October's Apple [AAPL] iPhone 5 will quickly become the world's biggest-selling smartphone, potentially setting new success records as it seems it will be made available via the world's biggest network, China Mobile. iPhone 5 will also help many in the tech biz to make it through tough economic times -- and seems set to offer truly international 4G/LTE support...
[ABOVE: Apple-haters may enjoy the video above which shows a sharp-shooting grandmother taking potshots at iPhones and iPads. They'll be less happy to see how well-protected these devices are against damage by use of the ClearPlex screen protectors...]
Expect a 'significant upgrade' in iPhone 5
Sterne Agee analyst, Shaw Wu, believes the next iPhone will be a "significant upgrade" and reckons it's set to be made available via China Mobile. That's following years of negotiations between Apple and the gigantic carrier. Based on conversations with contacts within Apple's iPhone supply chain, the analyst states (in a statement provided to me):
"One other key feature we are picking up on the new iPhone is that it will likely be a 'true world phone' meaning the ability to work with the world's various 3G and 4G wireless networks. This includes China Mobile's proprietary TD-SCDMA 3G network. There are currently 4G trials going on in China: China Mobile, which recently introduced LTE in Hong Kong, has rolled out commercial tests for TD-LTE in mainland China, and China Unicom has started trials for LTE as well. Since carriers have yet to obtain 4G licenses and there is testing ahead, we believe that widespread adoption for 4G in China will likely be 2-3 years out meaning strong 3G support is critical."
This means Apple's iPhone 5 may well support 4G networks worldwide, rather than the insanely limited North American support offered by the iPad 3.
He added: "We believe the combination of technology support and enhanced features in the iOS 6 refresh tailored for Greater China including the ability for Siri to understand and speak in Mandarin and Cantonese, easier Chinese character input, and integration with popular internet services including Baidu, Sina Weibo, Youku, and Tudou, make iPhone an even more attractive platform and bring it closer to a partnership with China Mobile."
The impact of this cannot be underestimated. China Mobile is the world's largest mobile phone operator with about 655 million subscribers and already supports millions of iPhones on its network, albeit unofficially. If Apple tempts just 1 percent of China Mobile's existing user base to buy an iPhone, then it will add an additional 6.5 million users to its ranks next year. Demand is likely to be higher than this.
[ABOVE: You'll find full instructions to build your own version of this iPad-controlled LED wall with 544 LEDs via this link.]
Saving the system
The impact is much more than just sales. The impact will be to keep many in the consumer electronics space in business while the economy rocks. Here's why I think this.
I attended last night's Macworld UK Awards bash in London town. The event -- which featured the great, good and glitzy folk who populate the industry here saw live entertainment from contortionists, glammed-up hula-hoop dancers and psychotic clowns, courtesy of Circus of Horrors, which is nice.
I spent time chatting with people and picked-up that many -- retailers, distributors, manufactures -- are seeing no or little drop in the demand for iOS-related hardware or software products. Sales of add-ons for iPhones and iPads are keeping companies afloat, even while other areas of their business are being disrupted.
This is great, and provides some anecdotal evidence of something I've believed for some time: that iPhone/iPad owners don't just love their devices, but invest in them too. It's well known that iOS apps generate far more cash for developers than do the same apps on other platforms.
Now it seems this effect is also felt by hardware peripheral vendors -- iPhone users buy cases for their devices, buy battery rechargers, buy headphones. This isn't because they are necessarily the richest consumers, but because they love their devices and want to make them even better.
News that Apple intends changing the Dock Connector within the iPhone 5 will generate yet more sales for peripheral vendors, as consumers will be required to invest in new devices compatible with that connection.
[ABOVE: Third in last night's crop of amusing iDevice-related video clips -- the official video for a new song from band Trumpeter's Swan was shot and edited on an iPhone -- who says these things aren't creative tools?]
Dock in the arm
The move to a new connector will, unfortunately, also put some peripheral vendors in a tough position, as they'll be required to sign-up to Apple's official development schemes in order to manufacture compatible devices.
There's an element of enforced investment there which some consumers won't like -- Apple will need to do a very good job explaining why the new connection tech has been adopted, as many iPhone users have already made significant investments in their existing Dock Connector-equipped kit. The transition should mean iPhone peripheral vendors will continue to do good business in the months ahead.
(I won't make any comparisons between peripheral sales between Apple and other platforms, except to anecdotally state that the market for third-party add-ons for non-Apple devices is hard to research because it is so small.)
This move into China is likely to see Apple hit an already receptive market. Not only are its devices manufactured in China, but Apple is much loved by that country's consumers. Given that Apple's biggest competitor, Samsung, is a Korean firm, it is likely Cupertino will benefit from China's resistance to Korean products and its desire to invest in those devices which seem to benefit the country.
Apple may also benefit from its move to pay Foxconn workers more cash while attempting to improve working conditions inside the iPhone factory. This may have started as a damage control attempt to address legitimate criticisms, but it will also serve to boost interest in its products among Chinese consumers. After all, Apple is being seen to take a positive interest in improving working life in China, albeit after being pushed a little bit. Other manufacturers have not matched Apple's public commitment.
This suggests that when iPhone ships in China the company could see a huge spike in sales, driving 3G adoption there. Ticonderoga Securities analyst Brian White said in a note today that the world's largest carrier is "in need of the iPhone", a report claims. And, in October, it seems to be on the way to offer just that, and in doing so may help confirm the new Apple smartphone's place as the Samsung Galaxy-killer. Your thoughts? Pop them down in comments below.
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