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  • Featured, Gadgets - Written by on Wednesday, October 5, 2011 7:36 - 27 Comments

    Apple just lost Australia’s smartphone conch

    opinion When then-Apple chief Steve Jobs revealed the iPhone 3GS to the world in June 2009, the broad reaction from technology enthusiasts globally was one of muted enthusiasm.

    The handset’s predecessor, the iPhone 3G, had, after all, literally set the world on fire when it launched 12 months previously. Sure, the original iPhone had already done much to revolutionise the mobile phone paradigm, but it took the launch of the iPhone 3G to truly take that incredible level of innovation to the masses. At the time, it was a double-punch combination of features that propelled the iPhone 3G to stardom; namely, the introduction of 3G speeds that unlocked the handset’s Internet capabilities, and the introduction of a wealth of third-party software in the form of the App Store.

    The launch of the iPhone 3G was particularly huge in countries like Australia, where the original iPhone was never launched. The week of the launch felt like a festival in Sydney, where many fans queued up for days to buy an iPhone at midnight, accompanied by lavish parties put on by the major mobile telcos.

    By comparison, iPhone 3GS week in Australia in June 2009 was still big, but there was a more muted feeling about the festivities. It was as if the nation had held its breath, awaiting another marvel from Apple, and received only a small glimmer in return; a faint rainbow. Engadget summed up the feeling well in its review of the iPhone 3GS. “The iPhone 3GS is a solid spec bump to a phone you already own … but it is, at its core, a phone you already own,” wrote the publication, questioning whether a tech specs speed bump, a compass and video recording features were worth paying a hefty upgrade fee.

    Of course, the iPhone 3GS still sold very well.

    The reasons for this are pretty clear. At the time, Apple wasn’t so much cannibalising the smartphone market as creating a market for a new type of smartphone. The step change between the functionality offered by the iPhone range and that of rival phones such as Nokia’s Symbian line-up, Research in Motion’s BlackBerry and other rivals from the likes of Sony Ericsson was incredible. Sure, on paper many of the phones looked the same, but Apple’s glorious touch-screen and user interface set the iPhone apart. Its competitors were highly functional, but the iPhone was beautiful as well as wonderfully usable – and that’s something consumers will never forget. The launch of the 3GS merely enhanced the line’s existing allure.

    In addition, in 2009, today’s major rival for consumers’ attention, Android, was barely a glimmer in Google’s eye. Just a couple of Android phones had reached the Australian market when the iPhone 3GS launched, first among them HTC’s Dream handset, which was viewed principally in Australia as a curiousity which would appeal to die-hard anti-Apple bigots who would prefer to opt out of its somewhat restrictive ecosystem and choose a more open source, half-baked iPhone alternative.

    In short, the iPhone 3GS succeeded in Australia because it represented a substantial upgrade on a phone which was already independently setting the market on fire, at a time when the competition was extremely tepid. The iPhone 3G was a paradigm changer and the 3GS accelerated the change.

    I relate to you this context not to give you a history lesson (after all, it’s history that we’ve all lived through), but to illustrate how different is the context in which Apple’s latest opus, the iPhone 4S, will launch in Australia later this month.

    Unlike that previous incremental Apple upgrade, the iPhone 3GS, the iPhone 4S is not a paradigm-changer, and it does not launch in Australia at a time of diminished competition in the market. At times, it seems hard to believe how fast Android smartphones have taken over Australia’s mobile phone market. But taken it over, they have. The mobiles phones that dominated 2008 and 2009 in Australia were the iPhone 3G and 3GS (just ask Optus, whose network buckled under the load). But 2010’s banner handset was arguably the HTC Desire, which introduced the nation to Android seriously for the first time and put the smart money back in Telstra’s wallet.

    And in 2011, HTC and Samsung have divided up Australia’s smartphone spoils between them; HTC with a handful of world-class handsets (the Desire HD, the Desire S, the Incredible S and the Sensation), any one one of which is pretty close to being the equal of the iPhone 4, and Samsung with the Galaxy S II, which right now I personally consider to be the best mobile phone of any stripe in Australia, by any standard.

    If we had to say one thing about HTC’s handsets, it’s that they’re beautiful. Their hardware finish is polished and complete, and they simply feel lovely in the hand. In addition, the subtly moving Sense user interface layered on top of Android is just joyous to play with; big bold colours and a sense of motion beguile the eye. Samsung, in comparison, is more functional – but the Galaxy S II is so light, so powerful and does everything (especially photography) so well that it’s little wonder that it’s popping up in geeks’ pockets everywhere.

    Into this crowded market comes the iPhone 4S: A blocky handset with a smaller 3.5” screen (compared to the more usual 4.3” Android models) which has a penchant for slipping from users’ hands, and with a user interface that hasn’t been substantially updated since the original iPhone launched almost half a decade ago in 2007.

    The 4S’s chief virtues – as announced by new Apple chief Tim Cook this morning at 4:30AM, Australian time – are a more powerful CPU, a better camera and faster network access. But all of these features – as Ausdroid and Engadget have painstakingly chronicled – basically see the iPhone catch up technically with existing handsets like the Galaxy S II and various HTC releases, which have been on the market for months. The software upgrades introduced with iOS 5, also to launch this month will be available for those already using Apple’s iPhone 4, with the exception of Apple’s new voice assistant Siri, who will only be appearing on the 4S.

    In this context, Apple faces three likely categories of Australian customers for the iPhone 4S. On the one hand, its keenest early adopters — those who already have an iPhone 4 – will see very few reasons to upgrade and will likely delay their purchasing cycle until the iPhone 4’s real successor is eventually announced. Apple doesn’t need to worry too much about this category of buyers. They’re pretty much locked into its ecosystem at this point.

    But it’s when you look at other types of customers – those who have legacy, non-iOS, non-Android handset, and those who are coming to the end of their Apple or Android plan, that you start to realise that the company is going to face a pretty harsh dogfight for market share in the short to medium term.

    Unlike when the iPhone 3GS was released in 2009, new smartphone buyers in late 2011 are incredibly spoilt for choice. Telcos like Optus and Vodafone have already started discounting the Samsung Galaxy S II – currently Australia’s top handset – and discounts will no doubt hit other top handsets as we head towards Christmas.

    In January and February, every major smartphone vendor except Apple will announce an absolute slab of new, primarily Android-based handsets at the CES and Mobile World Congress mega-conferences, and the iPhone 4S will slip out of mind quickly as Apple’s also-ran handset falls behind in terms of new features, basic specifications and user interface design.

    Perhaps most disturbingly for Apple is that the company also faces a second threat. It’s not just Android eating the company’s lunch, but increasingly Windows Phone 7. The first bunch of fairly tepid phones released over the past year running Microsoft’s new mobile platform have just been given a new lease of life courtesy of the Mango update, and Australians are currently quite enthused by the system in general.

    I wouldn’t be surprised to see an incredibly resurgent Nokia in Australia over the next year as the company releases its first new Windows handsets into a market which loves shiny new toys. Nokia’s strength has always been its quality hardware – which will be a winning combination when paired with Microsoft’s eye-catching WP7 user interface.

    Now, none of this is to say that the iPhone 4S won’t sell well in Australia. The iPhone 4 needed an update to keep up to speed with the competition, and the company’s announcement this morning was precisely that. On paper (we won’t know more until review houses get it into the labs for testing), the iPhone 4S will easily take its place amongst the top ranks of Australia’s smartphones. It will hold the line for Apple in terms of market share.

    But that’s all it will do.

    The release of the iPhone 4S simply throws a ring fence around Apple’s smartphone market share in Australia, protecting and securing it for the time being. On the other side of that fence, HTC and Samsung right now are frolicking with each other in a sun-lit field with unicorns, whispering tiny delights in each others’ ear as they plan for major new smartphone releases in early 2012 that will put any thought of the iPhone out of customers’ minds. And even Nokia is no doubt evaluating the new potential for market share gain unlocked by Apple’s weakness.

    Despite already evident disappointment with its launch this morning, many Australians will believe the iPhone 4S to be a worthy device which maintains Apple’s stellar reputation. But the truth is that the release of the iPhone 4S just makes Apple’s job harder. To do more than just tread water, Apple’s next smartphone release will need to be truly revolutionary indeed. Because in the meantime, its competitors will be making hay under a radically diminished Apple star.

    Cupertino just handed the conch to its competitors. Now it’s their turn to shine.

    Image credit: Apple

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    27 Comments

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    1. David Braue
      Posted 05/10/2011 at 8:43 am | Permalink |

      I, like many, have been disappointed with what the iPhone 4S is not: bigger, or offering a more capable interface that’s not built around grids of apps. But when you consider what it is, it is still a nice incremental upgrade and will do very well in the marketplace. For all the whinging, 4G and NFC and all those other features everybody wanted, just aren’t ready for prime time yet and were never really in with anything resembling a chance.

      A bigger screen was the one improvement Apple really should have added, but it was never going to make a major change in form factor for what is a point upgrade. Guess we all have to wait for the iPhone 5 to bow next year, or just jump ship to Android.

      • Posted 05/10/2011 at 8:55 am | Permalink |

        “it was never going to make a major change in form factor for what is a point upgrade”

        Why not? HTC did. Does Apple have less manufacturing capacity or ability to respond to change?

        • Posted 05/10/2011 at 2:25 pm | Permalink |

          Apple makes it’s gaping profit margin from bulk buying parts in quantities that manufacturers with dozens of constantly refreshing models can’t match. Changes in form factor necessarily force changes in the form factor of some of those parts, most particularly the battery, which is custom designed to fit in the null space left by other parts. To maintain that advantage they have over the other manufacturers you have to commit yourself to buying, and then using, a lot of parts. Too soon for the refresh.

          • wintermute000
            Posted 05/10/2011 at 3:25 pm | Permalink |

            don’t forget the gazillion iphone specific peripherals/docks/etc.

    2. Posted 05/10/2011 at 8:46 am | Permalink |

      The biggest problem here is that the tech media in general – (not Delimiter/Renai specifically) – have been a rolling free publicity machine for months for the “iPhone 5″.

      There have been wild theories and pontifications about what it would be, what it would include and not include. I saw one tech outlet actually manufactured their own “prototype” based on the various rumours, just so they had some kind of “exclusive”.

      Now that the final product has been released, people are just let down because it hasn’t turned out how everyone was predicting.

      Well, shit.

      In the end, there is always this expectation that Apple must revolutionise the market once a year, and that’s the expectation of the people – not Apple.

      There really wasn’t much extra you could do with a 3GS over and above the 3G – it was faster, had more storage, a bit better camera, and an improved gyroscope/GPS system that let them include a compass app.

      Hands up who uses the compass app?

      *chirping crickets*

      The 4S is an evolution, rather than another revolution.

      So what?

      What’s the difference between the various Samsung Galaxy models? Not much, really.

      Unfortunately there’s this ingrained enthusiasm for Apple announcements that people get disappointed when it’s not as massive as they hoped.

      The gap between hope and actuality needs to narrow a little. They don’t have to define a new paradigm every time.

      Afterall, in the end, it’s just a phone. Great phones, but still just phones.

      • Posted 05/10/2011 at 8:54 am | Permalink |

        One thing which I think is fairly significant here:

        Let’s examine HTC for a second. This is a company which is churning out a new top of the line model every 3-4 months. We know that it is not the strongest of species which survive, but those most adaptable to change. Right now, Apple is forging its own path, but to my mind it is not innovating fast enough. It’s as if the company has decided what its vision is and is executing on that vision, with no regard for what’s happening around it.

        That strategy works well when you’re creating a new market, as Apple did with the iPod, original iPhone and iPad. But what Apple doesn’t seem to do well is innovate when a market has already been created. Apple created an entirely new market with the iPhone … but appears to be struggling to know what to do next with its handset, while Microsoft and HTC are innovating in user interface design.

        Apple created an entirely new market with the iPad … but with only one model, how long before the dozens of Android vendors start to cut it down as they have in smartphones?

        You’re right, the 4S is an evolution. But one evolution every 15 months is simply not good enough when HTC is evolving every three months. It’s that simple.

        • Posted 05/10/2011 at 9:08 am | Permalink |

          Agree to an extent, but how revolutionarily different is each iteration of the HTC handsets over that which came previously?

          Are they changing the game every three months? Of course not.

          Android’s flexibility is a plus, but could also ultimately be a minus if they end up creating so many different forks and flavours, that it becomes harder and harder to support.

          Different flavours per manufacturer will require each manufacturer to support its own variation. Some will support it well, some won’t – and that will potentially damage the Android brand.

          Time will tell on that one, but Google has some big decisions to make with Android in the near future in regards to how they control that going forward. It could go well, or it could go very pear shaped.

          I think the main reason there was an extra three months tacked onto the cycle for the 4S this time around is after “antennagate”, they wanted to firstly make sure that problem was well and truly fixed, and secondly make sure there weren’t any other smoking guns.

          The 4S needs to be less controversial than the 4 was – if for no other reason than to improve their image after the release controversies with the 4. By going for evolution, they have less balls in the air this time, and have taken extra time to make sure they got it right.

          Don’t be surprised if the iPhone 5 appears in 9 months, to get back on the normal schedule.

          And they’ll still sell a shed-load of the 4S, and with switching CDMA/GSM support, they’ll be able to sell them in markets they’ve not been able to previously.

          • deteego
            Posted 05/10/2011 at 11:06 pm | Permalink |

            SGS2 had a massive difference comapared to SGS in terms of software. The original SGS had horrible implementation of Android, to the point where you had to install custom ROM’s so it wouldn’t lag due to the way Samsung implemented Android with their own FS on the phone

            Furthermore, SGS2 is dual core. That makes a massive difference in terms of responsiveness on the UI (its basically instant response on anything), it also has a much higher density and better quality screen, and possibly most importantly much better battery life (efficiency and better battery) as well as it being lighter

            Apple are slowly losing the smartphone game in this regard, and it was really inevitable

      • PeterA
        Posted 05/10/2011 at 9:06 am | Permalink |

        Apple created (and indeed need) the massive hype engine to retain their market share.

        Without every website and their dog speculating about the iPhone 5, who really would have noticed when the announcement was? Even the news media will report on it, not because it is news worthy, but because it is Apple, and people are hyping it.

        If anything, the lack of anything really “big” in this announcement will actually hurt Apple in the long run, and with phones like the galaxy s II getting price drops, Apple I fear are in for a shock over the next 2 years. (Unless they have an iPhone 5 up their sleeve in ~6 months – given how apple operate this isn’t entirely impossible)

        • Posted 05/10/2011 at 9:23 am | Permalink |

          People fell in love with all the mock ups, and feel cheated that it doesn’t look like that.

          That’s not Apple’s fault – even though I am sure they are more than happy with the publicity it drums up.

    3. Nick
      Posted 05/10/2011 at 9:08 am | Permalink |

      I have a feeling that the wait for the next model won’t be so long.

    4. Ranu
      Posted 05/10/2011 at 9:45 am | Permalink |

      Do you have any sales figures to backup the statement: “In 2011, HTC and Samsung have divided up Australia’s smartphone spoils between them?”

      The Desire/Incredible and Galaxy S II are certainly good phones, but from casual observations (on the morning train commute) the iPhone 4 is significantly outselling them, no?

      • Posted 05/10/2011 at 11:42 am | Permalink |

        Well, it was a bit of an exaggeration, but for starters, here’s what’s happening at Optus:

        http://delimiter.com.au/2011/08/12/android-starting-to-dominate-optus-sales/

        In short, Android is now outselling Apple in Australia, and the major two vendors in the space are Samsung and HTC.

        • Posted 05/10/2011 at 12:36 pm | Permalink |

          Android is spread across dozens of handsets now. Apple only has a couple of handsets on which their sales can happen. Handset model per handset model, I reckon it would be pretty close, if not Apple ahead.

          Lots of people still go into phone stores and pick “the pretty one”…and only care if it makes calls or not, and not what operating system it runs.

          :)

          • Posted 05/10/2011 at 12:56 pm | Permalink |

            Sure, Android is spread across dozens of handsets, but my personal experience has been that people aren’t buying most of those handsets. They’re buying HTC and Samsung phones, with a smattering of Sony Xperia Arc in the mix.

            • Posted 05/10/2011 at 1:03 pm | Permalink |

              As someone else wrote somewhere around here this morning, sitting on trains to and from work everyday, iPhones are still dominant in people’s hands.

              Probably followed by Samsung, then HTC – but they still seem a way behind.

              *shrug*

    5. Brett Haydon
      Posted 05/10/2011 at 10:37 am | Permalink |

      The iPhone 4/4s is the Toyota Corolla of phones. It might bore tech journalists, but it’ll still be the no#1 selling phone for a bunch of reasons that have nothing to do with hardware features.

      • Sean
        Posted 05/10/2011 at 10:47 am | Permalink |

        Exactly Brett. Tech journalists aren’t the best people to promote phones to since their always looking for the latest and greatest shiny toys. Never mind those of us who use our “boring” phones on a daily basis with perfectly acceptable app and music libraries via our iTunes accounts. ;)

      • Marlon
        Posted 05/10/2011 at 12:38 pm | Permalink |

        Very very good point Brett

    6. Sean
      Posted 05/10/2011 at 10:37 am | Permalink |

      The best part of this launch is watching the media frenzy over the lack of iPhone 5 release. :)

      • Posted 05/10/2011 at 11:18 am | Permalink |

        I agree. Whether that frenzy is going to be negative on the whole or not is yet to be seen. If it does turn out that way though, it’s no one’s fault but Apple’s.

        It deliberately engineers a level of hype for its product announcements that no one else does and benefits from an enormous amount of free exposure in the tech press. But that’s a double-edged sword that’s it’s biting them in the ass now.

        Every comment along the lines of ‘it’s not a big enough upgrade’ is right to be critical. For a company that prides itself on ritualistic yearly product refreshes to delay a refresh and deliver little meaningful innovation for it, all the while doing nothing to manage ballooning expectations or rampant rumour mongering, Apple’s really dropped the PR ball releasing ‘just’ a 4S.

    7. Posted 05/10/2011 at 2:18 pm | Permalink |

      There are a couple of things going on here.

      First, Android is doing so well in Australia in large part because that’s what the carriers are putting their effort behind. Apple doesn’t really play nice with our telcos, so Android with its options to customise (and thank the gods our telcos aren’t going nuts with this!) and carrier control over updates is much more appealing to them.

      I own a HTC Desire. It’s a nice-enough phone. But to call HTC’s industrial design much more than workman-like at this point would be going too far in my opinion. If you want really nicely-built Android hardware right now you look to Sony-Ericsson, those guys have been pushing things and trying to really differentiate on hardware design in a way that HTC haven’t.

      One key advantage to the iOS deal is that you can be fairly sure of updates for a reasonable period. As and when Apple make substantive improvements to the user experience, you’ll get them. Not so on Android, where the most you’ll usually get is the same custom overlay ported to a newer version of the OS — e.g., there’s probably not any real reason why a Desire or Desire HD can’t run Sense 3.5, but short of third-party ROMs you’ll never see that.

      The iPhone 4S is a modest upgrade. I agree that anyone who has an iPhone 4 would be silly to rush out and update to it, but ignoring all the hype about the “bigger better strong faster iPhone 5″ from the past few months it’s not a bad deal.

      Personally, I’m waiting to see what Nokia come out with before I decide where to go from the Desire.

    8. Posted 05/10/2011 at 7:07 pm | Permalink |

      No real thoughts on Siri? UI is one vector of engagement with a phone. Voice control is another. If Siri is done well, it could be a game changer and leave Android completely flat footed.

      • Marlon
        Posted 07/10/2011 at 5:11 pm | Permalink |

        Can you seriously imaging yourself talking out loud instructions to your phone though? In some cases it will be a novelty more than anything else, and in my opinion it will be the best function on your phone that doesn’t get used..

        • Posted 07/10/2011 at 6:05 pm | Permalink |

          My guess is you don’t have a problem speaking normally to your phone as part of a call .. so what’s the difference to saying ‘remind me at 5.30 to pickup milk’ with Siri on the end?

          you might be right though .. it might fall flat, but then again it might not. if one thing we learn from apple, they dont do things half baked. time will tell..

    9. John
      Posted 10/10/2011 at 10:42 am | Permalink |

      Some of you must feel a little silly predicting the demise of Apple/iPhone in the wake of the weekend announcements. Pre-orders sold out. AT&T announced they had sold out in 12 hours – substantially eclipsing all previous sales records.

      Perhaps the “incremental” increase is better regarded by the buying public than the tech journalists? By the way, a fast, 5 element lens in a small camera is pretty impressive, 64GB of storage is pretty impressive, multi-accent voice control that seems to work is pretty impressive. And as for the bigger screen proponents – you must have huge hands and bigger pockets that me!




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