10.04.11

Apple's iPhone Letdown

New CEO Tim Cook unveiled the first iPhone of the post–Steve Jobs era. After 15 months of waiting, all we get is a refreshed iPhone 4, writes Dan Lyons.

Before today’s big event at Apple was even over, the company’s stock had plunged 10 bucks—which tells you all you need to know about how people are responding to what Apple introduced.

In short: there is no new iPhone.

There is, instead, a refreshed version of the iPhone 4, called the iPhone 4S, which looks exactly like the iPhone 4 but has new and improved guts, including a speedier processor, a better camera, and a new voice-navigation system called Siri that lets you do loads of things with voice commands.

That last part, Siri, is pretty amazing—but overall, today’s event has to be a disappointment to hard-core Apple fans who have spun themselves into a frenzy lately with speculation that the company was about to introduce an entirely redesigned device, which people have been referring to as the iPhone 5.

The main reason everyone was expecting more was that it has been 15 months since Apple introduced the iPhone 4, and that’s a long time in the world of Apple. In the past Apple has rolled out a new phone once a year, in the summer.

This time, when summer came and went, Apple fans started thinking it must be because the company had something super-special up its sleeve.

Apple’s strategy seems to be to push older iPhones down in price and try to go for market share rather than be on the bleeding edge of design.

Instead, it appears that Apple is content to keep selling what it has. And why not? The iPhone 4 is the best-selling smartphone on the planet, and sales have continued to accelerate despite its relatively long lifespan. Last quarter Apple sold 20 million of them.

Apple’s strategy seems to be to push older iPhones down in price and try to go for market share rather than be on the bleeding edge of design.

As the new iPhone 4S rolls out, with three models priced at $199 (for 16 gigabytes of storage), $299 (32GB) and $399 (64GB), Apple has slashed prices on its older models.

The iPhone 4 with 16GB of storage will cost $99. And the iPhone 3GS with 8GB of storage, which is still a really good smartphone, will be free (with a contract).

Video screenshot

That last bit of news means Apple can push even further into developing markets. In some ways it may be as significant as the fact that there’s a new, souped-up iPhone 4.

Four years after the first iPhone shipped at a cost of $600, you can get one free. And that’s pretty amazing.

The problem for Apple is that one week from today Google and Samsung are going to introduce the new flagship Android phone, which will have a totally new design and probably include some features that put it ahead of the iPhone 4S.

That may have as much to do with Apple’s stock-price drop as anything else.

Four years ago, when Apple introduced the first iPhone, it had the market to itself. Now the company is facing fierce competition. The fear seems to be that Apple has become complacent at a time when it can ill afford to slow down. Apple seems to be betting that its loyal customers won’t stray to the Android camp. Whether that’s really the case remains to be seen.