
Internal Apple document: FY'14 Planning Offsite - molf
http://www.scribd.com/fullscreen/216526160?access_key=key-1uv8ibrvnzr4dnx0fu5c&allow_share=true&escape=false&view_mode=scroll
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iandanforth
This strikes me as very boring, non-Apple style thinking. I don't think the
experience of a 5 inch phone is better than a 4 inch phone. But it is _a
bigger number_ and thus easy to market. And things that are easy to market are
the playground of boring companies.

Apple, on the other hand, should look at these numbers and say "people
obviously want something _new._ " Giant phones are being heavily marketed as
the new thing, so people are buying them. Not because it feels good to try to
shove a small book into a front pocket, or that they love having to use both
hands to type out text messages.

A boring business would follow the heard because they don't know how to
distinguish customer needs from customer inertia. Apple, traditionally, is
very good at knowing when something is a trend, and when something speaks to a
deeper human need.

I sincerely hope that Apple has not become a boring company.

~~~
m4tthumphrey
Have you actually tried using a 5 inch phone? I think you may change your mind
if you haven't. Trying to use someone's iPhone X after using my Nexus 5 is
quite frankly laughable to say the least.

~~~
ctdonath
I have the iPhone as a _phone_. I make calls with it, keep it in my pocket,
and other uses are secondary (albeit common). Insofar as it's uncomfortably
small for some uses, that's why an iPad is usually in arm's reach. Sure, 5" is
more usable for many applications than 4", but ~10" is much more so. Make the
phone more than 4" and I'm apt to just not carry it, as it won't reasonably
fit in my pocket and looks/feels like a wall held to my ear.

iPad + iPhone Nano = winning combination. If Apple makes a 6" iPhone, I'd sure
hope they at _least_ retain the 4" version, if not shrink & optimize for a
much smaller version. I need a phone that excels at being a _phone_ and
integrates well into the iOS ecosystem; got my tablet for applications needing
a more complex/larger interface.

~~~
slantyyz
>> I have the iPhone as a phone.

Yes, but this is _your_ use case.

While there are a lot of people who share your use case, there are probably a
lot more people who don't.

Which is why the product diversity on the market right now is good. There's a
decent chance that you'll find a phone that will work for your particular use
case.

~~~
lh7777
What concerns me (and I'm sure many others who don't like the idea of a larger
iPhone) is that the iPhone 5s is currently the only flagship phone under 4.5".
Sure, you can get smaller budget smartphones, but if you want a small high-end
phone, it's Apple or nothing.

If the rumors are true and Apple decides to make the iPhone 6 4.7" and 5.5",
what do I get next time I'm ready for an upgrade? I think it's silly for Apple
to leave money on the table by only selling the current form factor when
there's obviously a lot of demand for a larger iPhone, but it's equally silly
to ignore the market for smaller phones like every other smartphone
manufacturer is.

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kenjackson
Apple faces a severe _potential_ financial crisis in coming years -- one that
dwarfs Microsoft's. They rely so heavily on the premium subsidy for their
revenue that if the subsidy is merely brought down to normal levels they will
see a huge drop in revenue -- and this assumes that they keep selling the same
number of phones.

Now that there are viable alternatives in Android, and to a lesser extent
Windows Phones, with much lower subsidies, I think you'll see the carriers
push these other devices.

And if we move to a model where consumers pay for the full price of the phone
(which is what much of the world does today), then you'll actually see iPhone
sales fall. Sub $200 low-margin phones are the future. Apple can still do well
with a premium phone -- especially if the camera is really good, but I think
it's a tougher niche than the high-end PC market.

~~~
anon1385
>Why being insanely profitable is bad for Apple

Microsoft fans have been making this argument for 15 years or more. They said
Apple should copy Dell and sell cheap enterprise desktops with low margins
because that was where the money was. Then they said Apple should copy Asus
and HP and sell cheap netbooks with low margins because that was the future.
Then people said Apple should be making a really cheap ebook reader to compete
with the Kindle.

People are constantly advising Apple that they should get into low margin
markets and compete on price with companies that are barely breaking even.
This advice seems to mostly be based on what they want the market to look
like, more than how it actually is.

~~~
kenjackson
To be clear I think Apple has a great model, but they need to be realistic
that it won't last. The only markets in the world that the iPhone has
substantial market share is in countries with subsidies (at least I believe
so). In markets with no subsidy, Android is killing.

As the US (and the world) moves more to a non-subsidy model I think this
disproportionately impacts the iPhone. All OEMs will have to deal with this,
but Samsung, LG, Huawei, Coolpad, are used to this world already as they sell
really well worldwide. iPhone hasn't figured out how to sell full price phones
around the world.

~~~
awj
> As the US (and the world) moves more to a non-subsidy model I think this
> disproportionately impacts the iPhone.

This is the exact model Apple's computer division deals with, and they're
wildly profitable compared to most PC vendors even though they charge premium
prices all around. What's different about phones?

~~~
Touche
The computer division is funded by the overall success of Apple. It allows the
computer division to have a bigger budget to spend on things like marketing
and R&D. It's not a coincidence that the computer division has been doing so
much better since Apple had other mega-successes that serve as the cash cow
for the entire company.

 _If_ the iPhone ever ceases to be as profitable it will have a ripple-effect
throughout the entire company as they scramble to find the next thing that
will replace those lost profits.

~~~
redler
Actually, Apple spends remarkably little on R&D, perhaps even to a fault. The
third chart on this page from Asymco [1] is interesting, especially
considering Apple's R&D is for computers, phones, and whatever other lines
they're developing, and the R&D for a company like HTC is likely to be
clustered around its narrower product lines.

[1] [http://www.asymco.com/2012/01/30/you-cannot-buy-
innovation/?...](http://www.asymco.com/2012/01/30/you-cannot-buy-
innovation/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Asymco+%28asymco%29)

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GVIrish
I think this is a case of Apple's stubborness giving them a little bite in the
ass. It took them a long time to come out with the iPad mini because they
didn't believe in the inbetween tablet size, and now it's taken them far
longer than it should've to come out with a bigger iPhone. Apple was late to
the party with 4G as well.

I think once a bigger iPhone drops it will put a big gust of wind in their
sails but I also think that Apple needs to be skating to where the puck will
be if they want to keep their place as the premium manufacturer. If they're 2
or 3 years behind what Android (Samsung really) phones have the narrative that
Samsung is more innovative is going to gain steam.

The other looming challenge for Apple is that software services are growing as
a differentiator in phone ecosystems. Most of the Google services thoroughly
outclass iCloud, meaning that iCloud doesn't give the Apple the competitive
boost that it could.

~~~
selectodude
>Apple was late to the party with 4G as well.

I remember the battery life being just awful on LTE phones until around the
time the iPhone 5 came out.

------
shawnc
I remember when everyone was bagging on the iPhone for being 'so big'. "who is
going to put that damn thing up to their face? They look hilarious! What is
this, 1990?"

Really amazing how times change. I think it's because when the iPhone came
out, no one could think of using their Phone for everything that they are now
used for - so it just seemed like overkill. Now for a lot of people, it's
their computer.

~~~
TheCoelacanth
Maybe that should be taken as an indication that there isn't any one size that
will suit everyone's needs. Some people want a phone that is larger than an
iPhone and some people want one that is smaller than an iPhone. Those people
are served well by other phone manufacturers who have a variety of sizes, but
aren't well served by Apple who only makes one size of phone.

~~~
cooper12
Apple makes their iphone screen that size because it is part of their tailored
user experience (ie: you can reach each part of the phone with your thumb and
developers can target that screen size) and because of uniformity (You know a
case will fit and you know what to expect). If apple started making their
phones larger it would disrupt that experience they built and would introduce
fragmentation.

Apple does consider screen size though, thats why the ipad mini was released
and the ipad itself was made even though Steve Jobs hated the idea of a
tablet, so it's not entirely unplausable that they would release an iphablet
alongside the next iphone, and as this document shows they are aware of the
problem.

Apple has also considered the price aspect of the document too, with the
iphone 5c, so time will tell what else they'll try.

------
ergest
I wonder how a document that says "Highly Confidential - Attorneys' Eyes Only
makes it into the wild.

~~~
Spooky23
It was turned over during discovery and released with court documents in the
Apple vs. Samsung litigation.

------
schuke
I'm surprised keyboard size is mentioned only once so far. When I have to type
Chinese a bigger screen is a lot more accurate. I switched to my current
iPhone 5c from a Lumia 920. Typing Chinese has been a major setback for me.
(Typing English is not that much different though)

------
joshontheweb
For Apple to maintain the lead they have had they need to continue to innovate
new types of products, not just keep improving what they have. I think there
is plenty of opportunity for this. Think smart appliances, houses, cars. The
question is whether they still have the ability to do that with Jobs gone.
Time will tell.

Edit: Probably the most likely new category would be wearable computing now
that I think about it. Longterm perhaps electronics integrated with the body.

~~~
psychometry
They've done some impressive things on the hardware front recently--the Mac
Pro redesign and streamlining their MacBook line come to mind--but since the
iPhone 4, which had some incredible innovations like the antenna and Retina
display, their mobile line has only seen predictable iteration. I expect the
iPhone 6 to be a significant deviation in form factor from the iPhone 4/5/5S
because Apple is run by smart people who are rarely late to the party.

~~~
hahainternet
I hate to be the anti-Apple cynic here, but really? Higher resolution screens,
a smaller computer and discontinuing products?

That really doesn't strike me as that impressive.

~~~
psychometry
The retina display was a significant achievement and you need only compare the
ppi counts of its contemporaries to see that.

~~~
hahainternet
The first retina display was made by Samsung I believe, and was higher than
its contemporaries but not by a gigantic degree.

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malux85
Where are their 4K displays? ... That's what I'm waiting for :)

~~~
octopus
They recommend to buy this 4K display (it is not produced by Apple) if you own
a Mac Pro 2013 or a MacBook Pro 2013:

[http://store.apple.com/ca/product/HD971LL/A/sharp-32-pn-k321...](http://store.apple.com/ca/product/HD971LL/A/sharp-32-pn-k321-4k-ultra-
hd-led-monitor?fnode=53)

------
yalogin
This is all over the internet today. Why is this a bad thing? Everyone knows
the smartphone market is maturing (or matured) Samsung/Google has exhausted
all its options (all screen sizes) where as Apple still has the bigger screen
sizes to release. So we know Apple atleast one more product cycle to go
through.

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gum_ina_package
Apple needs to show customers what they want, that's the real issue. Since
Jobs died, Apple hasn't really created a new product category that none of us
knew we wanted. Instead, they've made defensive moves by making their existing
products cheaper and more attractive.

~~~
matthewmacleod
_Since Jobs died, Apple hasn 't really created a new product category that
none of us knew we wanted._

Jobs died a relatively short time ago; even when he was at Apple, it's not
like they created new product categories all that often - maybe every 3–5
years?

I can't help but feel people have expectations which are a little too high.

~~~
phantomb
This. In its 35+ years Apple created - or at least codified - the personal
computer, the mp3 player, and the modern smartphone. I think it's closer to a
big new product category every 5-10 years, really.

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davis_m
Seems more like "The customers we don't have want what we don't have"

~~~
jusben1369
Or "Prospects (tive customers) want what we don't have"

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badman_ting
I guess Apple really _is_ doomed! Based on these three pages of a document.

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onmydesk
Its dated only a year ago.. Id have hoped they would have been working on this
obvious problem for a lot longer

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oxymoron
Better mind those second derivatives.

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GazNewt
I'm hoping for 2,272 x 1280 5-6 inch screens this year

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hit8run
Authenticity? It's bullshit because Apple is successful because it doesn't
follow every trend and it's not serving the low margin non premium segment.

~~~
DannyBee
It's a court exhibit, filed in Apple v. Samsung. It shows up on the pacer
docket. It's authentic (AFAICT), presumably part of discovery apple was
required to turn over to samsung.

