INDUSTRY INSIDER: Here's How Apple Blew It On The iPhone

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Yesterday, I argued that Apple has made a major misstep with the iPhone over the past year.

Specifically, I argued that Apple’s decision to move the release of last year’s iPhone from the summer to the fall, and then to release a phone that was only a “refresh” of the prior generation, had allowed Samsung, et al, to catch up.

Now, the iPhone 4S looks “small and old” next to the latest generation of Samsung phones, which I think is contributing to the weak sales Apple saw last quarter and is expecting this quarter.

Well, after I published my post, I of course received the usual savage response from a handful of Apple zealots.  But I also got the following note from an industry insider, which I found insightful.

(This executive used to be a senior executive at Microsoft. Yes, Microsoft folks presumably have it in for Apple. But I’ve found this executive to be quite sharp and objective about these things.)

Here’s the note:

Apple’s slow upgrade cycle has caught up with them.  Next to a Galaxy S3, the iPhone does look old and small.  The 4S was ultimately too incremental and unsatisfying, and the marquee feature, Siri, is, well, embarrassing.  It has so much potential but works so poorly in practice.  Apple left the door open for Samsung, especially, and they are kicking butt.

For Apple’s sake, the iPhone 5 better be killer – and not rest on their laurels again.   Great numbers as with the iPhone 4s can mask a more fundamental weakness.  And they need to ship the iPad mini, because the Nexus 7 could be huge.  The $199 price point opens them up to orders of magnitude larger markets.   And it can be a Trojan Horse for all things Google in our digital lives.

The iPhone 4 was too incremental and I started to wonder, uh oh, Apple’s leaving the door open.  And the 4S was even more incremental.   I have to believe the 4S was their backup plan because I think Apple is smarter than that.

I have firmly believed that each new product needs to look different externally.   Especially with a phone.  When I have a new iPhone, I want to show the world, hey I got the new iPhone!  Isn’t it cool?  Aren’t I cool?!    Apple wants this even more.  But you can’t tell a 4 from a 4S.  What a wasted opportunity.

I remember with the Palm V first came out.  It was a beautiful device and people couldn’t wait to put it on the table in meetings to show off that they had one. Brilliant.  Apple is built on that phenomenon – building beautiful products that make people feel good about themselves and want to show off that they use, building or reflecting self esteem.

I have a [Google] Nexus 7 [tablet] on order and am excited about its potential.  I can see so many places I would take it that I don’t an iPad thanks to size, and places around the house I’d have them because of size and cost.  They will be the ultimate home control and TV remote control. 

Apple is exposed, and their explanations only show their exposure more.  They may close the gap with the iPhone 5 but more fundamentally they need to increase their clock rate.   The advantage of a (more) open system is that you’ve got a whole world full of competitors fully armed going after you.  Samsung, Google, Amazon, Nokia, …     Sometimes they need a kick in the butt (eg, Microsoft’s Surface) but given a good-enough platform (Android is getting there and so is Windows Phone), Apple is going to have their hands full the next couple of years.

SEE ALSO: Well, It Looks Like One Of The Biggest Apple Risks Is Starting To Hit Home

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