Will iPhone tweaks be enough at a critical juncture for Apple?

Delivering on the “next big thing” is getting harder, as smartphones no longer hold the same meaning for customers.

The biggest challenge for the likes of Apple and Samsung is to convince customers to ditch their existing devices and upgrade. Picture: AP/Matthias Schrader.

Apple is betting the iPhone 7 can deliver the sort of magic that has been missing from the tech giant’s recent numbers. The iPhone 6, released in 2014, introduced a host of fundamental changes that delivered an uptick for Apple but things have been decidedly unspectacular since then.

The iPhone 6s has been a solid performer but hasn’t set the world on fire in terms of the important tech “buzz” and overall iPhone sales have slipped downwards year-on-year since last September. Apple is launching the iPhone 7 in San Francisco overnight, with prices for the new handset expected to range between $1000 and $1600 depending on the size of memory.

Apple, the world’s biggest tech company, still sells millions of phones globally every quarter but eking out a bigger slice of the smartphone pie is getting harder. The company’s rivals, especially a bevy of Chinese aspirants, are steadily closing the gap. According to research firm IDC, Apple’s market share has fallen almost 12 per cent in the last three quarters while the latest numbers from Kantar Worldpanel ComTech show subdued growth of the iOS operating system in the three months ending July 2016.

The drop has been particularly sharp in China and Japan, meanwhile in Australia, iOS’s has eked out marginal growth with Android enjoying a more substantial increase during the period. And it’s not just Samsung that’s making things difficult for Apple, with the so-called ‘other brands’ — Huawei, ZTE, Oppo — sniping from the sidelines.

So far Apple has maintained its position ahead of the pack by tweaking its cash cow just enough to keep its fan base interested and the iPhone 7 sticks with that script. The absence of the 3.5mm headphone jack will generate plenty of criticism and a little controversy might not be such a bad thing for Apple. It will divide opinion but also bring iPhone 7 the sort of exposure that Apple hopes could translate to new customers. Archrival Samsung’s current battery overheating woes with the Galaxy Note 7 also provides a small window for Apple to nab a few new customers but is unlikely to see a wholesale exodus.

Every September the tech powerhouse is expected to reveal the “next big thing” but delivering on the promise is a struggle not just for Apple but its rivals as well. Smartphones are starting to become more like commodities, and the lines of consumers waiting outside stores are starting to dwindle. An iPhone launch is still the busiest time of the year for telcos but the lure of the device is no longer a major selling point for telcos. Most phones in the market boast formidable capabilities and for telcos the key to ensure their networks are fortified to deal with demand for data intensive services.

The biggest challenge for the likes of Apple and Samsung is to convince customers to ditch their existing devices and upgrade. That requires more than making incremental improvements to the hardware, messing with form factors, or putting multiple cameras.

So how does Apple combat the ongoing slump in the market? One path could be to focus less on the hardware and develop disruptive services, whether in the payment space or smart homes. There’s a good chance that the iOS will also be extended into a number of segments from dashboards in our cars to the thermostat on your wall.

Another could be to take the big step into the virtual reality (VR) world which is just as much about services as it’s about high quality, well designed hardware. But we will have to wait for that.

Next year will be the 10th anniversary of the iPhone and Apple may use the opportunity to deliver a decisive statement but until then the iPhone 7 will have to do.