New iPhone: the 'S' is for 'suckers'

Going downmarket is the only way Apple will dominate the phone market

In their hearts, even the faithful know it: every iPhone since iPhone 1 has been treading water.  

A mobile phone that lets you surf the Internet, take pictures and check your email—that’s 95 per cent of the value. Everything else is gilding the lily.

Sure, GPS added some functionality and 3G provided a welcome speed bump. Though nobody uses it much, a video camera can be nice to have. But slimmer width, higher res, longer battery life, faster processor—these are the predictable, incremental improvements all consumer electronics undergo. Slap a new shell on it, change the colour, market the hell out of it, and perhaps folks will be convinced to ditch the pricey, still-functioning gadget you made them want so badly just a short time ago.

Eventually, people figure out that the differences are minor, and only the most insecure, status-obsessed early adopters will keep taking the bait. At that point, there’s only one place to go: downmarket. In Apple’s case, downmarket is most of the market.

For all of Apple’s dominance in mindshare, iPhones comprise just 5% of the cellphones in the world. While we in North America have been squealing with glee for an extra camera on our phone, Second and Third World nations have been experiencing true technological transformation through cheap, rugged phones like this, the world’s most popular handset. For millions, the homely Nokia 1100 isn’t just their first cellphone—it’s their first phone.

All phones will eventually be smartphones, and Apple wants to sell most of them. To do so they don’t need to offer new features, but cheaper phones.

That’s what the iPhone 4S will prove to be: the first entry in Apple’s budget product line. That’s why it works on GSM and CDMA. Pleasing U.S. carriers is now less important than offering a universal device. It’s their priciest iPhone right now, but soon the iPhone 5 will be here, giving Apple occasion to slash the 4S’s sticker price and market it (along with the 4 and the 3G) as Apple’s first affordable options overseas. To buy it here, now, at top dollar, is a sucker’s choice.

In the long run, there’s nowhere for the iPhone to go but down.

Jesse Brown is the host of’s Search Engine podcast. He is on Twitter @jessebrown


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