- iOS6 launches alongside the new iPhone 5. The new iOS operating system is also available for existing iPhone 3GS, iPhone 4, iPhone 4S, iPad 2 and 3, and recent iPod Touch models.
- Apple's ecosystem has grown to 435m iTunes accounts with credit or gift card attached. This Apple ID is also used for iCloud, Game Center and iMessage.
- Apple is replacing Google Maps with its own location and navigation platform in iOS6.
- The iPhone's social networking capabilities improve with Facebook integration throughout iOS6.
- The new Passbook app offers a single interface for coupons, ticketing and mobile commerce and is a platform for third party developers.
- Google Maps and Google's YouTube apps are no longer a standard part of iOS but are available for optional download in the App Store.
- Safari, email and local search gain small but useful improvements such as full screen mode in Safari and multiple email signature support.
iOS6 extends Apple's ecosystem into the real world with Apple's new Maps platform and Passbook apps. The new OS and key new applications such as Apple Maps and Passbook further improves the market leading ecosystem and will enable Apple to become even more successful with its product line in the coming years.
The new ecosystem features in iOS6 will be immediately relevant to existing iPhone owners and to developers because of Apple's slick upgrade process for new versions of iOS. Unlike Android and Windows Phone, most iOS users update to the latest version. At WWDC 2012 in June, Apple reported that over 80% of iOS users had upgraded to the then current iOS5.
We expect adoption of iOS6 to be equally swift and pervasive. This means that Apple's App developers have a much greater potential target market for Apps that use iOS6's headline new features such as the new Apple Maps location platform, Passbook and Facebook integration. Apple shrewdly understands that to build a viable ecosystem it needs to have a large audience of users on the most recent version of iOS. Apple has been, and will continue to be, successful at delivering that up to date installed base. This continues to differentiate Apple from Android smartphones despite the greater number of Android devices shipping. Despite Google's best intentions, it has been unable to match Apple's phone update process because of the wide variety of handset maker and carrier varied Android implementations.
Apple is now much more than a hardware company. This is demonstrated by the size of Apple's universe of users for its online cloud-based services. Apple now has over 435 million iTunes accounts with credit cards attached, dramatically up from 225m in June 2011. This impressive growth that has been driven by both record breaking iPhone shipments and also by iOS5's feature set. Last years' iOS version encouraged users to sign up for Apple's ID to enable iOS app downloads, iCloud backup and Game Center support. These accounts use the same Apple ID that ties together Apple's other online services including the iTunes music store. Last years' iOS focused on digital content and (virtual) digital services such as iCloud. It was extremely successful: Apple over 125m iCloud users; over 130m Game Center users; and over 140m iMessage users (figures reported at WWDC 2012 in June).
This year, iOS6 will extend the iPhone into real world services and not just virtual ones. The new Apple Maps and Passbook apps and accompanying location platform for app developers is the key foundation stone for this real world expansion. Initially, the offering may lag Android's Google Maps and Nokia's Windows Phone location services in some regards. But Apple's new Maps has many significant implications:
- Maps is now much more compelling for drivers because of turn by turn navigation. This will be more significant in the US than in Europe. US citizens drive twice as much as Europeans. In the most recent years for which data is available (see source below) US inhabitants drove over ten times as many miles per capita than in the UK.
- iOS6 Maps and Passbook opens a new front in Apple's fight with Google. Together they offer the promise that Apple will become a key enabler for daily deals, ticketing of events and travel services. Perhaps in time Apple will take a cut of such transactions. iOS6 lays the foundations for multiple new potential revenue streams for Apple and for the companies that build apps for iOS. This initiative will open up more old world business models for the smartphone to disrupt.
- Free turn by turn navigation will undermine Nokia's differentiator and disrupt another potential carrier revenue stream. A few years ago, turn by turn navigation was a differentiator in the mobile market. Now, it's table stakes. Including it is a necessary cost of doing business in the smartphone market. Nokia retains an advantage for now because of the number of countries its navigation solution supports, but in the key developed markets where the future of the smartphone is being decided it will not matter. Apple with iOS6 and Google with recent Android are undermining Nokia and Microsoft's hope for differentiation with Windows Phones. And, with TomTom as a location data supplier, Apple has a very credible alternative to Nokia-owned Navteq for navigation capabilities for iOS.
- Also, free turn by turn navigation will disrupt another potential carrier revenue stream. While navigation apps represented under 1% of US App Store downloads in 2011 they represented approximately 4% of revenue because of navigation app's high prices. Carriers had hoped to target this opportunity but the revenue opportunity is now at risk. Apple's initiative also removes yet another content-led revenue stream that many carriers sought. Why should users pay for navigation, when their iPhone, Android smartphone or Windows Phone offers it for free? Most won't, even if the optional paid service is superior, because the free option will usually be good enough.
- Apple's Maps app will take time to realise its full potential because it needs App developer support. Unlike Nokia, Apple is leaving public transportation to its developer community. This is smart because Apple can focus its efforts on projects that have global relevance rather than local niche appeal. But it means that Apple's day one solution will be less good than it will be in six months or a years' time when app developers have embraced the possibilities. Public transportation is one of many areas where Apple's vibrant App developer community will be able to innovate dramatically with iOS6.
Apple's iPhone has been the foundation for Apple's success in recent years. If 2001's iPod helped Apple turnaround its fortunes, it is the iPhone that has been the key to Apple's massive growth. In the last three quarters, the iPhone sold dramatically more each quarter than has the iPod ever. Since the iPhone debuted five years ago, cumulative iPhone shipments are almost as high as the iPod -- 244m vs 251m -- but the iPhone sells for a much much higher price so generating significantly more profit for Apple. The iPhone's operating system is conquering the world. iOS now powers Apple TV, the iPad, the iPod Touch as well as the iPhone itself. iOS enables Apple to create an ecosystem that straddles multiple devices and now extends from the digital world into the real world.
Apple is preparing to become not just a computer company, not just a mobile company, but a key company in all parts of consumers' lives, from entertainment, communication, business and now expanding into real world transactions for travel, entertainment events, daily deals and even retail with Passbook and the new Apple Maps.
iOS6 heralds just the start of this journey. Initially, Apple's Maps solution may lag rivals, yet Apple still has all of the capabilities to win. But to succeed, Apple will need wide App developer support.
Sources for traffic data:
UK, 2010 data: http://www.dft.gov.uk/statistics/series/transport-statistics-great-britain/
US, 2007 data: http://www.bts.gov/publications/national_transportation_statistics/