SHAFAQNA – Taking a look back at another week of news from Cupertino, this week’s Apple Loop covers the discussions and rumors of the iPhone 6S and iPhone 6C smartphones, Apple’s rising market share of tablets and smartphones, why Tim Cook needs to be careful when integrating Beats into Apple’s hardware, lawsuits on the iPod’s DRM and eBooks, Black Friday results, and the myth of the garage where it all started.
Apple Loop is here to remind you of a few of the very many discussions that have happened around Apple over the last seven days (and you can read our weekly digest of Android news here on Forbes).
Everyone Is Dreaming Of A New iPhone Model
There must be something in the air, because the Apple news is dominated by speculation on two new models arriving during 2015. Forbes’ Gordon Kelly takes a look at the idea of a four-inch variant of the iPhone 6, while I argue for a mid-season boost to storage in the iPhone 6 instead of the arrival of the iPhone 6S.
Starting with a ‘mini’ version of the iPhone 6, potentially the iPhone 6C, there are five clear arguments for the handset to exist and to go on sale; Natural fit, better budget option, lack of competition, guaranteed success, and choice:
…despite the success of the iPhone 6 and iPhone 6 Plus, there are a large number of grumbling iPhone owners who are not prepared to go bigger. Eventually time will force them to upgrade, but why force when you can have them joyfully snapping your hand off.
As for the idea of a new model in April to help boost the sales of the Apple Watch, my thinking is that this is less about an iPhone 6S, and more about a bump on the iPhone 6 and iPhone 6 Plus handsets:
While there are economic and psychological reasons for sticking with a 16 GB model, moving the baseline model of the iPhone 6 up to 32 GB alongside the launch of the Apple Watch would refresh the product line, it would allow Apple to cross-sell the Apple Watch and the iPhone to consumers, and it would not significantly burn the millions of consumers who have already purchased an iPhone 6 (or received it as a gift at Christmas) only to see it replaced by ‘the new model’ a few months after sale.
If there is to be a ‘new’ handset in early 2015, it’s likely to be a 32 GB version of the iPhone 6 and iPhone 6 Plus.
As always, there are many roads that Apple could take with the iPhone platform. While there are many aspirations and dreams that people will want to see in any new handset, I suspect that the road of least resistance and conformity will be the road taken during 2015.
Apple’s Market Share Is Rising
Let’s not forget that the iPhone 6 and iPhone 6 Plus are doing fantastically well in the markets. Chuck Jones has been doing his regular analysis of sales data, and points out the gains in market share in the major economic countries of the US, UK, Japan, and Germany. Looking at the US market:
Apple’s iPhone share increased almost 9 percentage points from 32.6% in September to 41.5% in October. While the 41.5% is only 0.7 points above last October the 8.9 point gain is almost double last years 4.9 point gain from September 2013 to October when the iPhone 5c and 5s were launched. However, it is less than the iPhone 5’s gain of 18.4 points from 34.6% in September 2012 to 53.0% in October.
The Apple iPhone 6 (image: Ewan Spence)
When Will We Hear The Beats?
Staying with the analysts, Seeking Alpha’s Douglas Ehrman has been wondering what Apple will do with the Beats IP and technology in the future, and how this might impact on Apple’s market price:
Apple is notorious for creating closed systems when it comes to peripherals, and headphones might be next. After the deal was announced, some analysts expressed concern that Apple would use the acquisition as an excuse to begin using the lightning port as the headphone interface and phase out the typical headphone jack. Integrating Beats Music into iOS is a logical first step.
As most will recall, when Apple insisted that its version of Maps become the default application in place of Google Maps, there was pushback from Apple users… With this in mind, Apple will need to make sure a Beats integration works seamlessly, to avoid another black eye
Apple’s Phablet+Tablet Sales Are Still Strong
The predicted 12.5% drop in iPad sales this year, (via IDC) has piqued the interest of Forbes contributor Mark Rogowsky. It’s not that the iPad sales are dropping, it’s that the numbers need to be examined with a view to the iPad being ‘old’ and other just as capable lines (such as the iPhone Six Plus) are ‘new’ and easier to sell:
Even if you were to just split the 6 Plus sales between the smartphone and tablet categories, it seems fair to argue that about 7.5 million of those purchases are would-be iPad customers who get a brand new iPhone in the process. Apple last year sold 26 million iPads over the Christmas quarter. If IDC proves correct and that number falls by 3 million or so, there appears to be no reasonable argument under which iPads plus a reasonable share of iPhone 6 Plus sales apportioned to the iPad category doesn’t result in an increase over last year. And, yes, this would still leave the iPhone very comfortably ahead of last year as well
Apple tablet sales are falling? Maybe. Apple “-ablet” sales? Any rumors of their death are very greatly exaggerated.
Every Class Action Suit Needs An iPod
Once more Apple finds itself in court, this time in a class-action lawsuit against the DRM system. I’ve laid out the background to the case here:
The case in question argues that Apple broke antitrust law because it was not possible to listen to music purchased from another store, or for competing MP3 players to play music purchased via iTunes….
The mode of operation that iTunes operated in then was broadly similar no matter the platform you were using. If you were a ‘PlaysForSure‘ customer of Microsoft, you had the same issues of transportability of music files as you would have from the iTunes Music Store. Or the MusicMatch Jukebox. Or Nokia’s ‘Comes With Music‘. You even had the situation that an owner of Microsft’s Zune music player could not use music from Microsoft’s PlaysForSure service because of the DRM and licencing restrictions.
Unsurprisingly, Apple is fighting this case, and from this desk it looks like it is fighting very well. Even though this is class-action case, it still needs a plaintiff… and Apple’s legal team has discovered the plaintiff did not own the iPod in question during the dates specified by the case. Forbes’ Daniel Fisher:
The San Jose Mercury-News reports that after named plaintiff Marianna Rosen testified in the case on Wednesday, Apple lawyers did the logical thing and checked to see if she owned an iPod produced during the class period between September 2006 and March 2009.
Turns out she doesn’t, Apple says. The serial number on her iPod shows it was purchased in July 2009, those lawyers said in a letter to the court, contrary to her testimony that she purchased it in 2008.
The case continues, and I’ll update you in next week’s Apple Loop how it goes.
Eddy Cue Is Unrepentant Over eBooks
“If I had it to do all over again, I’d do it again. I’d just take better notes.”
I doubt you can get a clearer quote on Eddy Cue’s view of the eBook market as Apple get ready to go to the Federal Appeal Court over eBook pricing (reports The Guardian’s Hanna Jane Parkinson).
“I knew some prices were going to go up, but hell, the whole world knew it, because that’s what the publishers were saying: ‘We want to get retailers to raise prices, and if we’re not able to, we’re not going to make the books available digitally.’ You have to fight for your principles no matter what. Because it’s just not right.”
I think this one is going to run long after the appeal is over.
Sony Z3 Compact and the Apple iPhone 6 (image: Ewan Spence)
Android’s Market Share Wins Black Monday, But Apple Pay Is The Long Term Bet
There’s no really surprise in the numbers, because ether match up with the digital purchasing of apps and games, but it’s worth nothing the Black Friday sales via mobile devices split down market share lines. Barbara Thau:
On Cyber Monday, 78% of mobile shopping occurred on Apple devices, down from 84.1% on Cyber Monday 2013. Android’s share was 21.6% on Cyber Monday, up from 15.4% on Cyber Monday 2013.
What would be more interesting to see is the number of handsets used for contactless payments. Apple Pay is still looking to get a decent volume of mind share and point of sale use, so perhaps that’s a question for 2015?
There was no garage.
In news that will shock amateur historians the world over, Steve Wozniak has told Businessweek that Apple never started in Steve Jobs garage.
The work was being done—soldering things together, putting the chips together, designing them, drawing them on drafting tables—at my cubicle at Hewlett-Packard… The garage is a bit of a myth. We did no designs there, no breadboarding, no prototyping, no planning of products. We did no manufacturing there. The garage didn’t serve much purpose, except it was something for us to feel was our home. We had no money. You have to work out of your home when you have no money.
Next you’ll be telling me there’s no Father Christmas…
Apple Loop brings you seven days worth of highlights every weekend here on Forbes. Don’t forget to follow me so you don’t miss any coverage in the future. Last week’s Apple Loop can be read here, and don’t forget this week’s edition of Loop’s sister column, Android Circuit, is also available on Forbes.