Is Tim too timid for Apple?

by Raj Narayan    Sep 16, 2013

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Make no mistake! Tim Cook has a job on his hands. Ever since Steve Jobs redefined smartphones with his unique touch (screen), iPhone users have come to expect miracles from Apple each time a new product was launched from its stables. This time was no different as the Cupertino-based company came out with not one, but two iPhone models – the 5S and the 5C.

If the iPhone 4 was defined by a change of form, the 4S ruled the heart as the last product launched by the inimitable Steve Jobs. The iPhone 5 had a bigger screen and was sleeker while the only thing going for the new models seems to be its fingerprint-led security features. So, what, is how analysts approached the launch. For, they believe that Apple has missed a major trick with its pricing that could end up turning away Gen-Y users in India, China, Brazil and Indonesia.

Of course, one might ask… what do users now expect the iPhone to do? Double up as a coffee maker? For one, investors believe that the two new phones aren’t all that hot. A day after the announcement, Apple shares fell 6%, its biggest single day fall in eight months. The general view was that the 5C wouldn’t measure up to the company’s pitch as a ‘low-cost’ iPhone and the 5S is bereft of a game-changing piece of technology.

Is it a Dead Loss?

While everyone agrees that the new phones aren’t actually a complete washout, analysts are questioning Apple’s incremental approach to product development. Says Toni Sacconaghi, analyst at Sanford C Bernstein, “Apple continues to risk being relegated to a high-end niche player, akin to its role in the PC market… a shame, given its pronounced first mover advantage in smartphones.” 

The Guardian quotes the analyst to say that high-end smartphones are expected to have limited unit growth going forward, making revenue growth a challenge.  Read the 10 Things You Need to Know about the Two New Models.

Does this mean Apple would lose out to its competitors in the smartphone market, especially the Android-powered design anachronisms coming from the Korean giants Samsung and LG? With Nokia set to get the ‘kiss-of-life’ via its deal with Microsoft, can Tim Cook really create the sort of ‘shock and awe’ that Jobs managed six years ago while debuting the iPhone? 

Intriguingly, most of the criticism that Cook’s two new models copped comes from their respective price points. A report from Canalys market research suggests that those looking for a cheaper iPhone would make do with the 4S, especially in India. The challenge for Apple is that it does not have any role in the Indian smartphones market, categorized by the Rs.7,000 to Rs.12,000 range. Apple accounts for less than 2% of this market and therefore the new phones might only interest the ‘well-healed’ or the fan boys of Apple.

iStupid or iSmart?

Most research companies throw data suggesting that Apple is losing market share outside of the United States with emerging economies like India, Brazil and Indonesia moving towards Android-powered Samsung devices. Canalys estimates that Sansung accounted for 36% of all smartphones sold in India during April-June quarter, accounting for 46% market share as against 5% held by Apple products.

Of course, there could be some method in Apple’s madness. Anshul Gupta, principal research analyst at Gartner holds the view that Apple would be happy with the low-volume, high-margins model. “I don’t think Apple wants to play the market share game right now.”

Sounds like a plan. The question is why did Apple take such a long time to come up with some modest changes to its product line? Where are the bold moves that one saw during the Steve Jobs’ time that resulted in breakthroughs after breakthroughs?

Says Bob O’Donnell, analyst with IDC, “As time goes on, each of these events will have fewer surprises. Apple needs to take a risk and shake things up again. Otherwise, people are going to write these things off as being not as compelling as they used to be.”

We believe, people are already feeling short-changed and it is for Tim Cook to find the answers.

As Troy Wolverton, a technology columnist for San Jose Mercury News says (read the story here), “Given the success Samsung and others have had with phones with displays of about 5 inches or so, a large screen iPhone seem to have obvious appeal. And given that much of the future growth in smartphones is expected to come from less-developed countries, a truly low-cost iPhone would seem to be a no-brainer. But, instead, Apple chooses to stay the course. If you want to know why, you’ll have to ask Timid Tim (Cook).