Apple’s Fall 2021 Lineup: Analysis, Carrier/Upgrade Outlook, and Competitive Response
Apple’s annual fall device update offered up few surprises, but adding noticeable, useful updates to best-selling products is generally a winning formula for Apple.
What Software and Services?
While most of the presentation focused on hardware, the event started with a review of upcoming Apple TV+ shows that felt very much like a media company presentation, only without live celebrity introductions (we got that earlier in the year). Fitness+ was the only other service that got more than a passing mention. There are some new group features, but the main news was that Fitness+ is getting distribution in 14 new countries. Sessions will be in English with localized subtitles, so Apple is moving cautiously here.
Apple surprisingly rushed through iOS 15 and iPadOS 15 improvements; for a company that is so software driven, this was somewhat unusual. The tech press has long since taken the improvements for granted, but hundreds of millions of regular consumers who don’t join beta programs will see customizable widget layouts, Focus Modes, and tweaked multitasking in iPadOS for the first time shortly, even on their older iPhones and iPads.
iPad Updates
The base $329 model of the iPad is arguably Apple’s most competitive product: it defines its category, provides tremendous value to consumers, outsells all rivals combined, and still manages to be cheap enough for Apple to manufacture with strong profit margins. Apple could reasonably rest on its laurels here for at least another year or two, but it is updating the iPad with small but important upgrades to the front camera (for video calls and distance learning), storage (now starting at a more reasonable 64GB), and the processor (mostly just because Apple can). None of these changes will immediately drive 7th or 8th generation iPad owners to upgrade, but the base iPad is even more appealing to new users entering the category.
In an incredible bit of marketing jujitsu, Apple deliberately pointed out that the unchanged – and frankly, ancient – iPad form factor is a huge benefit to consumers who have invested in cases, keyboards, cables, Pencils, and other accessories. It is. If consumers want something more modern, Apple has an iPad Air or iPad Pro it would be happy to sell them.
iPad mini Overhaul
The iPad mini was practically abandoned by Apple for four years until the company realized that enterprise customers were building businesses around them in food services, hospitality, and retail and finally gave the little tablet’s internals a refresh in 2019. Rather than drive price and margins down commensurate with the smaller size, Apple raised prices on that 5th generation iPad to $399, and positioned it as a premium product. The strategy worked, and Apple is now investing in giving the iPad mini a proper overhaul, turning it into an iPad Air mini in all but name.
The new iPad mini now starts at $499 and continues targeting prosumers who are less price sensitive and enterprise buyers who don’t have many alternatives. The iPad mini case size is essentially unchanged, but the sides have been flattened, and the screen has increased to 8.3” by reducing the bezels around it. The new iPad mini gets another power boost with the same A15 chip Apple is putting in the new iPhone 13. That slots the iPad mini well above the iPad Air 4th gen (with its A12) and below the M1 found in the latest iPad Pros. In addition to the more powerful silicon, there are new cameras in front and back, USB-C, stereo speakers, Touch ID integrated into the power button, Pencil 2 support (with charging), and optional 5G.
If this new model sells well, Apple should be expected to update it again in the next year or two with an OLED ProMotion display. This was likely left out of this version to keep costs down.
Apple Watch Series 7
Apple is on an annual update cadence for its Watch line, and the Watch Series 7 gets a new, slightly larger case with a noticeably larger display. The Watch 7 screen is just a bit bigger than the Series 6 and a LOT bigger compared to the Series 3. This is going to drive upgrades. I have not heard of widespread issues with Apple Watch durability – and have had no problems whatsoever with my long term review units – but Apple is investing a lot in better crystal and now IP6X dust resistance on Series 7. but remains compatible with all existing bands! Available "later this fall." Series 3 and SE stay in the line to keep entry prices down and make life miserable for competitors.
While Apple has given the Watch Series 7 an external refresh, it does not appear that there is much new on the inside or with the sensor array. This has to be seen as good news for Apple’s competition, because Apple already outsells all other watch brands (of all types), and if Apple had been able to add reliable blood pressure monitoring or blood sugar monitoring, it would compel millions more people to buy an Apple Watch, even if they needed to switch to an iPhone to do it.
iPhone 13 mini / 13 / 13 Pro / 13 Pro Max
There are plenty of updates to this year’s iPhones, but the most meaningful improvement for average consumers is the promise of more battery life. Some of this is due to software and silicon tweaks, but the batteries themselves are physically larger as well. Apple claims that the iPhone 13 mini and iPhone 13 Pro will last 1.5 hours longer than their predecessors, and the iPhone 13 and iPhone 13 Pro Max will last 2.5 hours longer than the iPhone 12 and iPhone 12 Pro Max. The improvement to the iPhone 13 mini could be crucial, as battery concerns were a key reason that many consumers stepped up to the regular iPhone 12 last year, even if they might have preferred the smaller form factor.
The cosmetic updates include slightly smaller notches and new colors. Inside we have new silicon for the processor – Apple’s new A15, which focuses on faster graphics and subprocessors for AI and imaging – and modem – Qualcomm’s unacknowledged X60, which brings more comprehensive 5G support. Much to Qualcomm’s dismay, Apple is limiting mmWave support to the U.S. In all geographies the phone will still drop to LTE whenever that makes sense in order to save battery life.
All the cameras on all the iPhones are new this year, with the most significant change being significantly larger sensor sizes that let in more light for better low light pictures. There is chip-level stabilization even on the base iPhone models, and the Pro features both a macro mode on the wide angle lens and a 3x optical zoom lens (up from 2x). Rumors of a periscope zoom camera in the 13 Pro Max proved unfounded, and while we withhold judgement until we actually get hands-on with the new phones (and see what Google can do with its Pixel 6), long-range zoom appears to be the only area where Apple is clearly behind the competition.
Apple has long led the industry in video recording and while rivals are improving, Apple is adding two new software features that build on its lead, even if most consumers absolutely never use them. The first is Pro Mode recording, which increases file sizes so much that the base 128 GB iPhone Pro 13 does not support it (presumably to preserve storage capacity for other things) and Apple now offers a 1 TB storage option. The video feature other is a Cinematic mode for video which can automatically change focus (“rack focus) mid-shot. It's very cool. These features are legitimately important to creators, but they are also part of Apple’s brand promise to regular consumers who buy the iPhone to get the best camera, even if they just push the button and let the phone do the rest.
The regular iPhone 13 and iPhone 13 mini sport brighter OLED displays. On the non-Pro models, that display still refreshes at 60Hz, but the Pro models get variable refresh rates that dynamically shift between 10Hz – 120 Hz based on the apps and content in use. Apple has been way behind the competition in variable refresh rate displays on phones (it has long offered them on iPad Pro), so ProMotion on iPhone 13 Pro is a big deal. There is no difference this year between the cameras on the iPhone 13 and iPhone 13 mini or the iPhone 13 Pro and iPhone 13 Pro Max. iPhone customers already over-index on buying Pro models compared to other brands that have premium and super-premium product lines, but this year the iPhone 13 Pro may gain a bigger edge than usual, as the Pro gets both better cameras and the higher refresh rate display. (The Pro also has an extra GPU core, and YouTubers will certainly run benchmarks, but I challenge consumers to discern the difference.)
iPhone 13 Carrier Support and Upgrade Outlook
The iPhone 12 was the first 5G iPhone, and while Apple trailed rivals in offering 5G, carriers in most areas around the world were only fully ready to provide improved speeds with reasonable mid-band coverage this year. In the U.S., T-Mobile has a head start on mid-band 5G deployments, and it managed to convince Apple to add a new “5G UC” logo when the phone is connected to the carrier’s 2.5GHz network. Verizon and AT&T will start their C-band rollouts in 2022 and the new iPhone already supports those bands.
To help fill those shiny new networks, U.S. carriers are heavily subsidizing the new iPhones, including giving them away free (over time, with trade-ins). In addition to heavy subsidies when signing up to its most expensive plans, Verizon is offering to pay off up to $500 on phones locked to other carriers if you switch. AT&T is particularly generous with subsidies even covering the iPhone Pro and not requiring the absolute most expensive service plans, though its device discount gets paid back over a full three years. T-Mobile’s Forever Upgrade sounds ridiculously generous, promising endless, biennial $800 upgrade offers. In truth, T-Mobile is really only promising to continue what carriers have largely been doing for the past few years anyway: offering iPhones for free with a recent model trade-in. Apple itself is also offering discounts with trade-ins, and, while not nearly as generous, its terms are more straightforward.
Most iPhone 12 owners are not going to upgrade this year and nothing in the iPhone 13 is a dramatic break from the past – none of the iPhone 13 models fold in half, at least not on purpose. Fast refresh rate displays have been available for so long on Android phones that they have become checkbox items that have already trickled down into the mid-tier from brands like OnePlus and Xiaomi. That has not mattered to people happily ensconced in Apple’s ecosystem – the iPhone 12 sold well even last quarter when the iPhone 13 was known to be just months away. However, now that Apple has iPhones with 10 - 120Hz displays, early adopters will be sorely tempted to upgrade. Battery life improvements help shorten the upgrade cycle for all types of customers.
As usual, Apple is keeping last year’s iPhone 12 – and iPhone 12 mini – in the line at a $100 discount. The iPhone 12 should appeal to late adopters looking for 5G and who are happy to trade the latest incremental improvements for a price break. The iPhone 11 (now $499) and iPhone SE ($399) are aimed at onboarding consumers into the iOS ecosystem at mid-tier price points.
Competitive Response
Competing Against the iPhone 13
The beauty of Apple’s software and ecosystem-led products is that consumers respond well to iterative updates, especially since most have already bought into the software and services around the product and are not upgrading every year or two. However, smartphones are a mature category, and there is a counternarrative that phones have gotten, well, boring. If you do have something radically different to offer, it is fair to point out that all bar phones look basically the same. Samsung should unashamedly promote the Galaxy Z line as providing fun experiences that the iPhone does not. These can be somewhat outrageous, along the lines of what happens when you try to fold an iPhone smaller or expand an iPhone by trying to walk around with an iPad mini in your pocket, with the chaser that Samsung’s third generation foldables are durable enough to use daily. Microsoft has a similar opportunity with the Surface Duo – though in that case, a more subdued approach is the better strategy. More productive dual-screen multitasking is exciting to the right customer, but the Duo imposes its own compromises to get there.
Apple's scale keeps it from using some components that cannot manufactured in enormous volumes, and sometimes Apple’s internal dogma keeps it from offering features that consumers like on other platforms (touchscreens on laptops, for example). It is fair for Apple’s competitors to point out features that current products offer that even the latest iPhones do not. It is not an effective marketing message to say, “we were first” once Apple has achieved parity or even pulled ahead. Thus, when considering high refresh rate displays, Samsung should not claim that its past phones already had it, but that Samsung’s phones above $400 have at least 90Hz displays today, and the brand new $729 iPhone 13 mini and $799 iPhone 13 are still stuck at 60Hz. This should be a key selling point for OnePlus and Xiaomi as well: all of their mid-tier phones can claim to offer a version of the $1000 iPhone Pro’s standout feature, fast refresh rate displays, for half the price.
Similarly, Samsung, OPPO, Vivo, Xiaomi, and Huawei all offer flagship phones with periscope zoom systems, getting users far closer to their subjects than the iPhone 13 Pro’s 3x optical lens assembly.
Xiaomi’s recent marketing around the extremely high speed chargers included in the box is another good approach, though this risks focusing too much on a feature that does not rank nearly as high in consumer priorities as the camera.
Competing Against Apple Watch
Apple was not the first to build a smartwatch, but it was the first to figure out what a smartwatch is supposed to do – notifications, fitness, and health. That insight, plus Apple’s design, software, and investment in custom silicon made the Apple Watch the best-selling watch in the world. If that wasn’t enough, Apple makes it basically impossible to lure iPhone users over to alternatives by keeping a $200 model in the line and by locking down key elements of the OS so that a non-Apple watch cannot replicate the same functionality.
With that context, how do you compete with the Apple Watch on iOS? One way would be to provide a key health measure that Apple does not have, and get insurance companies and nationalized health systems to pay for it. Short of that, it is better to compete where Apple is not. Fitness bands $130 and under should be fine for those who don’t need a full watch experience. On Android, the key is making a good enough smartwatch – in style, functionality, and performance – that people don’t switch to the iPhone just to get an Apple Watch. Samsung’s Galaxy Watch4 fits that bill, though WearOS needs more third party software investment, and Samsung needs to implement Google Assistant support sooner rather than later.
Competing Against the iPad
The base iPad is just a beast, offering a responsive, versatile experience at an affordable price point. Apple’s tablet-specific app selection is simply better than Android. Amazon can keep hammering away with Fire tablets that manage to significantly undercut Apple on price, but Amazon should also remind consumers that its tablets have multi-user support (buy one for yourself and create a profile for your child, or buy one for multiple children to share independently) and that the Kids+ subscription is an absolute bargain.
The other area where the base iPad is vulnerable on price is as a complete solution: its accessories can collectively cost almost as much as the tablet itself. Samsung should be giving up margin on accessories and offering packages that include a case, a stand, an S Pen, and a keyboard at close to the iPad’s price point alone. Samsung should also make it easier for educational buyers to realize the value that Android does offer by including a free software package that includes common apps used in distance learning like Notability and Zoom.
Competing Against the iPad mini
Apple has carved itself a large niche of vertical markets who have built businesses around the iPad mini along with consumers who value a premium small tablet for content consumption, sketching, and note-taking. In the enterprise; Samsung’s best bet is to continue building out its own vertical solutions for its Galaxy Tab Active and XCover line and hope to keep Apple out of front line worker use cases with the argument that the iPad mini’s design and price point are solidly aimed at prosumers.
Microsoft’s Surface Go is a terrifically portable little Windows tablet, but it isn’t small enough to be a daily carry for front line workers. Microsoft’s software story for integrating it into larger enterprises is not bad, so Microsoft may want to try a one-handed Surface tablet with a lot of evangelist support to break into retail, law enforcement, and transportation.
It is awfully difficult to compete directly with the iPad mini for the premium consumer small market – Apple’s software and services ecosystem advantage over Android is real, even if consumers end up using these tablets mainly for Netflix and Facebook. I am skeptical that a premium Android tablet would sell well enough to justify taking on Apple directly, but to try, you would need an included active stylus, variable refresh rate OLED display with Dolby Vision, great loud stereo speakers with Dolby Atmos, and superb included drafting, drawing, and note-taking software.
Huawei was actually succeeding in the premium small tablet market by focusing on the media playback experience before its consumer device business was hammered by U.S. software and component restrictions. Huawei continues to build MediaPads with HarmonyOS, which is based on Android open source and a fluid IoT-centric user interface (we currently have an older model running HarmonyOS in for review). If Huawei can source enough components, this can be a successful product inside China.
To discuss the full implications of this report on your business, product, or investment strategies, contact Techsponential at avi@techsponential.com or +1 (201) 677-8284.