Initial Thoughts on iPhone 5s

I’ve been using my new gold iPhone 5s for a few days. Here are my initial impressions:

Size: I like the 5s, not sure I would enjoy a bigger phone. Upgrading from the 4S, it took a little bit of time to get use to the slightly farther thumb reaches required to touch the upper left corner of the 5s.  Even though the extra screen real estate is a positive, I have doubts that I would want a bigger screen than the 5s. I often find myself in one-handed use situations and I simply would not be able to use a bigger screen. If Apple is to go bigger with iPhone 6 (seems like its more than a 50/50 probability at this point), I suspect Apple will also maintain the current iPhone size, which would be noteworthy in that Apple would be maintaining and updating two different iPhone sizes. It may just finally be that time though as the smartphone market continues to mature. 

Slo-Mo: This year’s Siri.  The new slow motion camera mode will be the feature everyone is demoing at the Thanksgiving table or holiday party, just like how Siri was so much fun to show friends and family. I have taken at least 15-20 slo-mo videos so far and still can’t get enough. Of course, this fascination may very well die off in a few weeks, but by then it wouldn’t matter much since everyone I know would have seen the feature. 

Color: White is the new Black.  Up to now, it felt that the black iPhone was the unofficial default iPhone, the color you get to be like everyone else, while the white iPhone was the designated color to stand out from the crowd. I think the 5s changes that dynamic and white (sliver and gold) will become the default color, while the space grey is the color to stand out from the crowd (even though it doesn’t stand out as much as white did in previous years).  Of course, I am not taking into account case usage, which may make this a moot point, but nevertheless I think there will be quite a few gold and silver iPhones in the wild in coming months and momentum will only build. 

Touch ID: Awkward at first, but still cool.  It took me two days to get use to Touch ID, or should I say, break my habit of simply pressing the home button and then typing my passcode.  My issue dealt with pressing the home button and not leaving my finger on the button long enough for the fingerprint scanner to do its job. I also tried to show the feature to another 4S user and they had to be walked through the installation steps and even then they had trouble, so clearly Touch ID is not the easiest feature to demo to normal non-tech users, but nevertheless it’s pretty cool.  

Weight: Wow.  After a few days of using iPhone 5s, my iPhone 4S feels like a brick. It’s remarkable and incredible. Not sure much more has to be said. 

Battery: An improvement.  I’m able to get through a day of pretty constant 5s use (a few tasks per hour, all day) without a trip to find the power cord.  I wouldn’t be able to say the same with my iPhone 4S. 

Speed: Hard to see a difference with LTE; iOS 7 feels faster with 5s. LTE was one of those features Android fans mocked the 4S for not supporting. I don’t see the big deal. I often find myself on Wi-Fi with fast enough speeds to make any differences with LTE negligible. I do see a difference in terms of iOS 7, especially animations. Even though my 4S was feeling a tad sluggish with iOS 7, I don’t find myself complaining with 5s.

Free iPhoto & iMovie: Useful and fun. A few seconds after launch I was asked if I wanted to download a slew of free Apple apps, including iWork, iPhoto, and iMovie.  While many users may just play around with these apps here and there, I think they are plenty capable and will put a dent in third-party paid photo and video editing apps.  

Big Picture: Refinement is king with 5s.  When I upgraded to 4S from 3GS, the speed blew me away. Not only was the phone’s improved performance noticeable, but Siri was a pretty darn cool feature.  The 5s doesn’t have that same wow factor surrounding speed improvement, but instead the subtle refinements in terms of battery, camera, apps, and color, add up. I would have a difficult time moving back to the 4S, which is the easiest way to know that the 5s is a winner and another step forward in Apple’s iPhone refinement journey.

Twitter's Problem; Not Connecting with Mainstream Users

Twitter is going public. If you are an employee, investor, or simply a tech IPO lover, this is a very exciting time. While there is much to like about Twitter, I’m noticing a trend that is somewhat concerning; Twitter isn’t connecting with mainstream users.

Twitter had 215 million monthly active users (MAUs) as of June 30, 2013, a 44% increase from 2012. In today’s mobile world, an ecosystem with 215 million users is a very respectable number, but a 44% user growth rate isn’t superb.  In the U.S., Twitter saw only 32% year-over-year user growth to 49 million MAUs, adding just 1 million users in the second quarter. For a well established ecosystem, these numbers aren’t exactly thrilling. 

Earlier this week, one of my Facebook “friends” posted a question on her timeline, “What’s the deal with Twitter? Should I do it?” Within one hour, five people answered - all with a “no”.  Surveying my non-tech social circle, Twitter usage is abysmal.  A quick check with my high school teacher acquaintance led to an expected answer, no one at school talks about or uses Twitter.  At a recent state fair that saw upwards of 160,000 visitors on a Saturday, tweets mentioning the event numbered in the dozens. The list of anecdotal data points showing Twitter’s lack of connection with mainstream users goes on and on. 

While Twitter is proving valuable to a select group of users, the platform is not exactly hitting mainstream usage similar to how Facebook (1.1 billion users) conquered the world, or even messaging apps such as WhatsApp (300 million users) are trending.

What is going on? I suspect Twitter is not appealing to the masses in a world where Facebook made it socially acceptable to share and more intimate social apps, like Snapchat, are using their “coolness” and “ease” to flourish.  Many are confused with the concept of Twitter since the company really isn’t a classic social network, but instead an information aggregator. When a user joins, they are bombarded with suggested follows. If a user bypasses the suggested follows page, it is somewhat unclear what is the next step, especially if their current social circle is not well represented on Twitter. It takes time to find interesting channels (people, companies, concepts) worth following. Rather than being a social network where people use Twitter to update friends with actions and ideas (that’s more for Instagram and Snapchat), I think of Twitter more like an improved form of television, where a user creates a list of channels to watch or follow. Corporations, brands, and news organizations desperately want a Twitter presence to reach potential customers, further highlighting the television metaphor. The big question is if such a concept can appeal to mainstream users.

Heading into Twitter’s IPO, I suspect user growth will remain a key topic and concern among investors. While management will be judged on revenue and profit growth, including user utilization rates, I think the company faces an uphill battle with user growth as competing services continue to fight for mindshare in the maturing mobile computing era.  I see the value in Twitter, but I’m concerned that mainstream users will never give the service a chance.  

I Like Apple's iPhone Strategy

I felt Apple did a good job today. For the first time Apple will be selling two brand new phones, including one for under $100 in the U.S. A brand new iPhone for under $100. I wouldn’t underestimate the impact of such a feat. 

While there were some interesting technologies introduced, including a fingerprint scanner and a motion coprocessor, I have learned to control my long-term predictions on what such technologies may mean for Apple’s product line. Time will tell if such innovations become major cornerstones in future Apple products. 

The most controversial aspect of today’s event was iPhone pricing. I see a schism developing among the tech punditry. On one hand, there is the belief that market share is king and Apple must address the bottom of the market because developers will begin to focus on Android’s sheer numbers instead of iOS. On the other side, where I stand, market share is not created equal. It is okay if Apple doesn’t address the lower end of the market since five consumers who don’t buy mobile apps or content is not equal to one who does. Looking at today’s events, I think Apple is doing the right thing gradually moving down market (iPhone 4 and 4S have not been discontinued). This strategy will only expand in coming years. With approximately 400M-500M (and growing) active iOS users with credit cards, I view the iOS ecosystem as now self-sustaining, capable of app innovation as long as the hardware and software back developers up.  If I changed sides and instead only looked at market share, I’m sure I would have been championing Symbian, then Blackberry, and now Android. Market share is not everything. 

Moving to more minor topics, Apple is still addicted to case money, now selling iPhone 5s and 5c cases. Selling cases is a good and easy business decision and judging from the popularity of iPhone cases, Apple will make a decent amount of profit (and margin) from going down that road.  Apple also announced it will give away $40 of software with new iPhone and iPad purchases. While I am not a big user of Apple’s mobile productivity apps, quite a few people are and I suspect there will be many happy iOS users. 

There are still plenty of questions remaining about Apple and strategy. 

Did Apple’s keynote contain a bit too much of tech jargon? Maybe. 

Will mainstream consumers accept iOS 7 without any major complaints? Maybe. 

Will Apple’s margin actually benefit from the new iPhone line? Maybe. 

Nevertheless, with a new flagship phone that has enough differentiation to stand out from competitors, a more value-oriented option for consumers with slightly different priorities, and the desire to maintain older iPhone models in order to address the mid-tier phone market, I like where Apple is sitting and the outlook for the iPhone business over the next 6-12 months. 

iPhone Keynote Expectations

Apple’s 2013 iPhone event is here. At the end of the day, everything comes down to expectations. If reality is unable to meet expectations, disappointment is not far behind. If expectations are kept measured, reality may still be able to deliver a positive surprise. Taking into account weeks of rumor, speculation, discussion, and simply “educated” guessing, here are my expectations:

Subsidy Land (Countries where phones are subsidized by mobile carriers)

$199 – iPhone 5S with a 128GB option, “gold” color option, fingerprint scanner, improved camera, faster processor. (95% confidence)

$99 - iPhone 5C available in various colors. (75% confidence)

$0 - iPhone 4S (51% confidence)

Non-Subsidy Land (Countries where phones are not subsidized by mobile carriers. Pre-paid option in subsidy land. For simplicity, I’m not considering various taxes/international fees.)

$650 – iPhone 5S with a 128GB option, “gold” color option, fingerprint scanner, improved camera, faster processor. (95% confidence)

$499 – iPhone 5C available in various colors. (75% confidence)

$399 - iPhone 4S (51% confidence)

$349 – iPhone 4 (50.1% confidence)

Summary

1) The “cheap” iPhone won’t be cheap. Consensus seems to have settled around the $399-$499 range, therefore I suspect $499 is the floor. For the first time, Apple will be selling a brand new iPhone for under $100 in the U.S.

2) I think the iPhone 4S and 4 will stick around (in somewhat limited capacity). I have received the most push-back on this point, but I still see a large market need being met by the 4S and 4 (having an iPhone at a sub-$400 price point is important).

3) The iPhone 5 will see end-of-life, to be replaced by the very capable iPhone 5C.

4) Notice the subtle differences in subsidy and non-subsidy wholesale pricing. Apple may be willing to sacrifice $50 or so in non-subsidy land for more aggressive iPhone 5C pricing (coinciding with China Mobile launch).

5) I think an iPhone 5S fingerprint scanner could be a pretty big talking point during the keynote (think this year’s Siri). Expect very limited functionality, but a ton on security and privacy.

6) Other topics such as a refreshed Apple TV (not a TV set), updated iPods, and a few more new iOS 7 features are probably more likely than not at this point.

Other Random Musings

As usual with Apple keynotes, the safe bet is to collect all rumors and divide by half to get closer to reality. There will likely be disappointment around iPhone 5C pricing and chatter that the iPhone 5S isn’t different enough from previous models. Let’s not even begin to discuss iOS 7 reactions.