The iPhone 8: A Little Innovation for A Lot More Money

The iPhone 8: A Little Innovation for A Lot More Money

In Technology by Daniel NewmanLeave a Comment

These days, you rarely read an article about Apple that doesn’t lavish the tech giant with glowing praise, or in some way remarks on the company’s amazing technological strides. As someone who works in tech and keeps tabs on where innovation comes from, and who files patents for what, I’ve always found this curious.

Apple CEO Tim Cook himself has admitted that Apple is rarely the inventor of what goes into Apple’s products, but most people- consumers and journalists alike – default to crediting Apple for having invented everything that goes into its products. It’s a fascinating contradiction. To be fair, it’s also a tribute to both Apple’s marketing prowess and the strength of its user community, and before I go on, I must give Apple credit where credit is due: Few companies in the world today are better at marketing and tribe-building than Apple. It also doesn’t hurt that Apple, under the leadership of Steve Jobs at least, dominated the world of industrial design in the consumer products space for well over a decade. Also under Jobs’ leadership, Apple masterfully integrated non-Apple innovation into its products, and made it seem like Apple was behind it all. But that’s just it. Knowing what I know, the part that makes me wince the hardest every time Apple starts ringing its innovation bell is the Pavlovian response from most of the tech press: the mounting ecstasy of anticipation stretching into weeks and months before a new product is unveiled, the fawning over Apple’s “unequalled innovation ecosystem,” the overzealous regurgitation of the Apple myth. I can see why ignorance is often mistaken for bliss. It’s damn good marketing, anyway. I’ll give it that.

My Pavlovian response is a bit different. Why? Because I know that as good as Apple is at being innovative with design and marketing, Apple isn’t as good at the technology innovation part as most people give Apple credit for. And no amount of denial or rationalization on my part will change that. I like to give credit where credit is due. It’s a thing. So it’s unsettling to me to see how many people credit Apple for aspects of its “innovation culture” that it has played no part in in the past, and continues to play no part in today. Although it isn’t entirely Apple fault, it nonetheless always feels like watching the popular kid in class take credit for a group project he contributed very little to. Or rather, the popular kid in class letting everyone assume that he did most of the work, and basking in that glory, and not giving his partners the credit they’re due. Either way, the cool kid didn’t do the work. He just happened to be good at speaking in front of the class.

So when Apple’s big product release wheel comes around, like it’s about to, and the next iteration of the iPhone gets launched, that’s where I find myself. You read all the headlines, and it’s hard not to catch a sunburn from that basking in the bright golden glory of Apple for the “revolutionary” new product it is about to gift to humanity.

No. I’m sorry. Gift may be the wrong term. Rumors of the next iPhone costing a cool $1,200.00 don’t exactly fit the “gift” argument. And yet, judging from the way the tech press is tripping over itself to declare this phone, which no one has seen yet, the greatest phone ever designed, you would think that $1,200 for an iPhone is the bargain of the century. That kind of reaction seems more akin to zealot frenzy than any kind of reasonable market expectations.

Let’s talk red flags: On August 22, 2017, Bloomberg published an article with a look at the expected feature set of the iPhone 8. Some of the more “innovative” (Innovative may be better replaced with iterative, improvement or enhancement) features included edge-to-edge glass, the elimination of the well-known home button, a 3D facial recognition sensor to unlock the phone and make payments, and an OLED screen. There are a number of other neat innovations on the list such as infrared sensors for in-the-dark facial recognition, and of course Apple’s new A11 processor. However, many of the new features that they speak of, such as inductive charging, slimmer bezels and a “tap to wake” feature are nothing more than Apple versions of things that everyone else is already doing. Not to mention that the above referenced edge-to-edge glass and virtual home button have already been launched in the market by Samsung when they introduced the S8. Additionally, the Essential Phone has these features as well, but I am withholding judgment on Essential as I have little knowledge on their products at this time. In short, I’m not sure there is one invention or innovation on this device that hasn’t been done before, is there?

Another major red flag for the iPhone 8 relates to the speed of the mobile connection. We’ve covered at length the ongoing dispute between Apple and its long-term partner Qualcomm. Still though, few people realize just how critical that partnership has been for Apple. For instance: The current iteration of the iPhone offers two mobile modem providers, Qualcomm and Intel. While “officially,” both modems deliver the same performance, independent testing has overwhelmingly concluded to the contrary, with Qualcomm modems showing significantly superior performance (namely speed). With Apple considering abandoning Qualcomm completely with the launch of the iPhone 8, they are likely going to have to bring it to market without the newest “benchmark” in mobile connectivity performance: Gigabit LTE. This higher speed connectivity is already available in premium competitive products from the likes of Sony and Samsung and while the Gigabit LTE networks are far from pervasive today, they are rapidly expanding.

If Apple and Intel are unable to successfully incorporate Gigabit LTE into their newest device, users will be paying over $1,000.00 for what is effectively last year’s technology. Launching the phone with such a glaring deficiency suggests a typical arrogance, as Apple expects that people will buy whatever Apple sells, regardless of whether that product meets the expectations of a rapidly changing mobile market. (Remember when the original iPhone came out with 2G?) Given that Apple has some of the smartest leaders on the planet, what is most disappointing is that while the decision to roll with the old modem may be good for Apple in the short term, how can it be good for the consumer?

But that isn’t the most troubling part. If much of the technology that goes into the iPhone 8 wasn’t developed by Apple, and some of its critical connectivity performance is a year behind premium smartphones offered by Apple’s competitors, why is the price of the iPhone 8 rumored to be so much higher?

Perhaps more to the point, what is the real market benefit for consumers?

To be fair, I do believe that some of the new features – the OLED screen, the improved cameras, and the augmented reality capabilities – do add some cost. That’s entirely possible. But are these changes really the reason for that big of a price bump? I think there’s a simpler explanation. Apple wants to position itself in a category apart from its smartphone competitors. A premium of premiums, if you will. Not technically “luxury,” as Apple can’t hold on to its sophisticated design-loving populist image if it becomes the Cartier and Chanel of the tech world, but something “other” than Samsung, HTC, Google, and Huawei. Something a notch more premium. That kind of positioning allows Apple to compete on image and perception rather than pricing and technology features. In that kind of scheme, consumers aren’t comparing apples to apples (no pun intended), they are either choosing between whatever the $500-$700 smartphone makers have to offer, or upgrading to Apple. $1,200 isn’t just about the features or the performance anymore. It’s about being part of Apple’s world.

We’ve seen this before: It doesn’t cost that much more to build a Porsche Cayenne than a Volkswagen Tuareg, but people pay much more for the Porsche. In some cases, you may even find a VW with nicer features, a faster engine and nicer rims than the Porsche, but it isn’t a Porsche. Same principle. For several years now, companies like HTC, Samsung and others have built phones that have out innovated and out featured the iPhone. And because Apple doesn’t innovate at the same pace, and doesn’t have the R&D in deeply technical disciplines that some of its competitors and partners enjoy, Apple has had to remain competitive and create value in other ways. If not performance, what? If not proprietary new technologies, what? If you’re Apple, the answer is simple: Focus on the brand, not the pipes. Apple has always understood the power of its brand. It’s invested unimaginable sums of money crafting unique experiences for its customers and reinforcing the cool factor of using Apple products to capture a massive market share regardless of any inferiority that may exist in its products. Apple has always been good at this, because Apple has always been good at telling stories, and making people feel good about being part of the Apple tribe. Any company that can do that can charge a premium for their products and services because in the minds of their customers, those products and services are something special. That you may be able to get a better phone for a lot less money elsewhere doesn’t really matter. Most purchasing decisions are driven by emotion, not logic. Apple, perhaps more than any company in the tech world, understands the power of that single insight into the human condition.

So what is the real benefit for buyers of the iPhone 8? The obvious benefit beyond it being an Apple product is that it is an easy upgrade for the current Apple ecosystem. Those that have Apple are likely using iCloud and maybe have some other Apple devices. Moving from one device to the next is simple. The new device is a little bit cooler than the last, and everyone likes a new gadget. Because of the secrecy around this new design, some of the other benefits have yet to come into focus. We’ve heard a lot about the Apple AR Kit, and how although they are once again late to the market, Apple is sure to try and position itself as the penultimate AR company. It’s a big bet. If the iPhone 8 winds up being as good as Apple claims it is, it could be the gadget Apple needs to bring all of those AR applications to life. But… beyond that, I just can’t find that many other benefits for buyers of the iPhone 8.

Now, let’s talk about the benefit to Apple for a minute. I’ve alluded to this throughout, but I think this is where my call for reflection about real invention and innovation versus marketing and brand comes into play.

When the choice between two similar products with equal or greater capabilities offers one for 1/3 or ½ of the price of the other, most people generally buy the least expensive of the two. Apple knows that consumers want the iPhone, and that they will pay more for it, but if the rumors are correct, Apple may be testing the limits of price elasticity for smartphones. Having said that, here is where Apple may yet win: On the one hand, with mobile carriers no longer offering subsidies on mobile devices, this number could be intimidating, but I’m sure Apple sees this as an opportunity to deliver a model or two below the $1K price-point, which many see as a price threshold. These stripped-down versions of the iPhone 8 will likely have less storage, for instance, although that will give Apple’s cloud storage services a welcome boost. On the other, with an increasing number of mobile customers essentially leasing their phones instead of buying them outright, the price of the device may simply be absorbed into their monthly bills. The result: lower barriers of entry, shift the risk to the carriers, collect more revenue, increase profitability. Only time will tell if things will play out that way, but it seems logical that Apple is hoping they will.

It’s no surprise that people are excited for the iPhone 8. I have no doubt it will be a gorgeous device, and expect that Apple stockholders will feel a surge of confidence on launch day. But let’s call a spade a spade: Apple is a great marketing company. Apple is a great industrial design company. Apple is sensational when it comes to packaging other companies’ innovations and making them seem like their own. There’s a lot of value in that (mostly for Apple), but it should be noted that this behavior of claiming credit for others innovation is littered with ethical shortcomings that their marketers will surely orchestrate into a convincing marketing message. Meanwhile though, consumers may wind up paying a lot of money for a phone that doesn’t necessarily outperform its competitors’ phones, and worse, a device that could possibly be saddled with yesterday’s connectivity technology, meaning another upgrade will be required to take full advantage of Gigabit LTE.

Having said that, I will probably be standing in line on launch day, if only to see for myself exactly what Apple has (or hasn’t) delivered this time around.

This article was first published on Huffington Post.