Why Apple's Next iPhone Is As Important As The First One

Apple's next iPhone already have you hot, bothered, and insanely curious? You're not alone. And there's a good reason for it, too. For Apple, and for consumers the world over, the next iPhone may be Apple's most important edition since the first one rocked the cell phone world in 2007. There are two reasons why.

Design

Check out the video below. It's of some leaked parts of the purported next-gen iPhone, assembled to give you a sense of what the device will look and feel like in your hand...all that's missing is the electronic guts that actually make it work.

Enough of these leaked parts have arrived that we can be pretty confident this is likely to be genuine. The phone is slightly slimmer than the current 4S, and has a bi-material back face that seems to be part metal part plastic—probably more resilient to drops and impacts than the 4S is with its prominent glass front and back pieces. It looks like it has a bigger 4-inch screen, and the video shows why this is a great size: It's just about possible to touch most of the screen with a single hand grip on the phone (try doing that on a 5-inch screen, and it'll be tricky). The base has room for the new-style small dock connector, but other than this it's familiar.

While these details are interesting, the design itself tells us something about Apple: It's very much a design evolution, carefully thought out and seemingly incorporating lessons learned from earlier versions and the milled-metal chassis techniques Apple's been using on its iPads and Macs. It's also new and unusual looking, while being instantly recognizable as an iPhone—you're not going to mistake it for a rival's device. Court filings from the protracted Samsung case suggest this is a design whose origins are a concept device codenamed Purple that dates from 2005. Basically this is a classic Apple tactic, one that it's used on its other devices with great success—design, refine, then completely redesign...and repeat.

This phone is also going to shape the smartphone market the world over for the next year or two. Like it or not, because it was first the iPhone really is the gold standard in the new smartphone world...and more and more of us are ditching our dumbphones and adopting smartphones the world over. Think of the iPhone for 2012 as the phone equivalent of the MacBook Air—a super-slim mix of plastic and metal that represents the peak of slowly evolving laptop design, and one that's prompted a whole new class of portable computers that are designed to be curiously similar to it.

This is important because the next evolution of the iPhone, in a year or so's time, may be into something radically different. It almost has to be—there are few new directions Apple can evolve the phone in that marry to its clean design philosophy of thinner, simpler, smarter. So 2012's iPhone may be the peak of the device that debuted in 2007 and changed how we access the mobile Net and think about touchscreens, photography and casual gaming. It may even be the end of the iPhone's beginning.

Money

Apple's last quarterly finances seemed to disappoint Wall Street, despite the fact that as the world's biggest company it achieved year-on-year revenue growth and improved margins—a duet of facts that any company of any size would be proud of. But analysts expected Apple to sell more iPhones than the 26 million it did, and punished the stock price as a result. Apple explained that poor sales in financially damaged Europe and a slow down in sales ahead of the next iPhone were probably to blame.

And if you think about it, that's a crazy, and yet totally plausible fact: The average phone-buying citizen is now aware of Apple's yearly update cycle and is excited enough about the prospect of a new phone that they're holding off buying the current, very capable, highly applauded device for a period of up to five months. More and more, the iPhone is becoming a signature device for Apple that can influence millions of people's buying decisions.

As such, it's vital that they get the iPhone for 2012 absolutely right. It has to technically amaze, and sell like the blazes.

The selling part is even more important than you might think, because recent statistics show that Apple makes around twice as much profit selling a single iPhone as it does from selling an iPad unit, and it sells many more iPhones than iPads (at least until the rumored iPad mini goes on sale at a lower price point). Part of this profitability comes from design efficiencies in Apple's production line process, part of it comes from carrier subsidies. The production efficiencies are important because they let Apple make twice as much money from a similar device than Nokia does from its flagship Lumia 900 device. The subsidies are important because carriers are desperate to sell the iPhone to their clients, tying them into long-term contracts where they can earn revenues from the high data consumption the iPhone promotes. Carrier subsidies may be slipping as this business model begins to get old, although Tim Cook made a point of arguing the opposite during Apple's earnings call.

It's being guessed that the iPhone for 2012 (iPhone 5? iPhone 6?) will sell so many units globally that it'll achieve 170 million units sold for fiscal year 2013—roughly one new iPhone sold for every two U.S. citizens. The iPhone drives over 50% of Apple's profits. The latest rumors say it'll be revealed September 12, so we don't have long to wait, at least. 

What will all that money let Apple do? It might let it launch a radically new device (like the long-fabled HDTV) or, more importantly, it could let Apple take a big risk, and launch a wearable computer that competes with Google's Project Glass, but bringing Apple's design cool and the iPhone halo effect with it. 

[Image: Flickr user David Pham]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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