fiscal quarter of 2013, compared with 37 million during the same period a year prior. The upgrade cycle keeps demand brisk, he says. The first iPhone 4S customers who bought their gadgets in October 2011 will be itching for a new subsidized phone now that their two-year contract is at an end, Colello says. “The smartphone market is still in the early to middle innings,” he says. “More and more people are buying these phones.”
But to further outpace the competition, Apple may look to improve some of the features that most irritate customers. “Apple needs to fix a lot of operating system flaws,” says Claude Zdanow, founder and president of Stadiumred, an entertainment company in New York. Among his suggestions: a custom interface showing personalized news like stock prices and a more accurate autocorrect feature. “Why does it change the word good to hook?” he says. Siri could give more specific answers and, taking a leaf out of the BlackBerry’s playbook, the iPhone could make its email app more business-friendly, he says. “Email is the largest complaint when it comes to the iPhone,” Zdanow says. “I’d also like to see proper search features and better organized folders.”
Why the new iPhone can’t lose
MarketWatch reporter Quentin Fottrell discusses why experts are saying the next generation iPhone will be the best-selling smartphone ever.
Of course, there are plenty of rumors that the iPhone 5S could have that “wow” factor. Brian White, an analyst with Topeka Capital Markets, wrote in a research note— after meeting a component supplier during a tour of China and Taiwan — that the iPhone could include a fingerprint security scanning feature. That, analysts say, would create the kind of buzz that greeted the introduction of the voice-activated search engine Siri — as long as it doesn’t have teething problems like Apple Maps did. Apple is also reportedly developing a new operating system, iOS7, that would be faster and include a redesign of the iPhone’s interface. But one blogger, John Gruber of DaringFireball.net, says he heard it could be running behind schedule.
Part of the reason each successive version of the iPhone has outsold the prior one is that Apple continues to make its devices available with a larger number of carriers around the world. “The iPhone is in more markets than ever before,” says Sarah Rotman Epps, a senior analyst with Forrester Research. Last month, for instance, T-Mobile announced that it would finally offer the iPhone, as other carriers like AT&T and Verizon do. China — Apple’s second-largest market — had 17,000 outlets selling the iPhone during its latest fiscal quarter, up from 7,000 a year earlier, which helped increase sales in the Greater China region to $6.8 billion, up 67% from a year earlier. Apple CEO Tim Cook has said this will continue to grow.
Not everyone is so bullish. “The current iPhone isn’t the neatest, newest, geekiest smartphone out there,” says Margaret M. Black-Scott, president and CEO of Beverly Hills Wealth Management in California. She says it lacks new features like a larger screen similar to Samsung’s latest Galaxy S4, standard USB connection, longer battery life and an option to “drag and drop” app sessions between the iPhone and other Apple gadgets. Apple badly needs China for future growth, she says, as evidenced by CEO Tim Cook’s apology to Chinese customers on Monday over the company’s warranty policy there. China Mobile, the world’s largest smartphone carrier with 700 million subscribers, still doesn’t carry the iPhone.
Despite such gripes, Apple’s relationship with its customers is naturally evolving. The honeymoon period is over between iPhone users, Kagan says. “Keeping up with that high level of customer expectation is very difficult indeed,” he says. “It’s like falling in love. At first, it’s all about infatuation, when everything seems perfect. Then, after several years, the relationship matures to the next level.” There’s also the matter of Samsung, which has made some inroads on Apple’s dominance: The iPhone represented 19% of global smartphone shipments in 2012 versus 70% for all Android phones, according to IDC.