Mobile Technology

With iPhone 5, Apple Again Raises the Smartphone Bar


Apple CEO Tim Cook and Dave Grohl of the Foo Fighters look at the new iPhone 5 during the Apple launch event in San Francisco.

Photo by Justin Sullivan/Getty Images

Apple CEO Tim Cook and Dave Grohl of the Foo Fighters look at the new iPhone 5 during the Apple launch event in San Francisco.

Apple Chief Executive Tim Cook took the stage Wednesday to unveil an eagerly awaited revamping of the company’s flagship products, including the iPhone, iPod, iTunes—all the way down to its ubiquitous white earphones.

The centerpiece of the event, held at the Yerba Buena Center for the Performing Arts in San Francisco, was the introduction of the iPhone 5, a sleek new handset that sports a larger screen but a thinner profile and is 20 percent lighter than the previous iPhone 4S. The phone runs Apple’s new iOS 6 mobile operating system and clearly raises the bar in a high-stakes, industrywide competition between Google (GOOG), Microsoft (MSFT), Samsung (SSNLF), and other tech giants to dominate the most real estate in the expanding world of mobile computing. “It really does feel like a piece of jewelry,” says Tim Bajaran, an analyst at Creative Strategies, of the new phone.

Although it sports a new design to accommodate a wider and longer screen, the iPhone 5 is not a radical departure from Apple’s (AAPL) successful formula. The device still transports its users into Apple’s world of digital media and 700,000 mobile apps. Phil Schiller, Apple’s marketing chief, says the phone’s screen was expanded to make it more comfortable to hold in your hand and operate with your thumb. The device is encased in glass and aluminum and, like previous models, comes in two colors, black and white, with a silver back.

Powering the latest iPhone is Apple’s homemade A6 processor, which the company said provides faster computing and graphics performance. The new phone incorporates higher-speed 4G networks, called LTE, of Sprint (S), AT&T (T), and Verizon in the U.S. The phone runs Siri, Apple’s famously temperamental voice recognition assistant, which now has expanded duties, including an ability to pull up information about sports and movies and allow the user to make dinner reservations via OpenTable.

“Apple has never been stronger,” said Tim Cook at the end of the nearly two-hour event, in which a succession of senior Apple executives took the stage, one after another, to preview the updates to their product lines. The differences between Apple products and the competition, he said, “is how well all our products work together.”

Although it initiated the wave of modern multifaceted smartphones, Apple has inevitably lost some ground in the mobile computing wars. Its iPad dominates the market for tablets, but Apple trails Google’s Android OS in overall market share. This year, says eMarketer, a data research firm, 43 percent of U.S. smartphone users will employ an Android device each month; 33 percent will use an Apple device.

Apple’s uniquely focused approach was on display at the event. Where other manufacturers enumerate the sheer number of features their phones have, Apple exercised restraint, directing attention to a few key features and emphasizing the unique tricks that distinguish the iPhone, such as a new photo feature that allows iPhone users to take a panoramic picture easily with their handset.

Apple also highlighted its legendary design prowess. The demonstration included a video interview with Apple’s chief designer, Jonathan Ive, who discussed some of the practices Apple has either used or invented to create the latest iPhone. Surfaces are finely honed, polished, and assembled with tolerances measured in microns. In this way, Apple looks to rise above the scrum of competing smartphones, positioning itself in a category that has more in common with expensive luxury goods than flimsy-feeling gadgets. “If you hold something like a Samsung Galaxy S III, you can see it right away,” said Bajarin. “They use cheap materials, and they copy.”

Among other announcements, Apple said the new iPhone 5 would integrate Facebook (FB) into its operating system. Users will be able to deliver status updates to their Facebook page using their voice, via Siri, and songs and videos in the iTunes store on the phone will have Facebook’s “like” buttons. Thus users can easily express their media tastes to their friends. Facebook stock was up nearly 7 percent, rising $1.50 to close at $20.93, on Apple’s announcement.

In addition to the iPhone, Apple announced updates to its somewhat musty line of iPod music players, whose introduction in 2001 truly started the company’s renaissance. Most significant were the changes to the iPod Touch, which now features the same 4-inch display found on the iPhone, as well as an anodized-aluminum case that measures 6.1mm thick and weighs just over three ounces. The iPod Touch has quickly established itself as a popular video, music, and gaming device and is free of the complications associated with mobile-phone contracts and providers.

With upgrades to its camera, the iPod Touch also becomes more of a competitor to traditional point-and-shoot cameras, a product category already knocked about by the rise of smartphone photography. The new iPod Touch has a 5-megapixel camera mounted on the rear, an integrated flash, autofocus capabilities, and the same Panorama feature found on the iPhone. Apple is also shipping iPod Touches with a wrist strap that attaches to the device, driving the point home even further that this is a device to be kept by your side for spontaneous events—exactly what point-and-shoot cameras have used as their selling point for years. Apple also updated the iPod Nano, adding Bluetooth, expanding the screen size, and, in a glancing nod to its past, introducing a variety of colors.

Apple even updated its iconic white earphones. The globular and gratuitously named EarPods are more comfortable and don’t create an awkward seal in the ear, the company said. Apple says it spent three years working out the new dimensions. The EarPods also have a unibody design, which will avoid removable inserts that separate from the rest of the earphone assembly.

Apple said that customers can order the iPhone 5 on Sept. 14 and will ship it on Sept. 21. Prices for the new phone, with a contract, start at $199 and remain the same as existing iPhones. The iPhone 4S goes on sale for $99, and the iPhone 4 is now free with a two-year contract.

At the conclusion of the announcement, the Foo Fighters took the stage and performed several of their hits, including My Hero and Walk, songs whose wistful lyrics seemed easily interpretable as an implicit nod to the passing of Apple co-founder Steve Jobs nearly a year ago.

Grobart is a senior writer for Bloomberg Businessweek. Follow him on Twitter @samgrobart.
Stone_190
Stone is a senior writer for Bloomberg Businessweek in San Francisco. He is the author of The Everything Store: Jeff Bezos and the Age of Amazon (Little, Brown; October 2013). Follow him on Twitter @BradStone.

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