Apple iOS update poses challenges to existing apps in App Store

While the anticipated iPhone 5 launch was missing from Apple?s announcements yesterday, the company did introduce a significant update to its mobile operating system as well as important pricing changes.

Apple held an event for analysts and journalists yesterday to announce developments in the mobile space. Based on previous experience when Apple has used such events to introduce major new hardware such as the iPhone 4, anticipation was high that once again Apple would show a new mobile device. 

?There is an expectation that anytime Apple introduces anything, it will be completely revolutionary,? said Noah Elkin, Austin, TX-based principal analyst at eMarketer

?The iPhone4 is still a top-notch device and, if anything, the iOS software was getting a little long in the tooth,? he said.

?That accounts for the emphasis on the software more than the hardware -- the hardware was brought up to speed.?

18B apps downloaded
According to Apple, iPhone posted 125 percent year over year growth compared with 74 percent for smartphones. In addition, it has 5 percent of the worldwide mobile phone market.

The company also shared some impressive statistics regarding the iPad, with 92 percent of Fortune 500 companies currently testing or deploying the iPad. Additionally, 74 percent of all tablets sold are an iPad.

The iTunes App Store also continues to perform well, with 18 billion apps having been downloaded to date.

A large focus of the event was on Apple?s mobile operating system, iOS. According to Apple, iOS is currently the number one mobile operating system with 43 percent of the market.

The latest update, iOS 5, becomes available Oct. 12. New features include notifications that are visible from the top by swiping down, an iMessage messaging service, deeper Twitter integration, an updated camera app and rich formatting for mail.

The breadth of the new features could present a challenge to some marketers.

?This represents a significant update to the current operating system, posing a challenge for many businesses and retailers who already have iOS apps on the market,? said Raj Koneru, chief executive officer at Kony, Orlando, FL.

?In fact, iOS5 has more than 200 new features that consumers will be expecting to be able to use ? including the iMessage and Reminders feature, both of which could be used this holiday season to prepare a mobile shopping list or share gift ideas with other iOS users,? he said.

?Businesses will need to act quickly to integrate these features, providing customers with the best possible customer experience.?

IPhone 4S
Apple also introduced the iPhone 4S, which has an A5 chip, is two times faster, has dual-core graphics and a battery that delivers six hours of browsing.

The new phone?s screen size could disappoint some consumers.

?The new iPhone is an incremental improvement over the previous version, and Apple admits it themselves by calling it iPhone 4S, rather than iPhone 5,? said Alex Spektor,  senior analyst of global wireless practice at Strategy Analytics, Newton, MA.

?Consumers will appreciate the new iPhone?s speedier processor, improved camera, and better battery life, but those seeking now-common 4-inch-plus screens will have to look to devices based on Google?s Android or Microsoft?s Windows Phone 7,? he said.

The iPhone 4S also comes with Siri, an intelligent assistant that uses voice recognition technology to answer questions posed by users that was introduced by Apple.

Siri points to the growing interest in voice recognition technology.

?Apple's new Siri Assistant, unique to the new 4GS, is a powerful harbinger of the future use of mobile devices ? not just the power of voice but, more importantly, the ability to contextualize a statement or request,? said Charles Golvin, a principal analyst at Forrester Research, Cambridge, MA.

?However, Forrester believes that consumers will be much more slow to adopt this new interface than they did Apple's revolutionary touchscreen of its first iPhone,? he said.

The iPhone 4S becomes available Oct. 14 in a 16 GB version for $199, a 32 GB version for $299 and a 64 GB version for 399.

The company also announced new pricing for existing products, with the iPhone 4 going for $99 and the 3GS with 86 B available for free with a contract.

?I think pricing is a key thing here,? eMarketer?s Mr. Elkin said.

?This is very much a clear play for increasing Apple?s market penetration,? he said.

Sprint gets iPhone
Other big news announced yesterday by Apple is that the iPhone is now available from Sprint.

However, there are some questions around why Sprint made such a big commitment here.

?The real story is around Sprint ? this is a much bigger day for Sprint,? said Kevin Burden, vice president and practice director for mobile devices at ABI Research, New York.

?Sprint picked up potentially 30 million iPhones over the next few years,? he said. ?Obviously, they think that two-thirds of their subscriber base is going to turn over to the iPhone ? good luck to them.?

Other news discussed at the event included iCloud, which enables iOS customers to store content and wirelessly pushes it out to all of their devices as well as Find My Friends, which lets users quickly and easily see the locations of those who have opted to share this information.

The new pricing and availability for the iPhone on Sprint could help drive sales for iPhones during the upcoming holiday season.

?Smart, incremental pricing of Apple?s three generations of models and broader operator availability will mean strong shipment volumes in Q4 2011 and beyond,? Strategy Analytics? Mr. Spektor said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York