Apple has announced its latest iPhone models today: iPhone Xs, iPhone Xs Max and iPhone Xr. The company is attempting to create more iPhone options, while moving its whole portfolio further up into the premium segment. Apple has completed its hardware design refresh that started with iPhone X, and moves to an all-notch display line-up.
Features like high-refresh-rate and high-dynamic-range (HDR) OLED displays, computational photography and enhanced audio recording, and improved performance for artificial reality (AR) games and other offerings, re-enforce Apple’s focus on the user experience.
Three new models
The three new iPhone models continue the design trend using notched, full screen displays first introduced on the iPhone X last year. As opposed to the traditional 16:9 aspect display with home button, this wider aspect-ratio design allows for the iPhone to display more while accommodating the ergonomics of the human hand.
Notched- and full-screen were all the rage in 2018, as the industry raced to adopt the new smartphone design features. The continuation of the notched display speaks to the importance of Apple setting the design language that the rest of the market will mimic.
All three new iPhones come with the new A12 Bionic chip (7nm TSMC), which is geared to further improve performance in key areas, including the camera and AR applications. As in an “S” product year, Apple continues to evolve the new platform and user experience with the iPhone Xs upgrade - just as it had with the iPhone 4s, 5s and 6s.
The new chip is optimised to leverage machine learning (ML) capabilities of the latest version of iOS. In fact, the Neural Processing Unit (NPU) of the A12 Bionic features eight NPU cores as compared to last year’s two cores in the A11 Bionic.
It is also important to note the Xr model features the same chipset as the two premium Xs models. This inclusion should make the iPhone Xr more attractive to price-sensitive buyers seeking value and performance. The main trade-off is the display technology (LCD versus OLED) as well as the lack of HDR support.
High display-refresh rate (120Hz) is a common theme in the display improvement that all three new iPhones share. Faster refresh rates ultimately improve user experience, as images and videos render faster and more smoothly than previous generation models.
Specifically, on the Xs and Xs Max, Apple is featuring enhanced HDR capabilities on the new OLED displays. These are premium features reserved for flagship-level devices, as consumers are now becoming more familiar with HDR on televisions. Display quality improvements are also in line with Netflix, Amazon and other content providers promoting HDR content.
These screen improvements also play into key aspects of Apple’s existing user-experience (UX) and content creation. Apple highlighted the advancements in computational photography of the Xs, which allows the new iPhones to capture photos and videos in HDR.
Stereo audio recording also enhances this key feature for Apple. While it’s not a completely new experience, it augments existing content and is clearly different than what was offered in previous iPhones.
Content creation and consumption is getting richer on the new devices and Apple’s competitors are not following along with this as quickly, if at all. Calling out high-efficiency video-coding (HEVC) support as encoder and decoder, in this regard, speaks to Apple’s desire to further develop its key strengths.
Dual-SIM support is another feature international markets will appreciate. It is especially important in markets in Asia and other regions where carriers do not have as much control over users, as they do in the US.
This feature also provides an incentive to upgrade to the new devices, for users who might have just upgraded last year, but have been waiting for Dual-SIM support for their personal and business lines for some time.
Apple has been successful with this type of delayed technology roll-out before: when Apple made iPhones water resistant, it had a significant effect on the position of the company in Japan, as Dual-SIM is another key feature for Japanese users.
Dual-SIM support has the potential to do the same in many other markets – perhaps providing a significant push to upgrade faster than anticipated.
With six colour options for the Xr, Apple is addressing a trend developing in the smartphone market over the last year. As displays have moved to full-screen, bezel-less designs, it has become difficult to differentiate iPhone handsets from the competition. colour options for the body of the phone are an easy and effective way to break the mold. Many manufacturers have introduced colour variants and new ways to play with colour, like Huawei’s gradient colours on its P20 line.
Apple upgraded the LTE radio in the iPhone Xs and Xs Max to be gigabit capable, so the latest premium iPhones will be LTE CAT-16 with 4x4 MIMO antennas. Meanwhile, the iPhone Xr will retain the LTE-A (CAT-12) modem of last year’s iPhone X.
The move to gigabit LTE is an important one, as it brings Apple into parity with Android flagship devices. The improved modem appears to be supplied by one supplier (as there is only one model for all carriers in the US), which the IHS Markit teardown will identify later this month.
Moving to a single modem supplier simplifies both the SKU management and will make switch carriers easier. It is no surprise that this cellular radio update occurred the first time Apple offered eSIM and dual SIM designs.
Change in pricing structure
For some time now, Apple has dominated the premium smartphone market for phones priced above $751. All new iPhones now start at this price segment, up from the historical starting price of $649.
According to the 'Smartphone Model Market Tracker' report from IHS Markit, Apple accounted for 86 percent of smartphones priced above $751 in 2017. Samsung, with 12 percent of the market, is the only other manufacturer represented in the segment.
The premium smartphone market segment increased drastically, after Apple released the iPhone 8/8 Plus and IPhone X in September of last year. Shipment volume increased to 30.1 million and 69.8 million units in third quarter and fourth quarter of 2017, respectively, up from 16.5 million and 32.9 million in the same quarter a year earlier.
As a result, the global share of premium smartphone shipments shipment increased to 18 percent in the fourth quarter of 2017, up from 8 percent in the fourth quarter of 2016.
With the new entry price of $749, Apple is able to address the high-end pricing segment. This is an aggressive market segment in which companies like Huawei and Samsung have already positioned their recent flagship devices, while at the same time tightening their grip on the super-premium segment.
The Samsung Galaxy S9 costs about $620, while the Huawei P20 costs about $580. These prices reflect the fact that both models have been in the market for almost six months. However, even at launch they were not much more expensive than the entry-level iPhone XR.
Only the Note 8 and Note 9 have reached the $1,000 threshold. The S9 Plus started at around $840 and the S9 debuted at around $720. The S9 Plus was only $100 more than the starting price of the XR. Apple is solidifying its grip on the super-premium segment.
With that said, $749 as starting point is not jarring for potential users in many markets – especially where other brands have been able to gain in the high-end segment just below the premium segment. Apple is now further moving its devices beyond the reach of its competitors, at least in terms of the ability to charge premium prices.