Market Insight

Apple’s Ambition for iPhone X is Nothing Less Than to Regain Smartphone Design and Innovation Leadership

October 26, 2017

Wayne Lam Wayne Lam Principal Analyst, Mobile Devices & Networks

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It was the most highly anticipated smartphone announcement of the year when Apple revealed the iPhone X to the world at their special event in September celebrating the 10th anniversary of the original iPhone at their brand new campus in Cupertino, California.   The edge-to-edge screen and button-less fascia design sets the iPhone X from any other iPhone released before it.  Apple completely did away with their signature TouchID home button in favor of a more technologically secure bio-metric using facial recognition dubbed FaceID – an industry first.  Coupled with new AI tuned application processor, Bionic A11, and dual camera design borrowed from the iPhone 8 Plus, the iPhone X was intended to set the new standard of iPhone design going forward in the next decade.

Remember multitouch display, Siri, Touch ID and Apple Pay?

Apple has had a history of introducing signature innovations such as the multitouch display and touch/swipe/gesture UX on the original iPhone which help set a new design innovation threshold for others to follow.  Back in 2007, Steve Jobs reveled in the fact that Apple had gained at least 3 years lead on the handset industry with the announcement of the original iPhone.  Steve Jobs’ sage prediction would be proven right as entrenched players like Nokia and BlackBerry struggled to compete as the iPhone revolutionized the marketplace.  Soon, fast followers such as Samsung would create similar user experiences based on multitouch technology and user interfaces with the help of Google’s Android platform.  As with all great technological leaps, it was only a matter of time before the competition catches up.

Apple would continue to set the smartphone innovation standard on subsequent launches.  Apple’s Siri voice assistant was introduced in 2011 along with the iPhone 4S.  This leadership in voice interaction would eventually be ceded to likes of Google and Amazon.  Next came the new generation of fingerprint biometric sensors with the introduction of the TouchID on the iPhone 5S in 2013.  The following year, Apple released Apple Pay and accelerated NFC payment adoption globally.  Both technology leads were short lived as competitors responded with similar innovations and designs.

As the industry closes on the 10 year anniversary of the original iPhone, the conversation around smartphone innovation has been co-opted by other brands such as Samsung, Huawei, Google and others in the Android camp presenting new designs based on larger, brighter and more immersive displays.  What Apple needed to do in 2017 was to introduce another breakthrough smartphone design that will set the stage for the competition in next decade where the smartphone market will more mature and commoditized.

FaceID technology lead will be substantial [if Apple does it right]

Key to the iPhone X innovation is the use of facial recognition bio-metric and AI in the FaceID subsystem.  This technology has never before been implemented in a smartphone.  Apple acquired PrimeSense, a technology company behind the Microsoft Xbox Kinect camera, back in 2013 to miniaturize the sensor technology into a smartphone form factor.  Concurrently, development in machine learning and AI at Apple has yielded a solution which not only senses for the owners facial contours but is smart enough to evolve with the user as they change hair style, grow facial hair or gain or lose weight.  This type of R&D took well over 3 years to complete and signals Apple’s commitment to innovation for their most important product category.

When Apple releases iPhone X next week and FaceID works as advertised, they will undoubtedly gain a technological lead in smartphone bio-metrics and user experience that others will have difficulty to match in the near future.  Further, Apple’s use of differential security and trusted security enclaves on the device should provide an unique privacy offering relative to the rest of the industry that relies on Android platform and cloud based services where user privacy isn’t as much a priority as it is a means to monetize user data.

Have we reached peak smartphones? Unlikely as innovations and possible disruptions are just around the corner.

It is easy for critics to pan the future of the smartphone as technologies converge and a competitive difference from one brand becomes less distinguishable from another.  The fact remains that the smartphone will be at the heart of our digital universe in the foreseeable future.  It is the one device that we all cannot do without.  Therefore, to capture the consumer attention, leading brands such as Apple will need to invest heavily in R&D to stay ahead of the competition not just in hardware design and technology but also in services and offerings such as the grand unifying user experience under iOS, MacOS, Watch OS, TVos and iCloud.

At IHS Markit, we see a bright future for the smartphone category as more and more functionality are absorbed into this form factor that everyone carries with them.  Not too far off, IHS Markit is anticipating new design innovations like flexible and foldable displays that can usher in new use cases and potentially disrupt markets adjacent to smartphones such as tablets and laptops.  The future of smartphone remains open to great ideas and innovations.  Will Apple continue to dominate or another brand knock it off its top perch? Only time will tell.

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