Apple’s new iPhone: What the expected update faces in the smartphone market

September 9, 2013

All eyes will be on Apple on Tuesday when the company is expected to announce at least one new model of its flagship iPhone and attempt to ward off growing concerns about its ability to innovate.

The tech giant has not offered many clues about the upgrades it has planned for the iPhone 5, but analysts widely expect Apple to introduce a less-expensive model of the phone that can be sold to price-conscious customers overseas. Some tech insiders are betting an upgraded phone could also include a fingerprint sensor or a new color — gold.

When Apple launched the iPhone 5 last year, it significantly redesigned the look and feel of the phone, so history dictates that this year’s changes will be mostly under the hood — a faster processor or a better camera, for instance.

“If people are looking for innovative new products, they will have to wait until possibly later this year or next year,” said Gartner analyst Van Baker.

Apple risks underwhelming investors who have been concerned that it has lost innovative edge amid mounting competition, Baker said.

“If [Apple] goes another year and they don’t have anything that can be considered a new product category, then they’ll have both [disappointed] investors and a disappointed user base,” he said. “But they’ve got a little time.”

Apple is, however, expected to respond to competitive pressure and release a cheaper version of the iPhone to appeal to overseas markets. While the growth of the U.S. smartphone market has begun to stagnate, sales are still taking off overseas, especially in China.

Several media reports, including some critical of labor practices in Apple’s supply chain, have indicated that the tech company may announce a phone with a plastic case and lower production costs.

“It would add much-needed expansion to the product line,” Baker said. “They have been playing at only the high end of the market and nothing in the mid-tier.”

Such a move would help address some short-term concerns, analysts said, and give Apple an opportunity to chip away at the estimated 80 percent global market share held by Google’s rival mobile operating system, Android.

But Apple must tread carefully as it competes in a new arena to ensure its does not damage its reputation for quality, analysts said. Because of its devotion to creating premium products, the company has shied away from moving into the lower end of the smartphone market.

That was never clearer than in a January conference call, when chief executive Tim Cook said Apple was not interested in rushing a cheaper model to the market just to sell more phones.

“We aren’t interested in revenue for revenue’s sake,” Cook said. “We could put the Apple brand on a lot of things and sell a lot more stuff.”

Hayley Tsukayama covers consumer technology for The Washington Post.
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