Apple’s relevance and the $1,000 iPhone

Another year, another iPhone(s), another annual event of crashing servers, jammed data lines from folks who stayed up until all hours of the night (in the United States anyway), and frustration from those that could not part with their hard earned (or borrowed) money once it was possible to pre-order the new device.

This year’s new iPhones were even less of a secret than last year’s iPhone 5s and 5c. The often rumored Apple Watch actually remained in the shadows, with its fate left to conjecture right up to the announcement this past week.

Apple broke new ground in a couple of ways as well. While not saying anything directly about it, the company arguably surrendered to consumer demand for bigger screens. The new iPhone 6 and iPhone 6 Plus deliver on that front despite the one-handed comfort the previous generation offered. The company also announced a new product with no firm availability date with the Apple Watch, “early 2015,” something I cannot remember happening with an Apple product, ever.

The fan bases of Apple products or competing platforms have been throwing their barbs back and forth as expected. A particular favorite jab I saw shortly after the announcement was a comparison graphic put together by Ron Amadeo over at Ars Techinca. The graphic has seen wide circulation in social media since. In short, it welcomes iPhone users to the year 2012, as they finally have a feature set that matches what some Android flagships have had for a while.

For those that can take a joke, have a chuckle and move on. For those that cannot, relax, this is not an anti-iPhone rant, nor is it an anti-Android or Windows manifesto. As it is, I moved away from the iOS ecosystem years ago, with an HTC One (M8) Google Play Edition, and Nokia Lumia 1520 now serving as my daily drivers.  I know that will not likely hold back many-a-fan-boy in the discussion, but even with the ribbing Apple is getting from the competition, the company’s position has become far more relevant, and it is due to a rather comprehensive set of hardware and service solutions.

Apple Watch

While some might argue that Apple is a bit late to the game when it comes to wearables, that is really only part of the picture. Yes, Apple did announce a product before HTC or Microsoft have even entered the arena, but Android Wear, Samsung, Pebble, and others have the jump. We also got to see a lot more of the Apple Watch than what we saw of the new iPhone, so it is anything but vaporware.

Since consumers have to wait until sometime after the holiday season to buy the watch, the onus is on Apple to retain interest from its customer base that is being enticed with new and ever-evolving products, many of which will have, or already have, a significant price advantage over the Apple Watch’s $350 starting price.  Considering timing and price, I can't shake the feeling that "early 2015" was not the planned roll out for the Apple Watch.

Apple did right by its iPhone 5 generation owners by ensuring the new wearable will work with those devices, which may draw them to make an investment in the wearable over spending a few-hundred on upgrading their device, particularly iPhone 5s owners, since that device is still a contender among flagships.  It also opens the door for wider Apple Pay adoption.

As things are now, where the Apple Watch stands out is in functionality, or at least the promise of functionality, the level of which is not available on any other platform. While some will pine about the closed ecosystem that is Apple, there is no denying the depth of the functionality or form factor of the hardware. I do not need to discuss whether or not people like the looks or not because it is irrelevant, people are going to like it, leave it, or feel ambivalent about it.

The $1,000 iPhone

Even though I divested myself of the iOS ecosystem a couple years ago, that does not mean I am going to hammer the new iPhones as a fan boy. In fact, I might pick one of them up for myself sometime after the mad purchase rush has subsided a bit, and will certainly be picking one up for the missus who likes the iPhone. However, I do have a couple criticisms about the new line of smartphones from Apple.

First, is the absolute highway robbery for storage. I’ve ranted about this a couple times in the past, but in Apple’s case it is not necessarily an issue of not enough storage as it is the price of admission for that storage. Second, there is one device that will certainly not be on my list of acquisitions: the 128GB iPhone 6 Plus, retail price, $949, or a cool $500 on-contract.

Those are the prices of full blown, full function computers and 2-in-1 devices. The top shelf iPhone even costs more than a decked out iPad Air with the same storage and cellular connectivity, which retails for $929. I understand that there are those who want as much media residing on their device as possible, but this is clearly a device for those that are inescapably “all-in” with the iTunes experience and want all their media with them, time to pay the piper.

Remember those are prices in the United States, before sales taxes (which typically range between 6-11% at a state level). The economies of scale make the price of the iPhone an order of magnitude more expensive in nearly every other market around the world. In the United Kingdom, the same iPhone 6 Plus will cost £699 (including VAT), or $1,140. In Italy, they will be shelling out €949 ($1,230). Russia is pushing 42,000 Rubles or $1,111.

As I already noted, Apple made an appropriate response to market demands with larger screened hardware. The quality of Apple hardware has never been much of a concern to me and despite a few misgivings I might have about the user experience of iOS, mainly the seven-year-old grid of icons, iPhone users receive system updates more reliably than from any other platform, a benefit of the tightly controlled environment that is Apple. iOS 8 brings parity with the new hardware and augments what I think will be a vital cornerstone of the mobile experience of the future, which is Apple Pay.

Apple Pay

Credit where credit is due, Apple Pay is the differentiator that gives the iPhone (and Apple Watch) an edge, at least in the American market for now. This is where we can see the benefit of that “fenced-in” world that Apple has built such a robust ecosystem.

Apple leveraged its strong market position in the United States to sign on every major bank, like American Express (the bank), Chase, and Wells Fargo, to its new payment service, and there are more waiting in the wings like Navy Federal Credit Union, PNC, and USAA. Support from banks is critical, but Apple has also ensured that American Express (the card), Visa, and MasterCard are on board as well, potentially bridging gaps the credit issuers (banks) might leave. This may ease the integration of debit cards too.  I reasoned several months ago that banking apps alone are potentially a major impediment to the growth of Windows Phone. Moreover, Apple Pay basically leapfrogs over Softcard (formerly ISIS) and Google Wallet.

Google Wallet ostensibly has the same retail exposure, but thanks to the carriers, in many cases, it was not available to consumers due to conflicting interests with Softcard (developed by AT&T, T-Mobile, and Verizon) or other services. The result was low exposure, coupled with Google’s hit-or-miss marketing, carrier bloatware, and 31 flavors of OEMs in the mix.

Apple continues to write its rulebook by which it directs its interaction with the wireless industry in the United States. The devices have everything Apple wants and zero carrier bloatware. It is an example where a company with the resources to do anything, and the will to use those resources, breaks through potential barriers as if they do not exist. Even where Apple does not hold similar market share to the US, iOS is a wholly unaltered experience out of the box. Windows Phone can make a similar case, but Microsoft does not have the wherewithal or market influence to follow Apple's example.

The Apple faithful can rightly argue that mobile payments will now become more mainstream. I’m in Northern California which is not exactly a backwater to technology.  You know how many people I’ve actually seen pay for something with their phone (not counting scanning a Starbucks card)? Zero. None. Nada. Apple’s install base, while a smaller share than “big Android,” is ubiquitous, and that lays the groundwork for setting tangible benchmarks by which all others will be measured.

A fenced-in world pays off

Between market share, wide adoption by OEMs, the near ubiquity of Android, and the partitioned, controlled, and integrated focus of iOS, we are seeing a two divergent paths of success. Apple owns the non-luxury high-end market in the battle of mobile platforms. The new iPhones give away nothing in terms of Apple’s intention to maintain that position.

It is not a perfect world for Apple, but the “PRO” column has far many more checkmarks in it than the “CON” column. The past several weeks and months have seen all sorts of leaks and concept renders about the iPhone, we read all manner of theories about an “iWatch,” and media along with industry analysts were intrigued by an Apple payment service.

This past week, Apple effectively delivered on all fronts, shifting the landscape of mobile again. The company has not been “first to market” with a lot of things, however, Apple made good in a way that only Apple could – it made sense of the technology that us geeks let ourselves get carried away with. For Apple’s existing consumer base, and likely a few converts, that will change everything, again.