Apple Plays Safe with iPhone Evolution, Not Revolution

Company more focused on putting a smartphone in every pocket than knocking off the socks of current iPhone fans

Apple Iphone Announcement
Justin Sullivan/Getty Images

With the smartphone biz at a mature inflection point — some 61% of Americans have one now — Apple is being forced to focus on less-impressive features like phone-casing colors and lower prices than category-shattering innovations.

Wall Street clearly was expecting more surprises to be up the tech company’s sleeve than CEO Tim Cook delivered, including an expectation that Apple would come out with an even lower-priced entry-level iPhone for emerging markets. Apple’s stock price oscillated during the event: It climbed to $507.05 a half-hour into the presentation, up from opening price of $506.17, but fell more than 2% after the event concluded to around $496 per share.

Keeping mum on its TV ambitions — despite previous speculation that Apple may have cooked up some magical new set-top or television — the company centered the Tuesday press conference entirely on its moneymaking iPhone franchise.

SEE ALSO: Apple Unveils iPhone 5c and 5s, New Fingerprint Technology

The most gee-whiz feature of new iPhones was the embedded fingerprint reader for enhanced security. The new Touch ID feature will let users unlock their phones with a single button push as well as purchase content on iTunes. According to Apple, about half of iPhone owners do not password-protect their devices.

Instead of trotting out must-have capabilities, Apple highlighted a refreshed smartphone lineup that includes the iPhone 5c model starting at $99 to hit a new cohort of smartphone users. The company, battling makers of devices that run Google’s more open Android operating system, is more eager to capture a bigger share of the global smartphone market than to knock the socks off current iPhone devotees.

Apple also unveiled the higher-powered and pricier iPhone 5s, which the company claimed doubles performance of the original iPhone 5 and is available with gold, silver and metallic gray casings.

The iterative nature of Apple’s latest iPhone launch — about which details had already been leaked widely — is to be expected with smartphone penetration starting to plateau.

Cook said the company is on track to ship its 700 millionth iOS device next month, which includes 380 million-plus iPhones. In the past, Apple has cut the price of prior-generation products but with the iPhone 5c and 5s the company is “replacing” the previous product line, he said.

Still, analysts said the more advanced iPhone 5s delivered a powerful new platform, with the first smartphone based on a 64-bit chip, that will help it expand the device as a gaming platform. “Apple is certainly offering meaningful innovation here,” Ovum principal analyst Tony Cripps said. “Moving to a 64-bit architecture means Apple can genuinely claim to have brought something new to the smartphone party.”

The new color options for the iPhone models show that “Apple isn’t too proud to follow its smartphone rivals in using this tactic” to sell product, Cripps added.

The iPhone 5c is $99 with a two-year service contract for the 16 gigabyte model and $199 for the 32 GB version. It’s available in five colors: the classic white, as well as green, blue, pink and yellow. The 5s starts at $199 for 16 gigabyte model (with two-year contract).

The iPhone 5c will be available Sept. 13 for preorder, with both 5s and 5c available at retail on Sept. 20 in countries including China.

SEE ALSO: Apple TV: The Time for an Upgrade is Now

To show the horsepower of the 5s, the company demonstrated Epic Games’ “Infinity Blade III” action game, which will be available when the device ships. Apple also touted the 5s’ better camera lens and imaging features, with the ability to capture slo-mo video mode at 120 frames per second.

Apple also announced that the next generation of its device operating system, iOS 7, will launch Sept. 18. The update includes 200 enhancements, including improved multitasking, an “elegant color palette,” refined typography, better photo navigation and iTunes Radio, a free Internet radio service based on music users listen to on iTunes.

A replay of the launch event is available here.