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Apple unveils two new iPhone models and launches iOS7 software for existing iPhones

- New flagship 4 inch screen iPhone 5S includes a faster 64bit processor using a new A7 chip, the first on a smartphone. It also has a motion coprocessor, M7, to improve the iPhone’s ability to manage contextual sensor data and an upgraded camera with a larger sensor and a brighter f2.2 lens.
- Apple increases security with fingerprint sensor on iPhone 5S and new iOS7 features that make it harder for thieves, and helps app developers/
- New iPhone 5C model ends Apple’s re-purposing of former flagship iPhone models at a lower price.
- The iPhone 5C includes more LTE bands than the outgoing iPhone 5 model which Apple is retiring, which will help Apple in Europe especially.
- iOS 7 software will be available for owners of the iPhone 4, 4S, 5; iPad 2, 3, 4, iPad mini; and iPod Touch 5th generation.
- iOS7 includes a new visual design throughout, variable font sizing, improved notifications, quick access controls, and much more sophisticated app multitasking.

iPhone5s

iPhone5s

With the new models, Apple is taking steps to bolster its share of the global smartphone market in the face of rising competition. Alongside innovation with iPhone design and features with iOS7, Apple is now also innovating at lower price points too. The iPhone 5C is the first time Apple has built a fresh handset design for a mid smartphone market segment. By using a visibly different design for the iPhone 5C, rather than re-purpose an old flagship, Apple is minimising the risk of cannibalisation of its more expensive iPhone models.

With the new features in iOS7 IHS confirms its forecast for the iPhone: Apple will ship 158.9 million iPhones in 2013, against a forecast total smartphone market of 1.066 billion smartphone shipments. If China Mobile decides to range the iPhone 5C and iPhone 5S — both of which support the TD-LTE standard used by China Mobile — then IHS would raise its iPhone forecast for 2013 because China Mobile has a vast mobile base of 710 million subscriptions.

The new security measures Apple is adding into iOS7 and the iPhone 5S will make the iPhone an even better platform for monetization. The fingerprint sensor on the new 5S helps Apple extend its makes the iPhone a safer device for users to trust with financial details ecosystem into retail as well as helping users safely buy App Store apps. Apple is also making it harder for thieves to bypass ‘Find my iPhone’ and ‘Remote wipe’ because users now need an Apple ID and password to turn them off.

These new iPhone models and iOS7 software improvements are critical for Apple because the iPhone is facing increased competition with Samsung, Sony, HTC and LG all releasing strong smartphone flagships in 2013. Notably, Apple’s portfolio lacks large screen smartphone models with five inch 1080p displays.

But while other smartphone makers may have stereotyped Apple as a competitor only in the premium segment, Apple is choosing to take the battle to their home turf by expanding new iPhone model’s aspirations. Now, new iPhone models will compete head-to-head with many more smartphone models from these rivals. Previously, rivals only had new iPhone opposition at the premium end of the market and competed with an older former flagship model in this segment.

iPhone5c

iPhone5c

The iPhone 5C and Apple’s new operator deal in Japan with market leader NTT Docomo increases slightly the addressable market for the iPhone. The iPhone 5C’s improved LTE band support will also make it more attractive to European operators than the older iPhone 5 which only supported one European LTE band: 1800Mhz.

Alongside new iPhone models, Apple is also re-imagining the experience for existing iPhone owners with iOS7. The new iPhone operating system significantly strengthens the appeal of the iPhone with many new features alongside the visual transformation. Most notable is improved location support with better local recommendations and a new highly-organised notifications tray, better background app multitasking, and sophisticated photo functionality. Importantly, iOS 7′s new variable font size setting prepares the ground for future larger screen iPhone models.

The updates that Apple makes to its iPhone range are necessary for Apple’s success in the mobile handset market in 2013 but they are not sufficient for the longer term. Apple will need to innovate significantly in 2014 with both improved software and new iPhone hardware to counter the growing threat from Android smartphones and ensure that Apple’s mobile success continues.

(Written by Ian Fogg, Analyst and Director Mobile & Telecoms at IHS)

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