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The iPhone 4S is a completely different phone from its predecessor. Really. Screen and exterior industrial design aside, there’s almost nothing that’s the same as the older iPhone 4. Mobile industry and media coverage sentiment hasn’t matched that analysis.

Nevertheless, the iPhone 4S has many improvements, including:

• A new chipset, baseband and radio that is dual mode. Previously, Apple used Intel-owned Infineon for earlier iPhone models. Now they are almost certainly using Qualcomm as they’re the leaders in dual mode CDMA/GMS (3GPP3 / 3GPP) handset technology. There’s some great analysis of quite the enormity of this shift to dual mode in this piece by Dean Bubley. In addition to his points, Apple also gains other benefits from now making a single phone that they are able to sell anywhere, rather than two separate phones for CDMA and GSM/3GPP: they boost their economies of scale still further with component purchasing, driving down costs. Also with only one SKU to manage in global manufacturing and distribution Apple has greater flexibility to re-direct iPhone 4S stock to where it’s most needed whatever network technology an operator uses.
  Ironically, given the reaction to the 4S, the new chipset and baseband may make the 4S the first iPhone that is actually a great phone for making phone calls. Assuming Apple has engineered the new platform right.
• A re-designed still and video camera. Not only does the 4S have 8 megapixels rather than the 5 of its predecessor it also has altered optics and a different sensor. Result: better low light performance, one of the big weaknesses of all mobile phone cameras. The 4S also records video in 1080P quality at 30 frames per second, up from 720P in 2010′s iPhone 4.
• More storage. This is the first time that an iPhone has shipped with a 64Gb option. The last time Apple raised the storage available on a iPhone was in 2009 when the iPhone 3GS launched.
• Faster processor and much faster graphics. The iPhone is now dual core like so many recent high end Android smartphones (e.g. Motorola Atrix, LG Optimus 2x, Samsung Galaxy S II, HTC Sensation). This should deliver snappier performance throughout and better games.
• New on-board software with improvements throughout. The most notable changes in iOS5 are the central notifications list, a reminders app, the week view in the Calendar, system-wide twitter integration and iCloud support. Almost all of these features are available to current iPhone 4 and 3GS owners but they’re still new. Apple reduced excitement around all of these major changes by pre-announcing iOS5 and iCloud features in June. As far as the media and industry, they’re four months old.
• Context-based intelligent voice assistant. The ‘Siri’ software is widely seen as an extension of Apple’s voice technology implementation. The background to Siri is more interesting. Originally it was a defence department project that focused on artificial intelligence learning. The clever part of Siri isn’t voice recognition, which Apple have almost certainly licensed (likely from Nuance). Instead, Siri’s differentiation from the mass of voice control services on Android and Windows Phone is from its contextual understanding of what a user means when they ask something, and to deliver improved results over time learning about context from a user’s past questions. The demos look impressive. Only real world usage over a prolonged period will indicate how well Siri delivers.

So why the widely expressed disappointment by the mobile industry, media, and savvy mobile enthusiasts?

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Apple’s product announcements today are a tale of two iPhones: the iPhone 4States and the Immortal 3GS.

Today at Apple’s annual event, new CEO Tim Cook unveiled evolved iPods, a new dual core iPhone 4S, and the voice-controlled virtual assistant based on Apple’s acquisition of Siri. He also recapped on iOS5 and iCloud which were announced back in June. Although Apple sell two thirds of their iPhones outside the US, I fear that the most innovative new parts of the iPhone 4S product design will appeal most to a US audience. Apple will still do well globally, but it could do even better with some tweaked product thinking.

Much more significantly, Apple now is moving to a three iPhone model portfolio: Apple will continue to sell both last years’ iPhone 4 and the previous years’ iPhone 3GS at cheaper price points. This will dramatically boost Apple’s phone sales volumes and enable Apple to compete head on with more Android smartphones.

The Immortal iPhone 3GS

The decision to keep on the 3GS as well as the old iPhone 4 is a massive move for Apple. It will extend the iPhone competitive threat to rivals into the mid tier of the mobile market. Apple’s competitors have often sidestepped the full force of the iPhone threat by positioning their models as cheaper phones. That strategy is now being squeezed and may become untenable in the US market.

Apple is positioning to counter Android with the new pricing and continued use of the iPhone 3GS.

Apple is motivated by great margins and not premium end user prices. If Apple can deliver keen prices to grab a market without sacrificing margins they will. The growth of the iPod product portfolio over the years as Apple’s economies of scales have enabled them to maintain margins yet lower prices demonstrates Apple’s aspirations:  the new 2011 iPod Nano is the cheapest Nano Apple has ever launched. As the iPhone 3GS is so old, component prices will have fallen and Apple will have steadily improved manufacturing to minimize defects.

Those that are disappointed by the iPhone 4S’s identical appearance to its predecessor forget the success that its forerunner model enjoyed and in fact still enjoys. Back in 2009 there were similar comments to those being made today: Then, the new iPhone 3GS looked just the same as the older iPhone 3G. Those people were wrong then and so are they now:

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The sites below will be providing live coverage of Apple’s 2011 iPhone event where new iPhones will be unveiled, either the iPhone 4S and/or iPhone5.

I’ll be analyzing the news live on twitter, follow me here @ianfogg42 or read now these just published pieces of Apple analysis: On a core part of iOS5, Apple’s iCloud Enables A Post-PC World That Will Boost iPad & iPhone Sales; and on how to compete with Apple, Apple’s Metrics Demonstrate the Need for Strategy, not Tactics, to Counter the iPhone.

The event starts at 10am Pacific, 1pm Eastern, 6pm UK and 7pm CET.

Here’s the list of sites with live coverage:

• This is my next / The Verge: Liveblog
  (lots of great ex-Engadget folks)
• Macworld / PC World: Liveblog
• Cnet: Liveblog
• Engadget: Liveblog
• Gizmodo: Liveblog
• Arstechnica: Liveblog
• Slashgear: Liveblog
• Guardian: Liveblog Link live from 30m before the start
• Zdnet: Liveblog
• gdgt: Liveblog (more ex-Engadget folks)
• Financial Times: Liveblog

After the event has finished, Apple will post a video of the presentation here: http://www.apple.com/apple-events/ and as a podcast on iTunes. Apple are not offering a public live video stream this year.

Update, my analysis of Apple’s announcements is here: iPhone 4S Is a Worldphone That’s Not, as Apple Positions to Counter Android

With the launch of the 2011 iPhone models, Apple will also launch iCloud, a new online services play that replaces MobileMe. This is a part of the iOS5 software that will be available for free to existing iOS devices and will ship as standard on new iPhones, iPads and iPod Touch’s.

This is a core part of Apple’s near term strategy to drive greater device sales — iPhone, iPad, iPod Touch and Mac — as Apple builds a post-PC world. Over the long haul iCloud will also help Apple’s content and services revenues but that won’t be its most important initial impact.

Apple still makes the vast bulk of its revenues from hardware sales despite having by far the most successful app store, music download store and various other services initiatives. Example: In the first three years after the launch of the Apple App Store Apple generated $1.1bn in revenue from iOS apps (1). But this figure is dwarfed by their iOS device revenues of over $100bn in the same period (2). Apple has great margins on those hardware revenues too.

Because of that hardware model, Apple has enormous incentives to create new product features to drive device sales, even if that means offering those new features or services for free. Apple can be disruptive with “free” offerings too. The “contagion of free” business models are not just the preserve of Google and Valley-based VC-funded startups.

This is the cloud the way it should be: automatic and effortless. iCloud is seamlessly integrated into your apps, so you can access your content on all your devices. And it’s free with iOS 5. — Apple marketing, October, 2011

Those devices sales give Apple a massive incentive to package its cloud services for free. In so doing, Apple undermines those that have cloud-based services as their core business. This includes Google. Although Google charges for few cloud services — the main exception being Google Apps for businesses — it still generates direct advertising revenues across all of its cloud services such as Gmail. So, if people choose to use Apple’s services instead of Google it still hurts Google’s bottom line.

iCloud supports Apple’s desire to sell more devices by helping two overlapping groups of consumers:

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Next week Apple will announce new iPhones. There will be a backlash. There will be praise. Much of significance will be lost in the noise.

Instead, Apple’s metrics should focus rivals’ attention on the importance of multi-year strategies.

Competitors are forever seeking to emulate Apple. But too many deploy me-too tactics, rather than following a consistent and sustained long term strategy:

• HP fired its CEO under a year after appointment. There’s only time to kill things, not build them, in such a short period.
• Nokia dithered on MeeGo. In 2009, Nokia partnered with Intel on MeeGo, then killed MeeGo just a year later, to focus on Microsoft Windows Phone instead.
• Samsung’s Galaxy S of 2010 resembles the Apple’s old iPhone 3GS of 2009, not the designed-from-scratch iPhone 4 that the S actually competed against at the time the S arrived in the market.

Part of the problem is that Apple keeps its strategy to itself: New products seem to appear out of Apple’s magic hat fully-formed at high profile launch events as if they’ve been born an adult, with no incubation or nurturing period. There are rarely betas or pre-announcements months ahead of availability, unlike the perpetually beta services of others. But we know Apple takes years to create these products. The iPad’s origins pre-date the iPhone and go back to around 2004 — six years before it launched — while serious development began in 2007, again years before competitors had anything publicly available that they could copy.

By mistaking tactics for strategy Apple’s many competitors are doomed to poor results. The time needed to build products as deeply and well designed as Apple’s can’t be completed overnight. Software design takes years to do. The supplier relationships that Apple is securing are long term. The investment that Apple is placing in key component design — moving into chip design with the A4 and A5 — is not something that any company could achieve without clear multi-year strategy.

Despite the Android evangelists and Apple naysayers, Apple’s metrics are nothing short of outstanding:

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I speculated ahead of Amazon’s launch that the Kindle tablet should be called the Kindle 451, from the Bradbury book where the temperature of 451F is that which causes book paper to spontaneously ignite. I was wrong. Kindle Fire is the better name as the Fire will burn so varied a selection of physical media that no single named temperature could describe its impact.

This is the first true media tablet, as I predicted it would be. With the Kindle Fire, Amazon is making a play for movies, TV, music, magazines, apps, games as well as books.

The Kindle Fire is the first tablet that has its whole design optimized for content consumption. There’s no extraneous features. No camera. No aspirations to replace a notebook PC.

While Apple, Google and Microsoft aim to build tablets and smartphones that drive a post-PC world, Amazon is taking ownership of digital media. And, as digital media will become all media, by implication Amazon is now becoming the leading player in media as a whole. It’s impossible to assess the prospects for the Kindle devices without also assessing the potential for the total digital media market.

Yet despite the Kindle Fire’s impressive hardware the price is extremely aggressive at just $199, a fraction of the price of Apple’s iPad. Until the component breakdowns have been completed we can’t be sure… and I’m writing this minutes after the end of the launch event… But I strongly suspect that Amazon has only achieved that price due to its expectation of strong sales for Amazon’s content services, ie an effective content subsidy again as I predicted would happen.

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[Updated after the Kindle Fire launch event: I've noted what happened in italics. I've not made any other edits.]

Tomorrow Amazon holds a major launch event and will likely unveil its first tablet, according to Techcrunch named the Kindle Fire.

To date, everyone bar Apple has failed with tablet launches. If Amazon mimics Apple then its tablet will fail too. Apple has too many economies of scale, industrial design expertise and supplier relationships for a retail-centric company like Amazon to emulate. Especially, if the Amazon tablet has taken a fast route to market by using the same ODM hardware manufacturer as RIM .

To succeed, Amazon must, and I’m sure will, take a different approach. The success of the Kindle shows Amazon is prepared to think differently from others and to disrupt its own products — in the Kindle’s case to disrupt the cash cow of print book sales — in order to be innovative and seize early advantage in digital markets. If Amazon’s hardware is undifferentiated and virtually the same as RIM’s PlayBook then Amazon has to differentiate elsewhere with content, experience and business models. Otherwise it will suffer the same fate as RIM’s PlayBook.

Amazon cares little about the post-PC world, unlike Apple and Microsoft who are playing that different game. Instead, Amazon is driven by a post disc and post print world where all media will be digital.

Amazon will build a true media tablet. The first true media tablet. The Kindle tablet will focus on the future of all media — TV, movies, music, books, magazines — to enable Amazon to become the dominant digital media retailer. That is Amazon’s ambition.

On that basis, here are the areas to watch for in Amazon’s tablet product launch and what impact each item will have  on the market:

• The extent to which the Kindle tablet’s business model is content-subsidized. Few devices enjoy a lower up front price because of content subsidy. It’s hard to do. Games consoles are the obvious exception but even in that market history is awash with console failures. Nintendo’s 3DS is the most recent struggler. Outside of games almost all devices are priced without a content subsidy. Even Apple sees content revenues as icing rather than a key profit centre that would warrant a lower up front price for iPads or iPhones. Carriers too subsidise iPhones based on communication revenues, not media. Arguably, only Amazon’s own Kindle eReader has extended a content-led device sales model outside of the games market. If Amazon offers its tablet for a very low price, based on expectations of future content sales, then Amazon will successfully disrupt the market and enjoy very significant sales. If the price is tied to hardware costs, then the price will be less aggressive and Amazon’s tablet will compete at a similar price to rivals and consumers will judge it based on the overall product package.
  Update post Fire launch event: Price is just $199 which given the component quality (IPS color screen; dual core processor; same broad hardware as the much more expensive PlayBook etc.) looks to have been set based on expectation of future Amazon content sales.  Read the rest of this entry »