Why Apple should consider more frequent iPhone updates

28 Comments

New numbers from Nielsen released on Thursday show that Android’s (s goog) market share grew in July while the iOS (s aapl) share stayed relatively flat. One stat in particular from Nielsen stuck out: Among early adopters, 40 percent would opt for an Android device as their next purchase, while only 32 percent would go for an iPhone.

Since the early adopter crowd is the group most likely to cycle through devices quickly, this makes sense. Android handset makers usually don’t adhere to any hard-and-fast update schedule, and they often release multiple devices or iterations of the same device within a single calendar year. If what you’re after is the latest available tech, Android has the edge, regardless of whether or not the overall user experience of iOS is arguably better.

Of course, it helps that Android has around a dozen hardware partners in the U.S. alone offering a variety of devices across all major carriers, but even among that crowd, some single device makers are beginning to pull away from the field with aggressive hardware upgrade plans.

The best example is Samsung, which announced a new 5.3-inch smartphone on Thursday at the IFA 2011 European tech conference. The new Galaxy Note, as the monster phone is called, also has a 1.4 GHz dual-core processor under the hood, as well as a pressure-sensitive touchscreen that can be used with a stylus for accurate drawing, sketching and writing. The huge 5.3-inch display boasts an impressive 1280×800 resolution, on par with many netbooks. Bristling with new shiny bits, it’s an early adopter’s dream device.

The features mentioned above won’t appeal to all, because as Steve Jobs has rightly pointed out in the past, most consumers are after an overall experience, not a list of specs. But one group, namely the early adopter group, is very much focused on the list of specs, and Samsung is showing that you can do well by appealing to that level of interest.

Early adopters buy early and buy often. The nature of Android devices makes it more possible for those on the edge to stay there, no waiting required. Given the rise in popularity of smartphones, combined with a generation of device buyers that grew up using them, we might see more and more consumers comfortable with device updates that are much more frequent than once (or less) yearly.

Apple doesn’t adhere to a strict yearly schedule with its Mac releases; approximately every six to eight months, it introduces minor overhauls and spec bumps when new processor tech is made available to keep its machines more or less current in terms of specifications. Doing the same with an iPhone might make sense and attract the wandering gaze of customers focused firmly on the horizon of mobile tech.

28 Comments

Andrew

First, I doubt Apple cares more about marketshare than they do profits. According to sites like Gigaom, Apple controls the lion’s share of profits in the mobile space: 48% in August, 2010 (http://gigaom.com/apple/apple-snags-48-of-mobile-profit-pie/) and two-thirds in July 2011 (http://gigaom.com/apple/iphone-snags-two-thirds-of-mobile-industry-profits/).

While I am no MBA, I suspect more iterations or more model variety will affect Apple’s vaunted supply chain model. The supply chain is an important component that makes Apple so profitable. Making more phone variety will complicate their supply chain, their manufacturing costs and hence, affect their profits.

I’m not convinced that the broader market is clamoring for bigger, more rugged iPhones, sporty iPhones etc. These are statements typically espoused by Android supporters who value “freedom” more than a typical consumer.

However, I am confident that should Apple want to compete in those markets it will do so as part of its profit motive and not some hazy belief in maximizing marketshare. If early adopters were an ongoing profitable market, why aren’t Android manufacturers making more profit than Apple?

Khürt Williams 

I think you’d got it right. If people are going to argue for diversification in the product pipeline they’l have to show a compelling business justification for doing so, and that justification must show how this leads to increased profits.

Khürt Williams 

Ryan,
I think more frequent release cycles will only lead to fewer consumer buying the current product because in a few months the new one will be out.

Frequent product updates also means shorter development times and possibly more bugs/errors which could hurt the brand.

Glenn Gore

Apple is famous for its “limited feature at launch” tactics. Take for example the camera on the iPhone, here’s my take on how Apple handled its feature launches:
Launch: The iPhone has a camera that takes pictures. MMS is not supported. Emailing pictures is not supported
Update 1: New feature! Your iPhone camera can take pictures AND movies, but you can only move them to your computer, not send the via email. Still no MMS
Update 2: New feature! Your iPhone can now send pictures via MMS but only to other AT&T customers. Still no emailing movies.
Update 3: New feature! You can now email movies, and can now MMS your pictures to anyone.
Update 4: New feature! The iPhone now has an LED flash
Android manufacturers would have enabled all these features at the product launch, but Apple trickled them out over the course of 2-3 years. I’m an Apple fan, but this trickle process is quite annoying and I would think sometimes makes potential customers choose other phones.

Khürt Williams 

Was there another similar device offering the complete feature set at the time? Android devices came later so could offer all the features at once since by the market had already determined the feature set.

Reiliec

Yes, Android had multitasking, PC-less sync, proper notifications years before Apple.

We get you love Apple, but even Jobs himself has said not everything in business is about profits. When you love your brand it’s also about passion, pride, art, etc. You sound young, bias, idealistic, & probably think everything you learned in business school translates into reality but it doesn’t. Your posts sound naive & ensure you will never get beyond middle management if you don’t open your mind. It’s the kind of attitude that will get you a job at HP, not Apple.

Michael W. Perry

More frequent updates would probably help sales less than having more models.

Imagine a car company that only has one model. When its One Car is new and innovative, it’ll sell well even if it doesn’t fit every customers needs. But when other companies bring out a variety of models that share the specialness of The One Car, but meet those specialized needs, they become more attractive and sell better. That’s precisely how GM was able to outgrow Ford. And that’s what’s happening with iPhones and Droids.

Since Apple made the Mac mini more versatile, its line of desktops and laptops cover the field well enough. (I’d still like a mini-tower.) Three models of desktops and five of laptops is probably enough. But forgetting that the 3GS is still sold ‘on the side,’ there’s really only one iPhone and two iPads, and those are serious lacks.

Apple needs a sports model of the iPhone that’s ruggedized and waterproof. It needs an inexpensive basic model for each cellular carrier. It needs a world-ready model that’ll work anywhere, and that comes (like the cellular Kindle) with global service at reasonable roaming rates. It might even create a productivity model with a slightly bigger screen. There are a lot of people who want more than an iPhone, but don’t want to lug around and iPad.

Apple needs tourist/traveler versions of the iPad and iPod touch with GPS and a WiFi VoIP phone. It needs an inexpensive, kid-proof version of the iPad (and perhaps the touch). And most of all, it needs a ruggedized version of the iPad for airlines, factories, warehouses and hospitals.

Apple also needs to abandon its fetish for thin and create LL (for Long-life) models that add thickness and a longer battery life. In most cases, that’d require little more than a larger battery pack inside a larger back cover.

The list goes on. Both models of MacBook Air need longer battery life. I get over four hours of use with my four-year-old MacBook. Why should I pay over $1000 to get a slightly lighter MBA with a five-hour battery life? That makes no sense. Make a MBA work for 10 hours like the iPad, and I’ll pay attention.

ML

I think Apple will have to consider an approach that is not just “one size fits all”. Much as they have different computers for different segments, they need to have different devices for people who may want to do different things. Why is it that there is only one screen size for an iphone or ipad?

Ultimately, Apple’s model of one device with the same chipset is going to have to evolve because the wireless carriers all use different chipsets for 4G LTE that are not compatible with each other. If apple wants to stay relevant in the wireless world they will need LTE and they will be forced to do something that they haven’t in the past, which is make customized models for US carriers. Maybe there will be more changes along with that.

Khürt Williams 

“Why is it that there is only one screen size for an iphone or iPad?”

Because it’s a pain in the ass for developers.

“Ultimately, Apple’s model of one device with the same chipset is going to have to evolve”

Why? What money is being left on the table by Apple continuing with it’s current strategy? Where’s the business justification?

ML

It sounds like you’re speaking from the point of view of the Company and an equityholder, which is fine, but did you consider that consumers of the product may have a different point of view? Android doesn’t have a 40%+ share of the market for nothing.

As far as the business justification for having to evolve, it’s pretty simple. There is no one chipset for LTE that will work for all of the carriers. If Apple wants to offer LTE devices, which I think most people agree they do, they will need to offer carrier specific models in the US.

Steve

So they’re comparing iOS, which has only one manufacturer, Apple, to Android, which is designed by Google but used by multiple phone carriers across numerous devices? This is the very definition of comparing Apples and oranges. Pardon the pun.

Releima

nobody ever used this argument the last decade while Windows was over 95% marketshare. there were hundreds of Windows laptops compared to just a handful of Mac’s but Windows has always been considered king.

marketshare is marketshare, no one is stopping Apple from releasing multiple models at multiple price levels. therefor that argument cannot be used to “defend” Apples flatlining share.

Kjetil Uthne Hansen

“Among early adopters…” who and how many are the early adopters? – who defines the “early adopters”? If the early adopters are those who bought every single iPhone model the first day, and constitute say… 3% of iPhone owners – the ones considering an Android would be some 1,2%.
In other words – how large is this “early adopter crowd”? – statistics presented this way just don’t make any sense, and only twist the facts.

Apple don’t need to release iPhones more frequently – they have a system called “updates”; a fun and elegant plot, where users can install new systemsoftware on their phones for free and without effort.
– I have friends using Android feeling the need to proclaim on Facebook and Twitter about how they “finally managed to upgrade” the phone.

Khürt Williams 

Apple don’t need to release iPhones more frequently – they have a system called “updates”; a fun and elegant plot, where users can install new systemsoftware on their phones for free and without effort.

Brilliant! Yes, perhaps the frequent Android releases are due to the challenges consumers face in getting update firmware for their devices.

Ted T.

There are only two factors limiting iPhone sales:

1) Carriers. Getting the iPhone on China Mobile, Sprint, t-Mobile, etc. etc. etc. will have a huge impact on sales. Currently the iPhone is outselling all Androids put together on AT&T and on Verizon. Think other carriers would be any different.

2) Apple’s ability to make enough iPhones to meet demand.

Dude

Yes, other carriers would be different. Because many people are with AT&T only because they want an iPhone. You are assuming that the customer base of AT&T is randomly selected. It is not. t-Mobile customers who want iPhones already switch to AT&T. If t-Mobile offers an iPhone, there will be takers, but not the same percentage as AT&T and AT&T will see their percentage drop as customers who dislike their service, but stay for the iPhone leave.

Ant

I think the reason the ‘early adopters’ prefer Android has a lot more to do with price. It would be interesting to see how much of the 40% would be left if Apple dropped prices. Remember the majority of Android handsets are free! The fact that the difference is only 8% considering how many Android handsets the iPhone currently stacks up against speaks volumes. There really is no story here and Apple certainly won’t be losing sleep over it!!

Guest

When you can STILL have a hot-selling phone (iPhone4) that’s 15 months old… and even your older 3GS model (27 months old)… why in the world would ANY company say … “let’s release new phones every 3 months”????

I’m glad gigaom.com doesn’t design phones.

pk22901

Ought to relate early adopters to device pricing. Many Android phones are sold for $250 and less. Perhaps we have much interest based on low pricing.

Apple’s rumored to be making an iPhone 4′ which will be sold for $300. How the early adopters react to this model will be interesting.

Michael Schmidlen

Could it be that the open nature of Android, versus the steeped in paranoid level secrecy, walled-garden approach of Apple is a bigger contributor to this trend??? Is the economy contributing to consumers unwillingness to pay the Apple “premium”? Is Apple’s past history repeating itself???

hyde

First, the Nielsen numbers are for the U.S. only. Second, Apple should iterate iPhones faster because Android makers do? How’s that working for tablets?

Teneista

tired statement, ask again in about 1-2yrs & lets see how iPad’s marketshare is compared to Android.

numbers are US only? be grateful, worldwide numbers are even less (Apple around 18% & Android around 53%).

just the fact Darrell is the 1 writing this article should lend some rationale that Apple needs to diversify their formula if they want to stay relevant in the next 5-10yrs. believe me, nobody wants Windows-like dominance all over again but in the mobile space, but as of right now thats where it’s heading.

Khürt Williams 

Numbers don’t indicate profitability. Dell and HP have huge markets shares but little profit on their computing products. Apple has a much smaller market share for computer yet that segment of their business is very profitable. Why would Apple follow a model that lead to reduced profitability? Do Apple’s shareholders care about market share bragging rights or profitability?

Ryan Lawler

Could it be that iPhone share fell because Apple owners generally know that the iPhone 5 is being issued soon and they’re holding out? Can’t we just expect to see this pendulum swing back into Apple’s court upon the iPhone 5 release?

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