The best thing Tim Cook didn't announce

Let‘s put aside the fact that Tim Cook didn‘t pull a single sheet of clear glass from his pocket, call it the iPhone 5, and redefine what we call a phone yesterday. The 4S is a great phone. And even those spitting with fury at the disappointment will glance with envy at the guy who in a meeting quietly asks Siri to order him coffee for the lunchtime break. More surprising, perhaps, was the absence of a second announcement; a lower-end iPhone to target the emerging markets.

It‘s not that there isn‘t a business case for doing so. Android is growing at a remarkable rate. Why? Because it‘s cheap. In a country like India, with an estimated 600m subscribers, Nokia accounts for 40% of new device sales, with RIM and Android dividing another 36% between them. Apple? 2.6%. It‘s much the same story here in SA. Despite the endless hype, iOS devices account for approximately 1% of the mobile market.
And yet, instead of releasing a plastic low-end iPhone to compete with the RIMs of the world, Cook announced instead that the 3Gs, now 2 years old, will be available for free on contract, while the amazing-until-yesterday iPhone 4 will set a subscriber back just $99.
Personally, I think it‘s a great move.
Apple is all about the brand. About image. About quality. They have positioned themselves as being the best of the best. Want cheap? Look elsewhere. Want perfect? Get Apple. To release a “˜cheap‘ and “˜low-spec‘ version of their device would be to dilute this entirely. The equivalent of Aston Martin releasing a competitor to the smartcar. Instead, Apple will work to make the older versions more available, the message being simple; it may be slightly out-of-date now, but it was the best on the market at the time. For the most part, those entering the lower end of the market will still have access to that “˜Apple experience‘. And, quite frankly, the iPhone 4 is probably years ahead in features, quality and design than the equivalently-priced Android, Nokia, or RIM device.
It‘s more than a nice thought. With the growing market share of Android and the like, capturing the emerging markets is vital to Apple‘s growth. The Chinese Apple stores have the highest traffic of any in the world; the Shanghai store alone saw 100 000 visitors in its opening weekend recently. The market size can‘t be ignored. And while Apple‘s profit margin on these older devices may be very low, the profit generated from in-phone purchases, as well as the brand impact of having more people seeing your products on a daily basis, is huge. The only remaining challenge for Apple is dealing with actually getting these devices into the emerging markets.

Forget the iPhone 4S. The big announcement? The 3GS.

  1. The other thing to consider is that by keeping the 3GS alive for the lower end of the market (instead of coming up with Yet Another Model) is that it’s a known quantity for developers.  Most developers will already have a 3GS lying around somewhere.  Apps are proven to work on that, and the 3GS should anyway be supported by most apps for at least another year.  As Apple uses the 3GS to wedge into emerging markets with a device that rivals similarly priced Androids and BlackBerries, nothing changes from a dev perspective (as it possibly would if Apple had come up with a different-spec’ed device).

    1. Emerging markets need a $100 prepaid phone, which Huawei, ZTE and others can provide with Android.  iPhone cannot and will not compete in emerging markets.

      1. Can’t argue there and I love Android for that… apps for the masses. Better for app developers everywhere.

  2. “And, quite frankly, the iPhone 4 is probably years ahead in features, quality and design than the equivalently-priced Android” 
    Seriously?  Do you actually mean this, or were you not thinking while spewing this nonsense?  If you really believe this, please list one feature that is “years ahead” of say the Samsung Galaxy SII.  Please also do the same with one quality aspect as well.  Debating which design is a hopeless case with you Apple fanboys in any case, so you may skip that one.

      1. You realize iOS runs a lot more efficiently than those other phones right? How do you think the iPhone 4 managed to work with only 512MB of RAM? Not all decisions can be made on specs alone.

    1. Hi Jimbo.
      The pricing of the Samsung Galaxy SII puts it up against the 4S at the new pricing, not the 4. Completely agree that the Galaxy is as good a phone, if not better than the iPhone 4, but as of the new announcement, they are not equally priced – the Samsung ranges between $250-$350 with a carrier, while the iPhone is now going for $99. 
      As for quality and design, there will always be differences of opinion. I personally think the Samsung is a great phone, but I really don’t like the fact that if feels so light in my hand. But that’s just me.

      1. Well put it up against the HTC Desire or the Samsung Galaxy S then.  Comparable, and you can get those on the cheapest off peak contracts in SA.  I can bet you a month’s salary you won’t get the same deal for the iPhone 4 after the 4S comes out.  You’re foolling yourself if you think the 4 or even 3Gs will now become mass market phones.  They will still be too expensive and there will still be comparable Android phones for less money.

        1. We’ll wait and see how the pricing pans out. All we have to go on right now are the official US figures from Apple. Android has by far the biggest overall market share, and Apple is not going to be able to take that away – it’s simply a numbers game; they have 3 phones, and you try counting the number of Android competitors. It’s all about offering consumers choice, and there’s no arguing that, given equal pricing, a LOT of people would choose the iPhone 4 over an HTC Desire or Galaxy S. The debate of merits of iPhone vs Android is one that there is barely an objective answer to. Hardware specs are great, but UI possibly counts for more when it comes to how fast it feels. Google and Apple’s cloud services will continue to compete. And design is an entirely subjective measure of quality. Apple isn’t going to dominate emerging markets with previous phones, but it’ll do a lot more than if they’d released a cheapo version – that’s all my post was trying to say.

    2. I like the S2 a lot, and it might have been the best phone out there. But you cannot seriously say a plastic phone feels better and is of higher quality than a phone made from steel and gorilla glass.

      1. Like I said, design cannot be debated with some people.  Why is metal better than plastic?  Let’s not even go there.

    3. Jimbo, I think this discussion is less about the hardware spec of each device and more about the services available through the device. As we saw with the new Kindle Fire, the hardware is merely a means through which a user can access Amazon’s core book, video, and music services. The Fire will kill the Android tablet market because of the services it is backed by, not because of the software.
      The above is the case in the cellphone market. iOS IS years ahead of Android, not because of hardware, but because it has iTunes and iCloud tightly integrated into it. Sure you could probably get the same from a Google/Android combo, but the experience currently sucks.
      Apple gets that it isn’t as much about the hardware as it is the services that the hardware allows you to consume.

      1. Interesting, and how many of those services are available in South Africa?  No music purchases.  No game purchases.  
        By the way, Apple didn’t come up with iCloud, they stole the idea from Google.

        1. The “not available in SA” argument is a bad one. The fact is that the technology/service is offered by Apple. And Google/Android would have the same region problems if they had a comparable service to offer.
          Who cares if they stole the iCloud idea from Apple (if they really did)? Apple has it, and crucially, IT WORKS well!
          Again, you’re missing the point Jimbo. This whole thing is not about hardware or who came up with an idea. It’s about the user experience offered to the end user.
          And Apple is years ahead in terms of user experience.

          1. Oh, I forgot, only Apple can care when competitors steal THEIR ideas.  Other way around it’s “better for the consumer”.
            And once again your whole argument comes down to the same old rehashed Apple fanboy line : “It’s like just a beter experience, ok!”  Nothing to back it up, just opinion.  And making a statement like “years ahead” on something that’s clearly not a mojority opinion (you’d find many people arguing Android is ahead in terms of most things) is just silly.

          2. Ok, the list:
            – Purchasing music/movies/tv series in iTunes and having it delivered wirelessly to your device, immediately. The integration for this is really tight.
            – iCloud. Yes, dropbox or google docs on Android do file syncing, but iCloud is built deeply into the Mobile OS. Things like being able to work on a document and then open it in exactly the same place on your Mac. Android just doesn’t do this.
            – Siri. There isn’t too much info on this yet, but the early examples show that it’s far more advanced than Android’s voice features.

          3. Don’t waste your time arguing with kids, Nick. I totally agree with you on the fact that user experience is everything considering how homogeneous smartphones are becoming. Jimbo doesn’t understand a thing about how a business works. If you talk out of your ass, we generally, in society define these people as idiots. It’s our responsibility to educate the unfortunates, for which I applaud you.

          4. So in the whole of this conversation on here I am still to see one fact backing up that the iPhone is “years ahead”.   We’ve had fanboy opinions and name calling (elitist name calling at that!).  Well, seems like there’s not intelligent debate to be had here.

          5. Fine, let’s talk numbers, not airy fairy fanboy opinions:
            Samsung Galaxy S II is also $99 through Amazon Wireless with a Sprint contract (same contract as the iPhone):  
            So you can get a phone with specs matching the new iPhone 4S for the price of the last generation iPhone 4.  That kinda blows your whole article out of the water doesn’t it?  Oh wait, I forgot,  “It’s like, just better man!  You have to like, experience it.  It’s like, just the design that’s so perfect.  You cannot compare it dude.”  

          6. Awesome. I’ve used the SGS2 and I quite like it. I still prefer the experience of my iPhone 4 but a lot of this comes down to personal preference. Hell, my Dad would take a Blackberry over anything with a touch screen. As is the case with a car, a house, or a potential girlfriend, boyfriend, husband or wife, it’s not just about the ‘specs’. Having used both, the UX and tightly integrated services that iOS5 offer make it a better OS. That counts a lot for me. If it’s screen size and RAM that matter to you, you should get the Samsung. That’s a better phone…for you.
            And go take another look at my article. It isn’t an Android vs Apple opinion piece. It’s simply about Apple’s strategy of entering emerging markets, somewhere they are non-existent at the moment, without compromising on their greatest strength; their brand. You’re more than welcome to take something else from it. But, hey, I’ve got a pretty idea of what it was about. I wrote it, after all.

          7. “Yes, dropbox or google docs on Android do file syncing”
            Well, Apple has iDisk and synced folders long before Dropbox or Android even existed…

          8. Oh, I forgot, only Apple can care when competitors steal THEIR ideas.  Other way around it’s “better for the consumer”.
            Emm, the whole “touch smartphone” scene and tablet scene is copied over from the original iPhone and iPad designs, from the design of the keyboard to the app icons and the industrial design. 
            What exactly has Apple stolen? The “Cloud”? LOL…

        2. From Google? What idea exactly? Clouds have been available for a decade now…
          And what exactly has Google done with this “idea”?

      2. That’s absolutely silly bordering on something worse. iOS is not “ahead” of Android, they’re copying everything they can. Everything from how multitasking works, the notification bar, and now even the messaging service and latitude.
        iCloud is still far from Google’s offerings, but I’m sure they will catch up one day. Until this day you couldn’t even use this “smart” phone without tethering it to your computer. And then you had to do it again to receive updates… 
        Android is not ahead in the market because it’s cheaper (they passed the iPhone in the segment last spring) but because the services are much better. After SGS-II Apple has fallen behind in hardware as well. They need to start innovating again, and not just copy everything Google.

    4. Android’s hardware specs will obviously surpass that of Apple’s iPhone – with Android handsets you have 2-3 huge players competing to build the best hardware > HTC, Samsung, Motorola, etc
      iOS is still a better OS than Android (in my opinion) and the iTunes app store is better than Android market place.
      iPhone is still a better total experience.
      The quality of Android is forcing Apple (and others) to keep pushing which means better quality phones and low prices for all of us. Whether you choose to buy Android, iPhone or even WP7.

      1. What do you base that being better on?  
        You can’t buy music and only some apps in South Africa.  How is that better than the Android Market?

        1. Jimbo, let me tell you something, (I mean no offence) South Africa is a third world country and does not fall under smartphone manufacturers target demography.

          1. “The only remaining challenge for Apple is dealing with actually getting these devices into the emerging markets.”  
            Not doing much to back up the article you’re trying to defend are you?

        2. Have you ever used mac products… from the sound of it you are just a hatter… I have never had any problems purchasing apps…!

        3. Have you ever used mac products… from the sound of it you are just a hatter… I have never had any problems purchasing apps…!

          1. A hatter, lol. What does Alice in Wonderland have to do with Tim Cook etc.? Wow look at that, a question mark at the end of a sentence which asked a question. Fancy that. Oh and full stops. Amazing. It’s like I finished high school or something.

      2. Apple will always deliver a more integrated experience because they run a tight ship with the iPhone ecosystem. Android will always be ahead on services (you just can’t compete with Google there) and on hardware (as Samsung can keep the best screens and processors for their flagship devices). Now let’s see which is more important in a free market… 

    5. I think the key there is equivalently-priced. I don’t know of any $99 Android phone that matches the iPhone in design and build quality. I’m an Android user myself, but I think his point there is valid.

      1. It’s not $99.  It’s $99 with a two year upper tier contract.  Think the equivalent of a R500 a month contract, and you have to pay in R700 for the phone!

        1. The point is still the same. Most phones are priced with contracts. What’s a comparable Android phone that costs $99 on a 2 year contract?

          1. I did not know that. I always forget about Amazon having better deals than direct from carrier. Direct from Sprint costs twice that much. Thanks for the info.

      1. It’s not.  It’s $99 plus an expensive contract.  You’ll be able to get at at least an equivalent Android phone on the same contract, without even having to pay the $99.

    6. Oh Jimbo, Jimbo. No need to list ‘one feature’, the entire package is years ahead! Galaxy SII? I would not take one if you paid _me_. It’s big, bulky, plasticy and has shit software. The devil is in the details, and Android is ignoring all of them.

    7. “please list one feature that is “years ahead” of say the Samsung Galaxy SII.  ”
      How about the ONLY feature that matters? The software and the overall usage experience.
      The Galaxy SII is just an inferior copy. Even the “bigger screen” has less density, as if it’s not the clarity that counts it’s how uncomfortable the phone is to hold. 

      1. I can’t stand the retina display on the iPhone. It’s too sharp for the screen size and any amount of usage puts strain on my eyes. Several other people I’ve talked with have the same issue. Interesting that I’ve never seen any significant mention of it. It’s always talk of the opposite.

  3. Aston Martin is launching the Cygnet….low end, so you probably used a poor example 🙂

      1. LOL. Then you would recall what Clarkson said about the Cygnet. Anyway – good article!

      2. Who cares? They’re only doing it to meet EU efficiency regulations, and they don’t even manufacture most of the car. It’s not an aston. It’s a concession to shitty government.

    1. after I read the aston reference I went to google the name of aston’s smart car and then I saw someone already commented on it. ha. 
      Good article though. Even in OC/LA a lot of my friends have the 3gs still because it still works great for them. They havent upgraded because they are still happy with it, not really about the money. 

    1. Cheap devices in my view devalues product experience. It only helps persuade consumers to go for something better. When the monetary barriers are removed.

  4. Sorry you are mistaken about where the market share is in India — “Nokia accounts for 40% of new device sales, with RIM and Android dividing another 36% between them…” –> that is not right. It’s correct that Nokia is 40% and that Apple is very small %, but RIM and Android are also very small. The rest are Samsung’s featurephones (about 20%) and players like MicroMax (about 10%) etc. I know this b/c that is my day job and there are more figures here

    1. There are always so many conflicting reports on these things. The report I referenced was IDC’s latest report which stated that RIM alone accounted for 15% of Smartphone sales in the last quarter. Thanks for the feedback and the link!

      1. No worries. Sometimes reports talk about “smartphone market share” not “total phone market share”. In India, smartphones are a small piece of the total market.

      2. The smartphone revolution is being undercounted.
        Check out this image above. (It’s not a doodle that I made myself.)
        The yellow line is European smartphone market share –> it just crossed over 50% last year.
        The blue line is North America –> crossed 50% this year.
        Both lines are pointed up, up, and away. Look at the last few months. Off the map.
        What’s that line on the bottom?
        It’s under 20%.
        And it’s tilted *down* not up.
        It is the “rest of the world” — and it makes no sense. Nobody is buying smartphones worldwide?
        **Unless you are undercounting smartphones.**
        Look at this gorgeous piece of kit up here — a new phone that a bunch of Peek partners are launching. Huge touch screen, metal body, apps, cool 3D effects in the UI…all very HTC. And super cheap.

      3. I’d like to add you to my professional network on LinkedIn.
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      4. The Shenzhen Bandit Phone Makers are winning the war on the Indian front. They supply a host of big Indian brands. Local Indian brands used to be 0% of the Indian market, and Nokia used to be 70% (see [this 2007 loveletter in the Wharton business blog]( Now, to call them dominant is to ignore the direction of the trend:
        _”Nokia, which according to IDC data continues to dominate market share with a 33 per cent [share of the] pie.”_ ([link](
        Looks like the Wharton folks called the top.
        That share loss has largely gone to the local incumbents (though some to Samsung — which is a terrific global story on its own). And **these local guys are starting to aim to do more than just sell volume of low cost phones.**
        _”With a view to increasing brand value, introducing differentiation and ultimately creating some intellectual property, India-based mobile handset makers, like Spice Mobility, Karbonn, Micromax and Lava among others are set to increase the average selling price of their product range by an average of 30 per cent.”_
        Grouping those guys together is a little bit of a trick — Micromax is 2x the size of the next one, and the last couple are another 30% smaller.
        Still, speaking uniformly, the folks talking up price increases are saying that they have won the battle in the low end and want to switch their sights to mid-tier and above. But they are also saying the following:
        _”There is a paradigm shift in mobile phone usage. This is now increasingly getting dominated by multimedia and applications driven functions. The idea therefore is to introduce more feature rich phones even in the feature phone segment and more phones in the higher ranges as well.”_
        Phones do more now, most people now have gotten their first phones, and the combination means that people want to trade up to phones that do these things. Hence the focus on higher feature, higher price phones.
        And what are these “features”?
        _”Right now, it is difficult, if not impossible to differentiate between products. We will shift to a computing platform because it is imperative for us that consumers be able to differentiate between products”_
        So the big question for these guys is: what do you consider differentiation via software?
        **Here is the wrong place to look for the answer:**
        Some trends to chew on. For the phone makers building cloud-based app families to distinguish themselves — **Peek’s genius cloud is hard at work.** Check it out at [](
        All the best,
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