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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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The sites below will be providing live coverage of the Apple announcement today, where Steve Jobs is due to detail Mac OS Lion, iOS5 and iCloud.

I’ll be analyzing the news live on twitter, follow me here @ianfogg42.

The event starts at 10am pacific, 1pm eastern, 6pm UK and 7pm CET.

• This is my next (lots of great recently ex-Engadget folks): Liveblog
• Cnet: Live
• Gigaom: Live video
• Slashgear: livecast.
• Engadget: Live video feed
• Gizmodo: Liveblog
• ZDNet: Live analysis 
• Arstechnica: Liveblog
• Macrumors: Liveblog
• Wired: live
• Boy Genius Report: liveblog (not live yet), but this page is working now.
• The unofficial iPhone blog (TiPb): Meta live blog (how apt)

Related post: “Let’s Talk iPhone” – Where to follow the 2011 Apple iPhone launch event live online

This post was originally published on my Forrester blog.

Tomorrow, on the 9th, it’s three years since the announcement of the iPhone. In that short space of time, and as Apple promised back then, Apple has reinvented the phone.

The iPhone has proven to be the ‘Ironclad’ of mobile phones. Everything that went before was obsolete overnight, both smartphones and dumb phones included. No prior phone could compete with the experience and the abilities of the iPhone. Sure, some phones were superior in very specific regards — especially on cost and call quality — just as very early Ironclad warships were not always the most sea worthy vessels. But overall, nothing existing could go toe-to-toe with the iPhone.

Other manufacturers saw this fast and reacted. Just like with the warships of the latter part of the 19th century the pace of innovation since, both from other manufacturers and from across the whole mobile ecosystem, has been ferocious. This week at CES we’ve seen numerous competing high end mobile phone launches that demonstrate that the pace of innovation in mobile is accelerating, rather than slowing.

Consumers use this new breed of high end phones in completely different ways to older ‘smartphones’ or dumb phones (we have consumer data on this, clients please ask!). This is especially true in Europe where consumer ownership of Nokia’s Symbian Series 60 handsets is so great.

What does this mean for the ‘smartphone’ category? Well, as I wrote in the preamble to my ‘Long Live Smart Phones and Smart Gadgets‘ report last year, the term ‘smartphone’ is dead and is no longer useful (read the report for more on this). Today’s high end phones are so different from the pre-Ironclad / pre-iPhone era it’s that it’s not useful to bracket them in a single category with older model designs that consumers don’t use in anything like the same way.

We need a new word for this new breed of phones. I proposed ‘Internet phone‘ last year. Others have made other suggestions: Google this week introduced the Nexus One as a ‘superphone‘ and pitched it as ‘web meets phone’; NYT’s David Pogue proposed ‘app phone’; Nokia has talked about the PC-centric abilities of its new Maemo phone as it has consigned its use of ‘smartphone’ to its older Series 60 Symbian line that’s being re-positioned for the mid-range (officially confirmed by Symbian: it will be a smartphone for the masses according to Symbian. This was interestingly unnoticed by most, as Symbian chose to publish on the day before Christmas). Or, do we simply accept that what constitutes a smartphone has fundamentally changed and move on?

Thoughts on the name? Do we need a new term? If so, please add your suggestion for a new term to describe this new generation of phones below in the comments. If not, I’d love to hear why you think that.