Apple 2013: iPhone diversifies as Cupertino fights back

You often hear it said that Apple [AAPL] is doomed to fail, outflanked by competitors in every market it will never succeed without Steve Jobs, it's over-controlling ways are anathema to switched-on consumers, and anyway, it started all the smartphone litigation.

[ABOVE: An internal Apple video discusses its philosophy for retail stores.]


You often hear it said, but this doesn't make it true. Yes it faces stiff competition, but it has done so ever since the company's inception. Yes, Steve's gone, but his company isn't just about a one-man army, no matter how useful it became for all of us to personify the firm as the feller.

In any case, if it's over-controlling ways are such a huge turn-off for customers, how come iOS people are active users, while Android's army hardly make a blip on any essential usage data? Android users don't even seem to shop online. As for the litigation, Apple will argue that it only began litigation because it felt it had no choice.

We could argue about these semantics forever, though there's little point, the discussions have become polarized, many have become partisan in their opinion. You can't change what's inside a closed mind. Those who like myself believe the truth sits between the two positions are used to being pilloried by one side or another at this stage.

It's also true that no one outside of the boardrooms in which these decisions are made have any true visibility over what's taken place, the rest of us just have opinions based on what evidence has emerged so far.

What we do know is that Apple is used to competing with everybody. It learned how to do this during the days of the Microsoft monolith, when the company was discounted as dead or near dead every couple of weeks. It didn't die and current reports of its imminent passing also seem somewhat exaggerated -- it's looking to expand its reach, not to quietly slip into history with a rueful sigh.

So how might it achieve new success in 2013? Let's take a look in our crystal ball...

Apples iPhone nano plan for 2013

[ABOVE: A nice crystal ball picture, care of Bitterjug.]

The diversification project

Look closely and you can already see the signs: Apple will diversify.

The iPad is arguably Apple's most important product. Just weeks ago the company introduced a 7.85-inch model to sit beside its now fourth generation range.

The move to diversify its tablet offering isn't a unique step -- it's one of several planned steps as the company acts to thwart those attempting its demise. Indeed, Apple's history shows ample evidence that once it achieves a hit product, it moves to diversify its range:

  • The iPod became hugely popular, so popular in fact that it wasn't eclipsed until Apple introduced the iPod mini and subsequent iPod nano.
  • The iMac set a new standard for consumer PCs. It captured the mood of its time and became the computer all the rest of us lusted after, even if we could only afford some beige box from another manufacturer. The Apple did it again with its iBook laptop, jumping aboard the emerging mobile device gravy train.
  • The MacBook Pro became so popular the range eventually grew to include the MacBook, MacBook Pro and MacBook Air.

Despite such evidence there's an enduring misconception that Apple doesn't diversify its product ranges. That's just not true.

Et tu, iPhone?

Apple has even diversified its iPhone. The current range now consists of the iPhone 5, iPhone 4S and iPhone 4. These three devices look pretty similar but they are indeed different devices.

When the iPhone first appeared in 2007 there were many -- far too many -- industry watchers who seemed unable to understand why Apple had introduced "a phone".

These days people of similar ilk dismiss each iPhone update as nothing more than "incremental", using their limited opinion as gist to their self-created mill in which they maintain Apple's "lost its innovative edge," a point to which they sometimes add, "it's not the same without Steve."

They don't have clue.

Apple is preparing to diversify. Here's how next year pans out, though please forgive me if some of these speculations don't happen quite according to this imagined plan.

Beyond the Mac

The first quarter of 2013 will see Apple introduce a new Mac Pro. Apple CEO, Tim Cook has previously promised the new desktop system will be "revolutionary", and it's pretty clear you'll be looking at a high-resolution Retina Display quality Cinema Display to go with it. These Macs will lack optical drives, though you'll be able to pop one inside as a build-to-order version.

The MacBook Air range will expand and become thinner. We know this is part of Apple's plan on strength of this Digitimes report.

Notice how Apple's quietly changed the release cycle for the iPad? Notice how the iPad 4 and iPad mini both appeared just in time for Christmas? What does this mean?

Apple has often tried to generate interest in new product families by introducing them in the first half of the year, though that's not a consistent pattern. The latest iPads are available now, and I can't see Apple updating these until Q3 at the earliest: so what might be the new product family the company plans to introduce?

The Apple TV

Many consider the Apple television as a likely contender. It may well be, but with the screen expected to be at an industry-beating high resolution (to match all its other products), the company is likely to test its supply chain by seeding the equally high-res new Cinema Display first. I can see the Apple television being a highlight at WWDC 2013, when Apple also discusses future API's for software development for that new platform.

As WWDC approaches it's likely we'll also see Apple begin to reveal the next version of OS X. We already know Apple's testing the OS ("Lynx"?) as Web traffic reports show site visits from machines identifying as running OS X 10.9, well, allegedly. I've not seen any.

There's likely to be lots of excitement at the introduction of the new OS, given it will feature Siri and Maps support along with a host of iCloud-focused improvements, including better data browsers so users can see just what they have stored there.

You can also expect sundry additional improvements to bring a little iOS to the OS, and given the increased prevalence of high-res displays across the Mac range, it's got to have a focus on enhanced graphics performance.

Emerging necessity

Apple's likely to continue its attempt to drum up business in the developing markets. It must. Developed markets continue to suffer the ravages of a financial depression that's being marketed to us as a new age of "Austerity", and this is bound to impact everyone doing business in these territories. This means staking strong positions in these emerging markets is absolutely essential.

As part of this we'll see Apple move to expand its retail presence in new countries, with Brazil, Russia and India joining China as key strategic locations.

However, given the relatively low GDP in some of these areas, Apple also knows it must introduce solutions that will appeal to price-conscious consumers there.

Given the increased competitiveness within the smartphone sector, the company knows it cannot simply rely on the fading glory of the standard model iPhone to achieve this. The iPhone 5 may have a larger display and a host of additional improvements in comparison to the preceeding models, but the fact remains that it isn't the darling of the media it once was.

Making iPhone cool again

This means Apple needs to excite people once again. Historically the company has been pretty good at this. Not only that, but it needs to introduce an iPhone variant that can be mass manufactured in huge quantities and can be offered up at a relatively affordable price.

In other words, it needs to introduce a cheaper iPhone, however it cannot afford to denigrate the value of its existing model. The new device needs to offer an iPhone-like experience but must be sufficiently different to get consumers excited.

That launch must be set to appeal not just to the company's existing heartlands, but also to those new territories its is aiming to stake a place within.

Enter Gene Munster who this weekend claimed Apple intends launching a low-cost version of the iPhone for the China and India markets. He believes Apple will offer a sub-$200 model by 2014.

Claims that Apple intends introducing a smaller, cheaper iPhone aren't new. There's been talk of an "iPhone nano" since 2008.

However, the company now faces a perfect set of motivational forces to make such an introduction necessary:

  • To expand its market and grow its slice of the sector
  • To drive sales in emerging markets
  • To generate interest and excitement in its products
  • To compete with an increasingly vibrant Android market
  • To maintain the logical progression for mobile devices toward smaller and more discreet gadgets.

When I read reports of Apple's inevitable demise, I do question the logic of those critics who tend to think only in the here and now, rather than pondering historical inevitability. In the longer term future, it seems likely Apple will make aggressive moves into the market for connected domestic devices.

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Copyright © 2012 IDG Communications, Inc.

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