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Come the month of September and there is excitement around the smartphone industry, and more specifically, among the Apple fans. On 12th September, the day was finally here for the year 2018, when Apple launched four new products – iPhone XS, iPhone XS Max, iPhone XR, and Apple Watch series 4. These new products are powered by the latest new technology that the company has been working on for a considerable period of time and is expected to significantly improve the user experience than ever before.
In the last couple of years, Apple has been working on the ‘bigger the better’ strategy, as the size of its iPhone screens is increasing steadily. This year, with the launch of the new phones, it broke the 6-inch barrier, with the company launching iPhone XS Max – sized at 6.5 inches, the biggest iPhone in the history till date. iPhone XS Max comes with dual lens camera, super retina OLED display, a smart HDR feature, greater water resistance, and the new A12 bionic chip. The A12 bionic chip is the first 7-nanometer chips installed in a smartphone which can process upto 5 trillion processes per second, rendering the new iPhone significantly faster than the previous versions. The new chip will significantly drive development and use of augmented reality apps and improve the functioning of Face ID and overall experience for the users. If the consumers are looking for relatively less screen, then there is iPhone XS, which is very similar to the iPhone XS Max in terms of the functioning but comes with a 5.8-inch screen. Additionally, the two phones also provide the option of 512 GB storage capacity as well and are priced at US$1,099 and US$999 respectively for 64GB capacity.
Apple also launched a ‘budget’ iPhone, which for the majority is not so affordable – iPhone XR that is priced at US$749 for a 64 GB model. The phone is equipped with a 6.1-inch display, a single lens camera provides maximum storage capacity of 256 GB and A12 bionic chip among other features. Apple has previously also launched the affordable iPhone, but it didn’t work out well since it was not equipped with features, the premium iPhones boast off. However, this year, the cheaper iPhone is equipped with a number of specifications and the design of the premium models, and thus, could prove to be the most attractive options to the buyers.
Even though the new iPhones are packed with advanced features, the bigger screen size is creating some issues in terms of usability. For instance, it was difficult to navigate the iPhone X with one hand, despite the company releasing a software called, ‘Reachability’, which allowed the users to tap the home button to lower the screen and make it accessible for the thumb to reach the required screen space. However, with no home button in the new models, the iPhone users are required to swipe down to lower the screen, thus slightly affecting the usability of the phone.
Despite, the one–hand usability issue, the demand for larger screen phones has been increasing rapidly among the consumers. The launch of the new model this year clearly shows that the company will be focusing mainly on manufacturing large screen sized phones in the future as the minimum screen size has been increased to 5.8 inches from 4.7 inches (iPhone 8 in 2017). The company witnessed a slow growth of 2.30% in iPhone sales in 2016-17, as compared to previous years, leading to Apple focusing on avenues that will allow them to continue generating higher revenues in the future.
Taking into account the slow growth in iPhone sales and stiffening competition in the smartphone industry, the strategy of developing bigger screen phones will allow the company to maintain stability in the overall revenue generation capability, primarily through the App Store services. Studies have shown that bigger screens have resulted in consumers spending more time on watching videos, movie etc. on a smartphone, and therefore, leading to increased revenues generated through apps like Netflix, Hotstar, and other streaming services. Apple receives 30% of the subscription fee via App Store in the first year and 15% in the subsequent years, and increase in the supply of bigger screen smartphones in the market will drive the revenue generation opportunity for the companies providing video streaming services as well as for Apple. In fact, the revenue generated by the services segment for Apple increased from US$19,909 million in 2015 to US$29,980 million in 2017 at a CAGR of 22.71% while the revenue reached US$27,209 million in the first three quarters of 2018.
The new Apple Watch Series 4 – more of a wearable medical device
Apple also launched the new Apple Watch Series 4, which is installed with a bigger display and smaller bezel; hence, offering relatively larger screen displaying fitness stats, sports scores etc. It comes with a faster processor and advanced health and motion detector that has the ability to detect whenever an individual falls down and automatically calls emergency services within a minute. Simultaneously, the watch also has the capability to perform an electrocardiogram, thus, alerting the individual of unusual heart rhythms. The company claims it to be the first over-the-counter ECG device and that it had been approved by the Food and Drug Administration (FDA). As the general public is becoming more health conscious, it is significantly driving the adoption of smart wearable devices that monitor and continuously update the user about their well-being.
The launch of the new iPhones and apple watch has created a buzz in the market, as Apple products tend to set the tone for design and specification for the entire industry. The move towards bigger screen sized phone is not a surprising one, considering the performance of the competitors with larger screen sized phones in the market recently, while simultaneously, improving focus on healthcare monitoring through the new Apple watch is anticipated to give it the edge in the smartwatch industry.