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Larry Seltzer
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Has The iPhone Peaked?

Prediction: Apple will sell every iPhone 5 it makes just on good execution and the strength of the brand. But the new phone already lags the competition in many areas, and it will be a year before the next major refresh. The iPhone 5 is a good incremental update, but Apple has left a big opening for Android and Windows Phone.

Even before the iPhone 5 announcement Wednesday there was widespread speculation that nothing really new, innovative, or surprising would be in the new iPhone, and so it turned out. The announcement matched the rumors pretty closely and nothing in the phone made anyone go, "Wow!"

Has the iPhone peaked? That's not necessarily a bad thing, at least not in the short term. "Peaked" is another way of saying that the iPhone is at the top of its game. I admire how Apple handled some of the changes in the new phone, such as making the screen taller, but not wider. It achieved a better aspect ratio without the regrettable side-effect, too common in the industry, of making the phone so wide that you can't reach the other side with your thumb. And while the need to support two screen geometries will make for modestly fatter binaries, I believe Apple when they say that it's not hard for developers to adapt apps to run optimally on the new screen.

Initially, after the announcement, I wondered if maybe the problem was more general and that we were running out of room for innovation in the smart phone form factor. But it's not true. Apple's competitors feel much freer to innovate, adding NFC, creating phablets, adding styluses; beyond Apple you can get hard keyboards, virtualized operating systems, wireless charging, not to mention a much greater variety of colors.

Many of these differences are dumb, such as wireless charging, or frivolous, such as magenta- and tangerine-colored phones. But some people like these things and they buy them. That qualifies as innovation, to a degree. Being the high-volume, high-markup player, Apple has to be more conservative. It has to make things it can sell hundreds of millions of.

Rather then throw in all the new technologies their competitors are adopting, Apple mostly aimed at improving what it had. It absolutely had to grow the screen and it did. It had to get LTE and it did. The camera is better, much of the software in the OS is better; it all screams "incremental!" to me.

Apple did take some risks--Lightning, the new, better, incompatible connector is the biggest one--but it can get away with it because it's Apple. The main risk to Lightning is that it will anger consumers who own many devices that use the old connector, but they'll live.

Even if the iPhone 5 already lags technologically behind many of its competitors, Apple probably will sell all that it makes just based on good execution of a good phone and the unrivaled strength of the brand.

It's likely going to be a whole year before we see the iPhone 6. I'm pretty confident that it won't be another marginal update. A little revolution now and then is a good thing. In the meantime, Apple has left a big opening for the competition.

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