Apple to Differentiate Future iPhone Models using Software?

Posted under Reviews on Wednesday, 20 May 2009 by john

You might remember that late last week analyst, Yair Reiner of Oppenheimer, who visited Apple’s
headquarters in Cupertino, CA had reported that Apple’s management felt that: “iPhone
is still in its early days and could gain share by: providing more
functionality; lowering prices; growing geographically; or segmenting
the market with different models.”

At that time, we had mentioned that we have already heard several rumors, which indicate that Apple is working on these options. But folks at Register Hardware have also learned from Reiner that “segmentation would focus on software.”

Register Hardware has interpreted this comment to mean that Apple is planning to offer
multiple iPhone models that would consist of essentially
identical hardware, but have different software packages. According to them:

Apple could market one ‘YouTube’ iPhone model with applications that
provide video capture, editing and sharing features. Other iPhones
might only offer basic video capture - or perhaps no video at all.

Selling models differentiated by hardware seems unlikely. Different
iPhones with very different physical specs could have far-reaching
implications for Apple’s production methods, volumes and costs.
There are two reasons why I think this is highly unlikely:

If Apple introduces another iPhone model alongside its flagship model then it would be a cheaper iPhone which would help Apple to widen the target audience especially in fast emerging markets of Brazil, Russia, India, and China. The only way Apple can achieve this is by stripping off some of the expensive hardware components from its flagship iPhone model (maybe even a slower and cheaper processor).

If Apple disables features using software then the iPhone hacking community will figure out a way to enable them by hacking the iPhone. It will end up hurting Apple in the long run as users will opt for the cheaper iPhone as they know that they can hack it to enable features that are available in the more expensive iPhone model.

According to MacRumors:

Another possibility is that market segmentation could still be offered
using different hardware, but driven by differences in software, such
as the rumored “iPhone nano” that could conceivably be released without
a focus on the App Store found on the current iPhone. In broad terms,
Apple’s comments indicate that the company may be using software-based
decisions to define feature sets for various iPhone hardware models.
I think that makes a lot more sense than Register Hardware’s interpretation of comments from Apple’s management.As always, please let us know what do you think in the comments below.[via MacRumors, Register Hardware]