The iPhone, Revisited: Expectations for the 5S and 5C, and why it’s bad news for… Mozilla?

      

The iPhone 5S - Apple

The big story of the day, at least in the tech world, was Apple’s grand unveiling of its new iPhone products, the iPhone 5S, and the iPhone 5C. Of course, whenever Apple announces anything, it’s the big story of the day. But today’s announcement was a little different. For the first time, Apple revealed not one but two new iPhones at the same time. The 5S can be viewed as the natural successor to the previous iPhone 5, and the iPhone 5C, while also a successor, is advertised as a cheaper alternative. We’ll get into what the 5C will mean for Apple and the rest of the smartphone industry later on, but first I’d like to revisit the post I wrote about a year ago on the iPhone 5.

At the time, that iteration had just been released, and I was working off the opening weekend sales figures and all the Apple financial summaries since the first iPhone. A total of 5 million units sold for $1.5 billion on opening weekend, creating optimism surrounding the product. I predicted that Apple’s revenues from iPhone products could hit $100 billion for the next fiscal year. That’s still possible, if the new phones have a huge showing, but not likely. Apple will end up with a little over $90 billion in revenue from iPhones over FY2013. That’s not bad at all. And some of the comparisons you can make to the early iPhones are mind-boggling. Apple made more off of the first quarter after the iPhone 5 release than it did for the first 3½ years that it produced iPhones. Statistics suggest the iPhone 5 has accounted for nearly 1/3 of all iPhone sales ever- and it’s been around less than a year.

That is some really good news for the 5S and 5C. Their sales figures are likely to shine, even though they will both takes sales away from each other. Overall, we should see a moderately larger bump in combined sales for iPhones. The theory Apple’s going for: Most existing customers will upgrade to the 5S (while a few will opt for the cheaper 5C), and the less expensive 5C will attract new users, expanding an already-large base of customers. The total number of customers will increase , as will their profits.

Here’s where things might go wrong, and where you should be skeptical. Apple is maintaining the same price ladder as before, so the 5C isn’t quite as cheap as Apple is trying to make it seem:

*Starting at; with contract

The 5C is still a better deal than the 4S was at this time last year, since it’s a step ahead of the previous generation, rather than a step behind. But it may not attract many new customers, since the prices are the exact same. The only possible way the price would be a substantial reduction would be if the contracts were substantially reduced in price, and unfortunately, that’s not going to happen.

Even so, the 5C (and 5S) have some pretty strong selling points. More colors options will attract the aesthetic enthusiasts. The cameras are exciting- photos are taken at 10 frames per second, allowing for rather smooth GIF creations (and proving just how much GIFs have saturated our lives). The video recording options- 30 fps normal rate and a 120 fps slow-motion capture (which you can seamlessly switch between) is making me salivate ever so slightly. And it’s fast. Really fast. If Apple can convince the public that the 5C really is cheaper- they’re doing a great job so far; literally every headline mentioning the 5C contains the word “cheaper”- then they will be coasting through a year with $100 billion in revenue, easily. Expect the opening weekend sales figures from 5S and 5C combined to outperform the 5’s opening numbers (5 million units, $1.5 billion revenue) and the first quarter iPhone numbers for FY2014 should set a new record. Remember, the first full quarter which featured the iPhone 5 broke the previous sales record by over $5 billion.

 

The iPhone 5C - Apple

One of the reasons Apple has cited for the release of the iPhone 5C is an inexpensive alternative to other smartphones in developing countries with emerging markets. It’s a smart business strategy for Apple, but it might not sit well with a lesser-known company which has had a similar plan in the works for over a year.

Mozilla- the not-for-profit that brought you Firefox and Thunderbird- had plans to bring smartphones with its new Firefox OS to the same type of countries: those with emerging markets. Mozilla has already been rolling out its phones for the last few months, and they will almost certainly remain a cheaper option to the iPhone 5C in those developing markets. But that doesn’t mean the revelation of the 5C won’t throw a wrench in Mozilla’s plans. If Mozilla wants to make an impact on developing nations in the same way that Apple has made a mark on the United States, it may have to reevaluate their strategy. Apple has nearly all the name recognition, and if the price is low enough, that may be all that Apple needs to KO the upstart Firefox OS. It will be interesting to see what the fox has to say in the coming weeks.

As a parting gift, here’s an updated version of the revenue graphs from last year. From what I’ve seen, there aren’t any major changes to the physical aspect of the new iPhones, so I won’t rehash those charts. Pardon the formatting.

In both of these graphs, the black dots represent holiday quarters right after the release of a new iPhone

How Successful Will The iPhone 5 Be?

When it comes to technology- and specifically, new products- perhaps nothing is more anticipated than the iPhone. When the original iPhone was released in 2007, it was the beginning of the Age of the Smartphones. Since then, Apple has stayed on the cutting-edge when it comes to their iPhones, and excitement and anticipation over technological leaps and bounds precede each release.

Last weekend, Apple released their new iPhone, the iPhone 5. Apple had had nearly a year since its most recent phone, the iPhone 4S, to work on improvements. The major selling points Apple hit on in its press release were the physical features, hailing the new product as the “Thinnest, Lightest iPhone Ever”. For this post, I thought I’d take a look at that claim, and examine the evolution of the iPhone. Is it really the thinnest, lightest iPhone ever? Is there anything that prior incarnations of the smartphone did better? Just how much money is Apple making on the iPhone, anyway?

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Apple has released a new iPhone fairly regularly- about once a year. I won’t be discussing the technological advancements of the iPhone in this post because it’s clear the iPhone has progressed substantially in terms of technology (Siri, anyone? It’s something Sci-Fi authors could only dream about even recently). Instead, we’ll be taking a look at the physical aspects of each phone.

The following graph represents the change in width for the iPhone over time:

As you can see, there’s clearly no change between this generation and the previous two. However, the other dimensions of the iPhone 5- height, depth, and weight- have changed somewhat. Here are those graphs:

The iPhone 5 is significantly larger in terms of height over its previous incarnations. However, the change shouldn’t be terribly noticeable for anyone using the phone: Only about eight millimeters, or a little more than the length of a red ant. It also results in a potential increase in screen size, though again, not terribly noticeable.

The iPhone 5 is also easily the thinnest iPhone yet, with a depth of only 7.6 mm. But is it really that significant of a change? The new phone has only shed 1.7 mm. Remember that ant from earlier? 1.7 mm is about the length of its head, maybe a little smaller. The change probably won’t make any significant difference in the future.

The weight of the new iPhone is something Apple is significantly proud about. They claim to have eliminated 20% of the weight of the iPhone 4S (and they have, actually), but since the iPhone 4S was so light in the first place (140 grams), is it really such a big deal? Let’s examine: the iPhone 5 is 28 grams lighter, so imagine three pencils, or five quarters. I suppose this could make up a fairly noticeable change- I’ve never actually held and compared the two, so I’m just making an estimation. But again, the iPhone 4S was already very light, so Apple isn’t actually saving the backs of millions of their customers (thank you, the Onion).

I also measured some characteristics of the iPhone that aren’t exactly physical: memory and battery life. We can easily see the change in memory over the generations simply by looking at what was sold- the original iPhone was sold in 4, 8, and 16 GB versions, and while every iPhone generation has had a 16 GB version, it’s the smallest memory option for the iPhone 4S and 5, which have 32 GB and 64 GB variants.

Battery life is more interesting than storage memory. Audio and Video battery life has gradually increased over the years (40 hours of audio since the iPhone 4, and 10 hours of video since the iPhone 3G), but standby life has a different trend. The iPhones 3G, 3GS, and 4 all had the most standby life, at 300 hours. The iPhone 5 has three days less life than that. Apple can still claim that it has increased the battery power, however, since the iPhone 4S only had 200 hours of battery life.

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Has Apple been doing enough to attract new customers and retain their old ones? How have their iPhone sales done over the years? The answer may surprise you:

Black plots in the above graphs represent the first quarter of Apple’s fiscal year. Their first quarter falls over the holiday season, and so yields significantly higher sales and revenue.

The iPhone has been a complete and utter success for Apple. Sales per quarter after the release of each phone have, at the very least, doubled. In the quarter after Apple released the iPhone 3G, it saw an 861% increase in units sold. Yes, you read that number right: 861%. While each iPhone slowly trends downward after release (I estimated a 25% loss each quarter when a newer model was on the market), Apple still pulls in billions of dollars each month, and could hit $100 billion of revenue for this fiscal year.

Even more promising for Apple is the first-weekend sales of its new iPhone 5. Five million phones were sold, bringing in about $1.5 billion- more revenue than the original iPhone made in its entire run, and nearly as many units sold.

Here is my data: https://docs.google.com/spreadsheet/ccc?key=0AnZrkjWWJajQdFNLdmtnYUxOR1ZlY2lfVHR1ZlpGZ0E

Bounds were determined in several ways, but should be viewed as the maximum and minimum possible totals for each phone. We know that no phone has sold $0, so we have to estimate the lower bound. The estimated exact total is based on the 25% decay rate mentioned above and, barring the discovery of the actual data, is a good ballpark figure for each phone’s sales totals.