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iPhone 7 draws muted response from analysts

Alex Yau
September 23, 2016

CEO Tim Cook hailed the device as Apple’s best yet, but reception from B2B dealers and analysts wasn’t as positive

Apple unveiled the iPhone 7 last week (September 7) in California, but the device has been described as ‘unoriginal,’ and ‘underwhelming’ by leading B2B dealers and analysts throughout the industry.

CEO Tim Cook took the wraps off the latest flagship, alongside a new Apple Watch, in front of thousands at the Bill Graham Civic Auditorium in San Francisco. It went on general sale in both a 4.7-inch 7 variant (£599) and 5.5-inch 7 Plus model (£719) on September 16.

Seconds before unveiling the handset, Cook claimed it was the best iPhone Apple had ever created, surpassing the previous 13 releases since its debut in 2007. More than a billion sales have been sold to date.

He said: “The iPhone is the industry gold standard and is the way other phones are compared. It is the best-selling product of its kind and it [the iPhone 7] is our most advanced smartphone yet.”

No change
Reception from the reseller channel did not quite match Cook’s enthusiasm. James Phipps, CEO of one of the leading Vodafone partners Excalibur Communications claimed Apple has run dry of any innovative ideas.

He said: “There wasn’t much of a fanfare and I think they’ve peaked. Their phones are always the same year in, year out. Nothing really changes. Underwhelming is certainly the word I’d use.”

Gartner research director Susana Santos agreed. “The only time Apple launched something new on a handset was with the 6 where we saw a bigger screen and the Force Touch feature. The iPhone 7 seems like it only has a few minor upgrades.”

Canalys senior analyst Tim Coulling added: “It wasn’t really groundbreaking in terms of phone launches. There weren’t any features that we haven’t already seen elsewhere and it seems more like an iterative release than an evolutionary one.”

Much of the criticism has been aimed at the features included on the updated model – many of which people argue have been seen on rival models – some of which are more than a year old.

A major difference between the 7 and 7 Plus is the camera. The Plus includes a 12 megapixel dual lens, which according to Apple senior vice president of worldwide marketing Philip Schiller, who followed Cook on stage, surpassed anything by the firm before.

Apple claimed this lets the iPhone zoom closer into subjects when taking photographs without compromising on quality. A ‘Bokeh’ effect is also possible, which makes still images appear as if they are in 3D. “The technology we’ve included in the new camera makes it the best we’ve ever had on an iPhone,” said Schiller.

However, rival handset manufacturers were quick to point out the technology is not new, with some mocking Apple that the dual lens has been in the market for more than two years.

Rival Huawei took to Twitter, noting that it launched a dual lens camera on its Honor 6 device more than 18 months ago. Follow up handsets, including its recently launched P9
(April) and sub-brand Honor 8 handset (August) .

The Chinese firm, which is currently third in the global rankings for sales behind Samsung and Apple mockingly wrote during the launch: “This afternoon we’re fondly remembering 18 months ago, when we launched the Honor 6 Plus, with its dual lens camera.”

This was echoed by HTC which also too took to Twitter and wrote: “Just reminiscing over our HTC One M8 launched over 2 YEARS AGO.” The comment was attached to its original tweet detailing the feature at launch.

Apple also lauded the fact the iPhone 7 was the first iPhone to include stereo speakers, which again have been available on the HTC One M8 since 2014.

Water resistance to IP67 standard was another new addition to the iPhone 7 models.
“It’s important to the team that we protect the great feeling we love with the iPhone. It meant re-engineering the iPhone from the inside out. In our tests, it is IP67 standard. Even the least coordinated among us don’t have to worry about any mishaps and the iPhone will be safe from water or dust”

This is despite the technology being used on smartphones for many years previously, including Motorola Defy back in 2010, as well as its closest rival Samsung on its two previous flagship devices, the Galaxy S5 and S6. Samsung has since begun advertising this fact through its TV marketing.

Trailing behind
Many leading resellers and analysts also gave a muted response to the launch – with many accusing Apple of lacking the innovative flair which made it such headline news in the past.

Sales director of leading Vodafone partner CommsXChange Emrah Külünk claimed the days of Apple innovating are now long gone: “There are no features I haven’t seen before. Waterproof phones have already been done by Sony and the only major new additions seem to be the colours.”

O2 dealer ADSI managing director Adrian Spreadborough agreed: “It appears to be no better than any other phone on the market. Historically Apple used to be really innovative but that has now stifled. It’s been three or four generations since we’ve really seen a revolutionary iPhone.”

Phipps added: “The waterproof feature has already been available on previous Sony devices and that hasn’t even been a major selling point for them within B2B. It might be able to withstand water, but it’s still quite a fragile device. Businesses like those who specialise in construction for example aren’t going to get an iPhone because they’re so fragile.”

uSwitch’s Ernest Doku praised Apple for its improvements to features, such as the camera and water resistance, but remains unconvinced the device will help halt its recent quarterly sales decline. “Despite being touted as a credible numbered sequel, it was difficult to escape the feeling that the iPhone 7 is very much an iterative device rather than the step change needed to allay concerns of falling fortunes.

“Having said that, the device nailed the key features consumers look for in a flagship smartphone, from an improved display and increased resilience to water and dust, to an improved camera and better battery life.

“Only time will tell if this is the model to help Apple to break away from Samsung, who is aggressively biting at their heels with a strong line-up in the Galaxy S7 and Edge.”

However, it wasn’t all negative. O2 leading direct partner Welcomm Communications’ purchasing manager Darren Tiday was more positive, arguing the new handset puts them on par with the likes of rivals Samsung.

“Apple have come level with Samsung now. It felt like they were lagging behind in terms of features like dust and water resistance. Previous phones were severely lacking compared to those from Samsung. It’s also good to see a faster chip and graphics card.”

CCS Insight chief analyst Ben Wood agreed, describing it as a “big step up” for the manufacturer and one which will appease die-hard supporters.

“These might not be the most groundbreaking additions by any means, but Apple has a large fan base who will still be impressed. It’s especially true for those with a 5s or 6 who are coming up to the end of their current contracts. The new phone will be a big step up for these owners.”

Arrogant Apple
A notable feature absent from the phone is a standard 3.5mm headphone jack. The only port is Apple’s trademarked Lightning jack. This means users will now either have to listen to music through earphones which are either Bluetooth or Lightning port-compatible.

Apple used the opportunity to announce its wireless AirPods, £159.99 ‘groundbreaking’ Bluetooth headphones. It claims the device has 24 hours of battery life and use infrared to sense when they are in a user’s ear. The purpose is to automatically pause any audio from a connected device when the AirPods are taken out of a person’s ears.

The decision to remove the 3.5mm jack was not well received, with some claiming it was an “outrageous” move. Next Communications’ MD Mark Finlayson said: “The new wireless headphones cost £159.99 and you can’t charge the phone at the same time as listening to music. Apple isn’t the most well-renowned for its battery life. It means the iPhone will probably be more expensive to run now. It’s outrageous and people will most likely be annoyed.”

Külünk added: “Removing the headphone jack is just a massive marketing scam to sell more headphones. There’s an adapter for old headphones to be included, but that could easily be lost or broken. People will have to go to the new system if that happens.”

Excalibur CEO James Phipps said: “Consumers aren’t stupid. Taking away the jack and bringing in expensive headphones is ridiculous. It just doesn’t offer value to the consumer. It’s definitely taken the value back. Most would see that as being commercially led rather than consumer led. It’s ripping customers off.”

ADSI’s Spreadborough said: “What they’ve done with removing the headphone socket is really arrogant. But that’s Apple, they’re trying to release products different from anyone else.

Wood however heaped praise on Apple, describing the removal of the headphone jack with its own Lightning cable as a “masterstroke,” one which presents it with lucrative revenue opportunities over the next year and beyond.

“Although some may view the iPhone 7 and 7 Plus as incremental improvements, Apple has proven many times over that iteration wins when underpinned by the Apple brand, installed based and ecosystem.

“In the context of a smartphone market that is firmly in an innovation drought, there’s a strong argument that the iPhone 7 is more than an iterative update.”

Doku described it as courageous, although admits the criticism was expected. “The loss of the headphone jack is likely to divide opinion. The pricey AirPod earphones are part style statement, part practicality, but Apple didn’t seem to land a persuasive justification for the bold move. The headphone adaptor helps bridge the gap, but suggests a lack of commitment to something touted as a courageous step.”

Little demand
The initial negative reception for the handset will do little to convince that Apple can turn around its recent decline in sales. In July, the company announced iPhone shipments dropping for the second consecutive quarter, down 15 per cent year-on-year in the three months ending June 25 to 40.399 million units. This was its second consecutive quarterly decline.

According to the latest figures from IDC, total sales of iPhone models have consistently dropped since the launch of the iPhone 6, which has sold 23.09 million units to date. The iPhone 6s has sold 15.57 million while the SE launched in April has only shipped 2.57 million.

Slowing demand seems to be the case with most of the B2B dealers who spoke to Mobile News. Spreadborough claims interest has increasingly dropped since the 5s and doesn’t expect that to change with latest model. “There’s definitely less fanfare for this product. We’ve seen reduced back orders since the 5s. Demand is half of what we received for the 6s. The demand for the 6s just hit half of what we got for the 6. There’s little innovation and that’s why demand has been so low.”

CommsXChange have also seen very minimal orders for the iPhone 7. “I’ve got a base of 13,000 customers and we’ve only received 15 orders from just one customer,” Külünk said: “When the 6 was released, the demand was in the hundreds and we had received back orders up until December. If it’s been this quiet, I can’t see demand picking up any further.”

Phipps added: “There’s definitely been the least amount of noise for this handset. Typically two or three years ago people would be banging down the door to get a new iPhone. We’ve not seen that this time. Demand is probably half of what the 6 was.”

Finlayson, was more optimistic however, despite admitting the device was hardly groundbreaking.

“There will certainly be demand for this model, especially as it’s a new version. Those who purchased a 6 will be at the end of their contract and there are certainly enough differences to justify the purchase. Demand for the 7 is twice that of the 6s right now for us.”

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