The steps for Apple beyond iPhone 5

Apple are releasing another iPhone, or iPhones, tomorrow, and the rest of the industry is understandably nervous.

However as what is now called smartphones catch up, Apple will increasingly be playing in a space with diminishing hardware margins. Sony used to own the Walkman market (they named it), but the remainder of that industry started churning out extraordinarily cheap players that brought margins down for everyone. Sony responded with a variety of products, going up-market by adding features and technology, and defending the lower end of the market with a ever-expanding range.

Apple did the same with the iPod, where we saw the original (now known as the Classic) gradually evolve and then splinter into several variants, eventually ending up with the Shuffle (tiny, no screen, lots of colours), the Nano (small, screen, lots of colours), Touch (big screen, iPhone without the phone) and the Classic (high capacity, large, 2 colours).

The iPhone is losing its technology edge, and while US telco Sprint is making a huge bet on the product, Apple’s hardware and software technology lead has diminished to about a year. However, just as with the iPod and iTunes, Apple own the software infrastructure behind the device with the App Store on iTunes. This will slow the decay of margin, but ultimately apps will be made for all large competing players.

So while the iPhone will continue for now to earn the lions share of profits in the industry, we can expect to see the beginnings of splintering along the lines of the iPod to shore up those margins.

So I predict we will see a cheap iPhone product – perhaps the existing iPhone 4, or perhaps a smaller screen-only sized product. This will compete against most of the rest of the industry.

But Apple will also punch for the higher margin products, as they did with the incredibly successful first spin-off product, the iPad.

There there are a range of opportunities as the size of the iOS device, the resolution of the screen and a whole host of other, less important, features will differentiate the offerings. Here’s my take on some possibilities – there are more:

Apple, if they stay true to their core, will keep the product range relatively small, and not introduce tens of variants.

I have not included features such as 3G/4G mobile data versus wifi, new software features which should be available to all (newer) devices, NFC and so forth.

Apple Convergence

There is plenty of scope for convergence of the Apple ecosystem, and we know they like to keep their product range simple.

One well-known missing link is a serious set-top gaming device, and Apple could quite easily have an approach that uses iPhones/iPod touches/iPads  as controllers, and an iPad, MacTV or iGamingDevice connecting and displaying the game on the TV. The AppStore already has a vast game library, and many would thrive on a TV.

The other obvious step is the convergence of MacBooks, iPads and iPhones. The iPad is still a media consumption device for business, and while it is ok for consumption and annotation, real computing still demands a keyboard and either a mouse or track pad. Despite, for example, a promising launch the Numbers spreadsheet is a usability failure on the iPad, while coding on the iPad is a distant dream for now.

But what if a high resolution iPad was your main computer (the iPad PC), which operated normally as an iPad but could also be unleashed as a Mac – in particular when connected to a keyboard and external monitor? There would be no need to have 3 devices as I do (an iPad, MacBook Air for travel and a larger MacBook Pro for office), as with just one device  all of our computing requirements are met.

There is, if we think about it, no reason that the iPad PC cannot eventually shrink to iPhone size, so that we could just connect our iPhone to a keyboard, mouse and monitor whenever we want to get down to serious work.

We can also turn back to the iPod, which as the iOS devices catch up could well be assimilated into the iOS range. The iPod nano, for example, could double as an input device for a gaming machine or simply as a tiny high resolution phone.

Technology has a way to go before i7 power chips end up in iPhones, but that day is fast approaching. This is Apple’s problem to solve, and solve it I am sure they will.

Their next problem is larger though – what on earth will they do after that?

And yes – if it is shiny and has an Apple logo on it, chances are I’ll be investing buying splurging on the new iPhone.