9/12/12

iPhone 5 features a boon for retailers

A bigger screen, 4G LTE speed and a digital wallet are big plusses.

Bill Siwicki , Managing Editor, Mobile Commerce

Apple Inc. has unveiled the highly anticipated iPhone 5. Of greatest importance to retailers, travel firms and ticket sellers in mobile commerce, the new iPhone boasts a larger screen, faster wireless connectivity, and a new operating system replete with features including Facebook integration and a digital wallet named Passbook.

“We anticipate that the iPhone 5 will drive a significant product cycle and put a lot of pressure on competitors,” says Shaw Wu, an analyst at investment firm Sterne Agee. “The previous update from iPhone 4 to iPhone 4S was arguably a relatively minor one with Siri being the biggest new feature. Despite that, a record number of iPhones were sold.”

From screen size to 4G LTE wireless speed to maps with turn-by-turn navigation, the iPhone 5 has many more advances over the iPhone 4S, Wu says. As a result, Sterne Agee is projecting Apple will sell 45 million iPhone 5 devices in the fourth quarter, well above the previous record high of 37 million units set in Q4 2011.

Pre-orders for the iPhone 5 begin on Sept. 14; shipping commences Sept. 21. The price is $199 for the 16GB model. The iPhone 5 is 7.6 millimeters thick, 18% thinner than the iPhone 4S, and 112 grams, 20% lighter than the iPhone 4S. It features Apple’s new A6 chip, which the company says is twice as fast as its previous A5 chip. Battery life is 8-10 hours, depending on how the device is being used; for example, 8 hours for 4G LTE browsing, 10 hours for watching video. The device also features an 8-megapixel camera.

The iPhone 5 screen is 4 inches in size, up from 3.5 inches on previous models. The retina display is 1136 pixels by 640 pixels. The increase in size allows for a fifth row of app icons to the home screen. Overall this means more mobile real estate for retailers to play with.

“A larger screen offers content providers, retailers and app developers greater opportunity to enrich what they present in a single screen of information,” says Charles Golvin, a principal analyst at Forrester Research Inc. “Primarily it’s about re-thinking the design of their apps and/or mobile sites to maximize the user’s experience of their content.”

A bigger screen can aid marketers in their mobile efforts, says Loren McDonald, vice president of industry relations at digital and mobile marketing technology provider Silverpop. “It means that for marketing assets such as e-mails and landing pages, marketers will be a little less constrained and can pack a bit more content in without requiring an iPhone user to scroll down,” McDonald says.

By comparison, existing apps built for the 3.5-inch screen run at that size with black bars above and below.

The iPhone 5 also boasts 4G LTE wireless speed, which can reach 150 megabytes of data per second, Apple says. 4G LTE stands for fourth generation long term evolution, a wireless telecommunications standard. It is markedly faster than the more common 3G networks of today. Mobile web users can be tough customers when it comes to mobile site and app performance, demanding fast load times. 4G connectivity will greatly enhance Apple’s smartphone offering and bring it up to speed with some competitors that already offer 4G LTE phones, experts say.

An iPhone with 4G LTE will have a profound impact on wireless “by vastly expanding the number of LTE users and raising the importance of LTE in consumers’ minds,” Golvin says, “which will have a snowball effect of driving carriers such as AT&T and Sprint to accelerate their LTE deployments in order not to lose subscribers to Verizon, owing to Verizon’s superior LTE footprint.”

Millions of iPhone 5 users with 4G LTE could be a boon for richer marketing initiatives, says McDonald of Silverpop.

“With more consumers soon having faster download speeds, more marketers may be willing to incorporate video into landing pages and more and larger images and animated gifs into e-mails, landing pages and ads—with less concern about how long it will take for the assets to load,” McDonald says.

With the iPhone 5 comes a new version of Apple’s iOS mobile operating system, which runs the iPhone, iPad and iPod Touch. New iOS 6 features include a Maps app with Apple-designed cartography and turn-by-turn navigation. This will replace the Google Maps app Apple has used since the iPhone debuted in 2007. There are also expanded Siri voice recognition system functions, including support for more languages. Facebook and Twitter integration enables users to post to Facebook or Twitter directly from iOS 6’s Notification Center and from within any app.

“The new iOS6 will enable consumers to share a brand’s content to their Facebook newsfeed without having to actually launch their Facebook app,” says McDonald of Silverpop. “This development could spur an increase in marketers increasing their content marketing activities by creating more educational content that has a greater chance of going viral or being shared.”

A key new feature that accompanies the new operating system is Passbook, a digital wallet in which iPhone 5 users can store identification cards, loyalty cards and other information. During its presentation this morning in San Francisco, Apple showed an image of an  iPhone 5 Passbook containing tickets (some with QR codes), loyalty cards and stored offers from Fandango, Delta Air Lines, Starbucks, Target, Ticketmaster, American Airlines, Sephora, Sheraton and Major League Baseball.

“Passbook will be of great interest to marketers who will be able to deploy coupons, tickets, shopping loyalty cards and other traditional print assets direct to a user’s iPhone,” McDonald says.

Golvin of Forrester Research says the new iPhone is just one component of a battle raging in the mobile realm that Apple continues to lead.

“The real market battle is among ecosystem/platform providers Apple, Google, Microsoft and Amazon,” he says. “These companies are fighting for customers’ loyalty by maximizing the dividend they pay on customers’ investment of dollars in devices, apps, music, movies, books, etc. The iPhone 5 further reinforces Apple’s leadership in this battle.”

It is the sum of all of its parts that sets the iPhone apart from the pack, says Weston Henderek, principal analyst, wireless services, at mobile and wireless research and consulting firm Current Analysis.

“Apple just keeps making incremental improvements to all aspects of the iPhone from a hardware and feature perspective and does not let market trends dictate which direction it will take,” Henderek says. “For example, one of the biggest trends in the smartphone space is the emergence of larger screens. Most of the leading-edge devices today—think Samsung Galaxy SIII—have huge 4.5-inch screens and up. Although Apple did increase the size of the iPhone screen, it did so without increasing the width of the display and while making the overall device thinner and lighter. As a result, the iPhone5 will be easier to hold and likely more comfortable to use than competing devices with much larger screens.”

Another reason why the iPhone will continue to be the smartphone to beat is Apple’s traditional pricing strategy on the device, Henderek adds.

“As soon as the iPhone 5 was announced at $199, $299 and $399, the iPhone 4 and 4S were dropped to free and $99 with service contracts,” he says. “Having those devices at those price points will put additional pressure on the entire smartphone value chain.”

During its announcement of the iPhone 5 this morning, the normally tight-lipped Apple revealed some interesting figures. It says through June 2012 it has sold 400 million devices running iOS, 84 million of which are iPads. It adds there are 700,000 iOS apps in the App Store, 250,000 for the iPad. And Apple says there are 435 million iTunes accounts, all set up with one-click purchasing.

Topics:

Apple, Apple Inc., Charles Golvin, Current Analysis, Digital wallet, Forrester Research, Forrester Research Inc., iOS 6, iPhone, iPhone 5, m-commerce, Mobile, mobile commerce, mobile statistics, mobile wallet, Silverpop, smartphones

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