Apple Maintains The Status Quo With The iPhone 5, But For How Long?

Apple's new iPhone 5 is a case study in incremental improvement. Nearly every aspect of the product -- the CPU, display, cameras, radio modem, size, weight, etc. -- are all improved over the iPhone 4S and at the same $199 price point. No doubt, the iPhone 5 and iOS 6 will sell millions of units, preserve Apple's momentum, and hold off the competition, but significant threats are mounting that Apple cannot afford to ignore:

  • Nokia is delivering Apple-quality innovation. As Nokia demonstrated last week at its Lumia 920 event, Nokia's innovation engine is firing on all cylinders. When the Lumia 920 launches (rumored for November 2), it will outclass the iPhone 5 in key areas such as imaging (PureView imaging, Cinemagraph) and location (Maps, City Lens, Transit) as well as bring wireless charging and NFC into the mainstream. While the breadth of accessories will be nowhere near what the iPhone offers, Nokia gets strong marks for showing Apple how NFC can enhance the accessory experience. 
  • Microsoft's mega-launch will put it back in the game. Microsoft's Windows 8 and Windows Phone 8 launches next month will re-establish Microsoft as a contender in both the mobile and tablet markets. Windows Phone 8 will finally give Microsoft the platform it needs to take on Apple (and Android). And while it is unlikely that Microsoft will gain many iPhone/iPad converts, nearly half of all US mobile phone owners have yet to get a smartphone, and even more people have yet to purchase a tablet. As this late majority comes over, Microsoft is in a prime position to win over significant numbers of those consumers. 
  • Amazon is challenging Apple's dominance in tablets. Less than a year ago, Amazon launched the Kindle Fire -- the first tablet to gain a foothold against the iPad. Last week, Amazon significantly improved its position with two new Kindle Fire HD tablets and a groundbreaking $50 per-year data plan. While these tablets are no threat to the iPad on technical grounds and have a fraction of the iPad's market share, they do offer consumers a content story that is every bit as powerful as Apple's and at price points Apple is unlikely to match. 

While platforms are at the heart of ecosystems, devices are their lifeblood. Devices are the consumer's entry point to an ecosystem and the vehicles through which platforms are brought to life. Without compelling devices, platforms cease to be relevant. For the second year in a row, Apple has put forth significantly improved but underwhelming iPhones. Apple's failure to continually bring new device innovations to the market allows competitors to catch up and threaten its iOS platform. 

Like all empires, platforms rise and fall. Just five years ago, Apple launched its first iPhone, and people were questioning whether or not Apple even had a chance in the mobile market. And nobody would have predicted Nokia's dramatic decline after 15 years at the top of the mobile market. Today, Apple's iOS platform and ecosystem seem invincible. But all empires eventually crumble, and unless Apple ups its device innovation game, we may be seeing Apple's iOS empire approaching its zenith.


A little premature

I'm sorry, but this analysis is a little premature. The Nokia Lumia Pureview technology has not been demoed or truly seen (the scandal around the ads surrounding this tech say a lot about their confidence in it). The Lumia promises to be a great phone, but by no means is it yet a significant threat to the iPhone. We still have to see how well it gels with the Microsoft OS. This is not to say it *couldn't* be a serious threat, but until we've seen the phone perform in the real world, I wouldn't simply announce this. NFC is an emergent tech, it may be big 2 or 3 years from now, but is not in wide use today. By then, Apple can incorporate it into future models.

There's a lot of hype surrounding Windows 8 and it's mega-launch. Truth is, Microsoft has been nervous about even allowing journalists to get hands-on with its new surface tablet. Again, it *might* be an awesome tech and challenge to Apple, but it still remains to be seen...and I for one, am not convinced in Microsoft's ability to pull this off seamlessly.

Amazon is indeed, the only actual, current threat to Apple. They have different business models and it remains to be seen if one will become more dominant than the other.

Lastly, this bandwagon approach to claiming that Apple is losing its lead is getting a little tired. Yes, their products are reaching maturity and stability. They have not yet come up with the iChip implant that'll allow you to interface with the net by planting a cyborg chip in your brain, or the biological or quantum Apple computer. Year over year, Apple makes steady, measurable improvements to its product lines and its manufacturing processes. The iPhone 5 will be the thinnest phone of its class. Their manufacturing and logistics are almost as impressive as their products. I don't doubt, when the next emergent technology ripens to be introduced, Apple will be the first (or one of the first), to introduce it to revolutionize computing. Until then, they are likely to stay ahead of the game in terms of product quality and user experience.