Apple iPhone 6 launch and analyst comments

Mobile industry analysts have given thumbs up to the launch of iPhone 6 and iPhone 6 Plus by Apple CEO Tim Cook. is presenting the highlights of analyst comments.

Ian Fogg, senior director, at IHS Technology.

The new iPhone 6 and iPhone 6 Plus expand Apple’s reach into new businesses. The iPhone acts as a critical bridgehead to acquire new customers, and as a foundation for new ventures such as Apple Watch and Apple Pay. The more new customers Apple can win with the iPhone 6, the greater the chance of success the company will have with Apple Watch and Apple Pay.

Apple is raising the competitive threat to other smartphone makers with a new stronger portfolio, including two new large-screen iPhones. By launching multiple products together, Apple is opening multiple fronts to build on the success of the iPhone. Apple has shipped more than 551 million iPhones to date. Despite competitive pressure, Apple shipped 15 percent more iPhones during the first half of 2014 than in the same period in 2013.

As a result of the iPhone 6 launch, IHS forecasts Apple will overtake Microsoft—the former Nokia devices unit—to ship the second largest number of mobile handsets in 2014 after Samsung. This includes all kinds of mobile handsets, not just smartphones.

The introduction of larger-screen iPhones eliminates a key differentiator that has insulated Samsung, Sony, HTC and LG large-screen flagship smartphones from iPhone competition. Shrewdly, Apple has prepared the ground to make sure its app ecosystem will be available quickly on the new iPhones by providing developers with the tool to easily support different screen sizes in iOS8, which was unveiled to developers three months ago at the WWDC.

iPhone 6 at $199

Apple also is expanding its iPhone portfolio this year. By continuing to sell both the iPhone 5C and iPhone 5S, Apple is increasing the number of consumer segments it is able to address.

Apple rarely invents new markets, despite its reputation. But when Apple launches a new product category, it attempts to redefine the market. Examples of Apple’s ability to enter an existing market and transform it include the iPhone, iPad and iPod.

In each case, Apple changed the competitive dynamics and forced existing players to move fast to remain competitive. Current wearable makers must raise their game to respond to Apple or risk a similar market trajectory because today’s Apple is considerably stronger than it was at the launch of the iPod, iPhone or iPad.

Unlike Apple’s original iPod strategy which sought compatibility with the MP3 standard and with Windows PCs as well as Apple’s Macintosh computers, Apple now has a large enough installed base to target only its customers with its new Apple Watch.

IHS expects Apple will extend Apple Pay internationally as soon as it can. Apple’s product strategy is globally focused and as a result keeps variation in products, models and services to a minimum in order to maximize global-scale economies. Apple has already started conversations with key financial players.

Even when it launches in one country first, Apple ensures its product design is suited to selling worldwide as soon as Apple has overcome launch hurdles.

But the iPhone has been so successful in the United States, the installed base is large enough to create a viable target market for a new product. IHS estimates the iPhone installed base is more than 100 million units in the US.

Enrique Velasco-Castillo, Digital Economy Analyst at Analysys Mason

The Apple Watch will at first have a chilling effect on competitors, followed by a spike in sales upon launch: Apple’s new wearable will significantly slow down sales of competing devices in the final quarter of 2014 as consumers wait for the Apple Watch to reach stores in Q1 2015. Analysys Mason expects just under 1 million smartwatches to have sold by the end of 2014; this will leap to 13.6 million sales in 2015 following the Apple Watch launch.

It will become the centre(time)piece of interaction with other Apple devices: Siri voice recognition, along with HomeKit (smart home control) and third-party apps will enable new use cases for health and fitness (through HealthKit), shopping (thanks to Apple Pay), and communication.

Apple has an advantage in the race for mobile commerce and payments dominance thanks to a combination of security features in the iPhone 6 and the Apple Watch, detailed customer data, key partnerships with card networks and merchants, and sheer good timing.

Convenient for users, secure for merchants: security features on the iPhone (Touch ID, Secure Enclave, tokenisation and encryption between the handset and the payments terminal) mean convenience for users, and lower fraud rates for merchants.

The time is right: US banks and merchants will be required to switch from magnetic stripe cards to the chip-and-PIN standard (EMV) in use worldwide. This switch will require an overhaul of payment terminals in stores, which will likely support contactless payments. Recent security breaches at large retailers in the US have served to accelerate this transition.

Over 1 billion iTunes accounts by Q4 2015: Apple also holds detailed customer data through its more than 800 million iTunes accounts—of which the majority have credit cards associated to them. Analysys Mason expects Apple to have over 1 billion iTunes accounts by Q4 2015—just in time for the switch to chip-and-PIN in the US.

Attractive for merchants: Apple may have been able to negotiate lower transaction fees with its card network partners, and will likely pass on the savings to merchants in the form of lower transaction fees. This will help persuade them to accept Apple Pay at their stores. In addition, Apple’s iBeacon technology will allow merchants to personalise in-store experiences and prevent fraud by using their customers’ location.

John Abraham, lead analyst for Analysys Mason’s Revenue Management research programme

Apple’s approach is to improve the stickiness of its platform by creating a seamless payment experience with robust security linked to biometrics through its iPhone TouchID. This runs against the tide of other payment initiatives by several CSPs and some others, that was primarily aimed at becoming a new revenue stream.

Eden Zoller, principal analyst, Consumer, Ovum

Apple reckons its new Apple Pay service will be the one that makes traditional wallets a thing of the past. Rhetoric to this effect is nothing new in the m-payments space but so far it has left consumers cold.  But if anyone can help make this happen then it is probably Apple, although it will need strong partnerships. NFC, as we expected, is the key enabling technology for mobile proximity payments but TouchID biometrics are also in the equation for authentication and Apple Pay looks set to be integrated with Passbook, which is a natural fit. But it’s not all about proximity payments – Apple is also set to enable online checkouts without having to enter card details. This should get PayPal and other online payment providers a little worried, particularly as Apple already has 800 million iTunes accounts on file.

Apple will prove effective at marketing mobile payments to consumers, not as a technology but as something that will make paying for goods and services with your phone fast, easy and even fun. When Apple introduces cool features on the iPhone people tend to use them, which is critical for the future of NFC as an enabling technology. If consumers start using NFC for proximity payments then merchants will be more prepared to invest in it, a key factor that has held NFC back.  Apple was at pains to stress the security of its new m-payment services, although we would have liked to have seen more concrete details on this front. But the fact that Apple is underscoring security from the start is important as concerns on this front are still the biggest show stoppers for consumers when it comes to m-payments.

It looks like many in the ecosystem think Apple can make mobile payments fly as it has launched with the backing of major card schemes, a clutch of banks and big name retailers. This is a promising start although not everyone will be happy as the strengths of Apple Pay will make it highly disruptive for many existing digital wallet providers such as Google Wallet and those run by mobile operators, which in many markets are making slow progress.

Neha Dharia, senior analyst, Consumer Services, Ovum

Apple’s Big Event resulted in the announcement of two new iPhones , the new Apple Pay payments platform and the eagerly awaited Apple Watch announcement.  The iPhone 6 and iPhone 6 Plus boast of a more efficient and faster phone with a larger screen size, superior camera and improved battery life as key improvements over its predecessors. The larger screen size is a calculated move as demand for smartphones with larger screens is growing especially in Asia. While the M8 chip allows the handset to accurately gauge distance, elevation and speed to create a more relevant fitness services for the user.  The much awaited Apple Watch did not disappoint. It is stylish and has a functional and easy to navigate user interface, but its true value will lie in the development of a strong app ecosystem around the device.

Apple has already got interesting applications from Starwood hotels and American Airlines, Ovum expects to see a lot more before its launch in 2015. Apple suggested a revolution in digital communications, with the ability to share doodles, animated emoji and even the heartbeat instantly to users. However, communication is a small part of the watch itself. Ovum expects the device to cause disruptions in the healthcare, personal fitness, navigation and payments industry. However, next year will be crucial for Apple as developers get creative with the capabilities of the Apple Watch and begin to disrupt other industries. The success of the device is hinged on the range of apps and services that utilize its capabilities.


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