iPhone 4: Apple Increasingly Preaching to the Choir

There are those who've been around the mobile industry awhile longer than Apple (Nasdaq: AAPL  ) ; there is a joke that "to see what will be new in the next iPhone, just pull out a 3-year-old Nokia (NYSE: NOK  ) ."

There is surprisingly much truth to that joke in this, the newest iPhone. But Apple has added new clever bits. How will this iPhone 4 do in the market place? I am afraid Apple is increasingly "preaching to the choir" and seemingly only offering something for those who already own an iPhone, rather than take on the big rivals who seem to target the iPhone on all fronts.

What's new in iPhone 4
So what is new? This is straight from the Apple website, so please Apple fan-boys, don't crucify me for nitpicking on the meaningless features. These are Apple's five big news items in the iPhone 4. Apple's biggest achievement to celebrate is "FaceTime" video calling. To achieve this, Apple has installed a second VGA camera facing the front [i.e. on the same side as the display]. This is the secondary camera; the primary camera still faces to the back of the iPhone, the same configuration now as has been the format with most other 3G cameraphones.

The second source of celebration by Apple is what they call "Retina Display" which means a four times more sharp display by resolution [in the same size 3.5 inch screen as in all previous iPhones]. The new resolution is 940 x 640 pixels. The increase in the clarity to the iPhone screen is clearly visible to the naked eye [similar to how early dot matrix printers - with visible "dots" of "computer printouts" compared to laser printer outputs that seemed to look like they came from a printer. Visibly more sharp.

The third achievement is multitasking. The fourth improvement is HD quality video recording and editing. And the fifth improvement is a 5 megapixel camera and LED flash.

This is what Apple itself celebrates as the new features of iPhone 4, that Apple claims is the biggest thing to happen to the iPhone since the [original 2G iPhone]. I would immediately scream to point out that the difference of the 2G iPhone from 2007 and the iPhone 3G from 2008 is a far more comprehensive upgrade and improvement than this iPhone 4. So while the iPhone 4 is the best iPhone yet, and the changes are significant, the biggest improvement "ever" to an iPhone was what happened with iPhone 3G in 2008. But yes, Apple is master of showmanship, and they want to make big claims. 

Those are not the only changes. The new iPhone has clearly visible design matters, a clear "facelift" in the style of car makers who come to the mid-point of the lifespan of a model, and a few years after the original is released, they do a facelift version. This iPhone 4 does not have the type of iPhone rounded back as we've come accustomed to. It is very square, rectangular, in profile [more like other phones?]. And Apple even now offers colored "bumpers" in rubber and plastic - hey, that's just like Nokia phones a decade ago! Plastic color highlights.

And yes, the one button design is also now history. Apple finally admits that the user gains a significant advantage out of some dedicated buttons, like standard volume controls for playing music. There are actually several buttons now on the iPhone 4. It's not a QWERTY keypad ha-ha, but Apple has clearly abandoned it's "we only need one button" thinking and now is adding user input methods through dedicated buttons. [I think this is very good]. But isn't that yet another way that Apple is going mainstream?

The iPhone adds a third dimension to its sensors, which should make some games even more intuitive to play. The processor is faster, the battery lasts longer. And at least in the USA [and I am guessing therefore most of the world] the price of the new iPhone 4 is exactly what used to be the price of last year's iPhone 3GS. And like last year when the old model, iPhone 3G was sold at a severe price discount in its second year, now the iPhone 3G has been discontinued, but the low price point is taken by the iPhone 3GS. In the USA, that means the cheapest iPhone 4 costs $199 on an AT&T two-year contract with subsidy, and the new price for the iPhone 3GS is $99 with AT&T subsidy.

And it's the slimmest smartphone on the market [according to Apple]. Isn't this the RAZR strategy when Motorola (NYSE: MOT  ) kept giving us ever-slimmer premium phones? Oh, but that was before Apple joined the industry, perhaps they didn't notice that we once went through the slimming contest, whose phone was most like the thickness of a credit card.

Apple loyalists will love it
This is "everything you ever loved in your iPhone, but more and better" - Now you get your LED flash and 5 megapixel camera that so many begged for. Now you get multi-tasking, what many more apps and tech oriented geeks were pleading for. Now you get HD quality video recording, and yes, video calling. If your iPhone 3G model is about two years of age and it's time to think of an upgrade, this new iPhone 4, adding on features we got in the 3GS model. So anyone who had been living with the original iPhone 2G, now there is so much awesome Apple goodness in the iPhone 4, there is no reason to wait anymore.

And that is I think where the 4 times sharper screen will play a big part. Any existing iPhone owner will of course compare the two screens side-by-side. The iPhone 4 screen size is no bigger. Identical is size. But it's incredibly sharp. So any video or any picture or any website etc, will be visibly more crisp and compelling on the iPhone 4 - when comparing to any older iPhone. The comparison is even more obvious and vivid explicitly because the screen size is the same. 

The new OS for the iPhone supports many other advanced smartphone features in addition to multi-tasking. It has folders, and even allows iPhone users to customize the home screen [again, folders and customizable home screens, these are years-old standard fare for such "old-fashioned" smartphone operating systems as Symbian ha-ha]. 

Statistics from all markets where we have heard of them into the public domain, including Nielsen just on the U.S. market reported last Friday - Apple iPhone owners are the most loyal repeat buyers of any smartphone brand. They are already pre-disposed to prefer an iPhone. Now Apple gives them even more "iPhoneness," clearly the iPhone 4 is in many demonstrable ways visibly, concretely, practically better than all previous models including the iPhone 3GS. Existing iPhone owners will find overwhelming reasons to upgrade to the iPhone 4. But ... as the smartphone market is in hyper-growth stage, just keeping existing customers is not enough for Apple. They have to grow, and now I think their recipe of keeping Apple loyalists happy, is not enough.

U.S. will love the iPhone 4
In the U.S. market, there is no collective consumer memory of a decade of Nokia smartphones with Symbian operating systems, doing almost all these things that Apple is now "innovating." In the U.S. market, astonishingly, many smartphones do not offer video calls, so while this is nearly decade-old technology, in the U.S. market, Apple seems to be offering "leadership." In the U.S. market, five megapixels in a camera is considered quite advanced still today [in Japan and South Korea any self-respecting cameraphone has at least 13 megapixels of resolution]. The LED flash also has plenty of mileage in the US market, again advanced cameraphones like SonyEricsson's Cyber-shots, various Samsungs and yes, top end Nokias, have the Xenon type flash which is far more powerful.

But I know that, and you, our regular reader, know that, but most U.S. consumers don't know that. To them this iPhone 4 is an amazing improvement over what was clearly the "best smartphone" last year, witnessed by the number of iPhone clones now on the market from the Androids on down. Apple has managed to create an alternate reality for the U.S. market where it is seen as the inventor and innovator, not the copier. And in the U.S. market, I am sure the iPhone 4 will sell well. There is a nice heavy market of iPhone 2G and iPhone 3G models that need to be replaced.

Rest of the world will be underwhelmed
Beyond the USA, it gets more tedious. When Apple said they did the multi-touch and capacitive screen and sensors and app store, that all played well in Europe and Japan etc. But now? They roll out their new phone where the top feature is ... video calling? Video calling? The last time video calling was "cool" was around year 2000. Just about anyone who has a 3G cameraphone made by European or Asian brands, has had video calling for at least half a decade. Truly underwhelming. And honestly, the service is so low among consumer preferences, that most analysts have stopped reporting video calling feature usage. Stopped reporting its usage. I found stats from the U.K. regulator for 2007, where only 1% of consumers were using 3G video calls, even though most UK 3G services included an allowance of "free" 3G video calling minutes and the 3G penetration rate per capita in the U.K. in 2007 is about the level of where the U.S. is right now. This, the biggest change Apple celebrates, is not going to be seen as a big improvement in Europe or Asia.

But the part that will really annoy the carriers/mobile operators of Europe and Asia is that Apple's video calling is not compatible with standard 3G video calling. So now we have a weird fight against Metcalfe's Law [the utility of any network increases in the square of the number of the members of that network - i.e. a telephone network that has 8 users, compared to a network with 4 users, has twice the users, but 4 times the benefit to all members]. So we have a 3G consumer market, globally with 600 million paying 3G users, most of whom have a 3G cameraphone that includes video calling ability. And Apple's proprietary FaceTime launches now, not even compatible with the 85+ million population of old iPhones, iPod Touch's and iPads - FaceTime is only compatible with Apple iPhone 4, the first of which start to ship June 24. This is madness [to Europeans and Asians where literally hundreds of millions can do standard 3G video calling, and all 3G carriers/operators have set up the 3G video calling ability - they have even done the international 3G video calling interconnects! so you can make 3G video calls across countries and continents].

Then Apple touts multitasking and the LED flash and a paltry 5 megapixel camera resolution. Again years old technology. Apple seems almost to be drawing attention to the fact that it is behind on all these things. It's not that someone else points out that the emperor doesn't have clothes, it's the emperor himself who yells "I have no clothes."

Apple celebrates five major changes to the iPhone line, and Steve Jobs proclaims this makes it the biggest improvement in the iPhone of all time. Yes, in the U.S. market, each of those five changes has merit, because the U.S. consumer has not yet experienced very advanced phones, by and large. But in the rest of the world, Apple is kicking sand in the eyes of its own loyal supporters. How can they now go "celebrate" year's old staples like video calling with the second inward-facing VGA camera, or multitasking, or LED flash with 5 megapixels in camera resolution. It's like suddenly a car manufacturer brags about its newest model having fantastic innovations of windows that roll down, and adjustable seats, and an automatic transmission. Sorry, those were innovations in a bygone era. Today any car maker should be able to offer those as standard.

HD quality video recording is more current tech, but not bleeding edge. Many rivals can match that in similarly priced smartphones. 

The display is magnificent
So it comes to the ultra-sharp display. Yes, that can be cool, but now rivals offer 4 inch and even 4.5 inch screens - that have far more sharp resolutions than the iPhone 3GS [while not quite as sharp as iPhone 4]. Is that really worth it to go iPhone? Again, sorry for bringing up Nokia [but I am ex Nokia and know the Nokia past product line-up and its phone features the best], but let's go back again and see who showed Apple a better resolution screen. The original iPhone 2G [and upgrade 3G and upgrade 3GS all] had a screen resolution of 480 x 320. The new 940 x 480 screen resolution is not quite 4 times as good [technically, it's 3.9 times as sharp]. Now, what was Nokia's next flagship phone after the original iPhone 2G launched in June 2007? The next Nokia top phone was the E90 Communicator [what I've often called the best Nokia phone ever and by far the best phone of 2008 - and certainly a far better smartphone than the iPhone 3G-something many industry analysts and phone review magazines etc agreed]. So how was the E90 screen - it actually has two, as it's a palmtop form factor - but the screen is a 4 inch screen - larger than the iPhone's 3.5 inch - and had a resolution of 800 x 352 which is 1.8 times more sharp than the any Apple models of that time, or even up to newer Apple models a year later.

So the original iPhone screen resolution was "not perfect" - says Apple itself, because it has improved the resolution. The screen resolution is a very important factor to smartphones - says Apple as it selects the screen resolution as one of the five big changes to this latest iPhone 4. And who was the smartphone maker, who looked at the original iPhone 2G, and in less than a year, released a phone with nearly twice as sharp a screen? Nokia of course ... To see the future of the iPhone, look at an old top-end Nokia ha-ha ...

Mildly disappointing
To the rest of the world [where in Europe, Australia and advanced markets of Asia they have a long history of advanced smartphones] this could have been the "great" iPhone. And it offers almost nothing. Bug-fixes only. A cosmetic face-lift [plus literal face-lifts and Botox with the color bodies and the wacky colorful "bumpers"]. Apple could have gone for a significantly bigger screen, 4 inches to keep up with the Joneses, or push the envelope to 4.5 inches or even beyond. No, the screen seems pedestrian in size now at 3.5 inches. Obviously no cool sporty trimmed-down lower cost 'Nano' model. And no QWERTY. And I know I know, Apple will resist the QWERTY option, but if not a QWERTY-slider model, then give us something to go against the rising tide of Androids. 5 megapixel camera with LED flash? Apple is really not trying its best, when even Nokia's cheaper N8 gives us 12 megapixels and Xenon flash.

It won't mean that "nobody" buys iPhones abroad. But what it does mean - very perilously that those foreign customers will be very easily tempted to consider a rival - an Android maybe from HTC or Motorola or SonyEricsson or LG. Or to see what the new Samsung Bada is like. Or check out how the BlackBerry merges QWERTY with touch screens. Or see Microsoft's (Nasdaq: MSFT  ) new Kin phones. Or go with the trusty Symbian Nokias, which after all offered 3G and MMS and video recording and 2 cameras and video calling [and 3G video calling] and multitasking and an app store and TV out and folders and user-customizable home screens and 5 megapixels and flash [and on and on and on] over 3 years ago. And Nokia still gives all those things most of us truly do appreciate - a QWERTY or T9 keypad as an option in addition to touch screen in many models, and the replaceable battery, the micro-SD memory card slot, Flash compatible software, etc etc.

The iPhone might appeal to domestic consumers, but read why Apple needs to manufacture a new model in the second part of this article.

More From Bright Side of News*:

You can read from Tomi Ahonen at Bright Side of News* here.

This article was originally published by brightsideofnews.com and modified by The Motley Fool. 

Microsoft and Nokia are Motley Fool Inside Value selections. Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 15, 2010, at 1:30 PM, Turfscape wrote:

    Wow...talk about missing the mark. Author, this is a re-hash of the bevy of posts from the "anything but Apple" crowd. When you start with a conclusion before you look at the facts, you're bound to arrive at...your pre-determined conclusion!

    Most of the points you make have been made about the iPhone for 2 years now. And, yet, iPhone continues to pour revenues into Apple's coffers (and, in turn, shareholders coffers). You've missed the competitive advantages in the business model that provides long-term profits for Apple versus short-term for competitors. Why not, instead, compare the business model of hardware/software solution versus providing a platform for the sake of gaining ad revenues through that platform? THAT would be an interesting article. This I can read in the comments section of any Apple-related article, anywhere.

  • Report this Comment On June 16, 2010, at 1:09 AM, SeanTCasey wrote:

    This is an interesting article. The whole focus is on 'features' without any mention whatsoever of the 'end user experience' which IS what Apple is ALL ABOUT. What good are premium features on a device if they don't operate seamlessly? What's the draw if the UI is buggy as hell? Anyone who's owned an Apple device for any length of time develops of their own a loyalty to the brand because their products are smooth, sleek, dependable, and solid! Period. Sure, you may have an occassional consumer that's dissatisfied, but they are few and far between, and anyone with a working knowledge of tech devices will at least have a decent respect for Apple's line of products.

    The issue with 'features' when it comes to hardware and software is HOW they function in the USER'S hands: their fluidity, dependability, and ease of use, as well as their aesthetic. This is where Apple leads the way. It's not so much in the timely release of features as much as it is in their solidity, dependability, and aesthetic on the device itself. This is also where it's truly hard to Actually compete with a company that builds it's own product from the chip all the way to the software: the lines are less obvious all the way through and this translates into a seamless, fluid user experience that is dependable, pleasant, and sleek. Apple products naturally create loyal consumers, because they are that good.

  • Report this Comment On June 16, 2010, at 12:04 PM, sabbasaun wrote:

    Lots of words and no substance... You could have trimmed this article down by 95 by just doing a side by side comparison table/chart. Instead you go into a long diatribe about how insignificant the new iPhone 4 is while clearly missing the point that it's not just about having the best features "stats" wise. Apple and its users know that it's more about the overall useability and the experience. The US user base knows this and the rest of the world can't wait to get the same experience (as is evident by the huge waiting lines in Japan just to pre-order the new "lower" featured iPhone 4).

    On a side note: I'll be able to sell my "out-dated" iPhone 3Gs 16GB Black, for around $400 on Craigslist. If you're not good at math that's double my money I spent on the phone when I purchased it last year. In my book and hopefully any rational investor (this is an investment centric web site right?) that's a pretty damn good ROI. Can your Nokia do that?

  • Report this Comment On June 16, 2010, at 12:53 PM, Turfscape wrote:

    Preaching to the choir to the tune of 600,000 pre-orders. Perhaps not considering the business model, consumer market and user experience was just a TINY misstep in your article?

  • Report this Comment On June 17, 2010, at 1:18 PM, rajngai wrote:

    If Apple were only preaching to the choir with the iPhone 4, they should experience no customer growth in the next few quarters. Wanna take that bet?

  • Report this Comment On June 21, 2010, at 12:30 PM, Wantok1 wrote:

    Interesting article. I own a 3GS and absolutely love it, but the author is correct in pointing out that phone users in the rest of the world have long had many features that we in the US have not had on *any* of our phones. Why are we so far behind?

    And my friends from Europe, Asia, Australia, etc., are absolutely stunned when I tell them that here in the US, both the caller and reciever of a mobile-to-mobile call are charged. To them that's double-charging, and is illegal in their countries.

    So, the author raises a good point: why on earth does cell phone technology here in the US lag so far behind what's available in the rest of the world?

    One note: the author states that iPhone has finally moved away from a one-button design. Apparently he has never even held an iPhone in his hands, because all models, starting from the 2G, have had the dedicated volume button he refers to, the ringer off button, and screen off/power off button. Better research is always appreciated. Otherwise, an interesting and thought-provoking article. If Apple intends to stay competitive internationally, certainly it should be looking to innovate more radically for the next iPhone next year.

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