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Apple Unveils iPhone5 Amid Fiercely Competitive Smartphone Market

September 12, 2012 at 12:00 AM EST
Though Apple remains a giant in the smartphone and tablet industry, the company unveils the new iPhone5 in a fiercely competitive market. Jeffrey Brown talks to the Washington Post's Cecilia Kahng and Forrester Research's Charles Golvin about the challenges Apple faces to stay at the top of the pyramid in the tech world.
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GWEN IFILL: Now: what’s behind the world’s most valued company’s latest moves, as Apple introduces new products while applying some competitive pressure of its own.

Jeffrey Brown has our story.

TIM COOK, Apple: Today we’re going to introduce iPhone 5.

(CHEERING AND APPLAUSE)

JEFFREY BROWN: It’s one of the most anticipated rites of the tech world: the unveiling of a new product by Apple. And, today, it was the iPhone 5, thinner, lighter and boasting a larger screen.

CEO Tim Cook spoke to the crowd in San Francisco.

TIM COOK: I am so incredibly proud of everyone at Apple that helped make today occur.

JEFFREY BROWN: Today’s announcement comes amid much change and some drama in the smartphone and tablet marketplace.

Last month, Apple won a major court ruling after a federal jury in California found that Samsung infringed on software and design patents related to mobile devices.

Apple was awarded $1 billion in damages, and is now seeking a ban on many of those Samsung products.

At the same time, the competition has only grown more fierce. Last week, Amazon unveiled new versions of its Kindle, including the Kindle Fire HD tablet, seen as a direct competitor to Apple’s iPad.

NARRATOR: The all new Kindle Fire HD.

JEFFREY BROWN: Companies like Nokia, Motorola and Sony have also touted new product releases.

The biggest battle for the future may be between Apple and Google, which provides its Android operating platform to more than 65 percent of smartphones around the world.

In today’s launch, Apple fired at least one very targeted shot, promoting its own maps app on the new iPhone 5, in place of the popular Google maps.

And we check the state of play in this hugely important tech market now with Cecilia Kang of The Washington Post, and Charles Golvin, an analyst with Forrester Research.

Cecilia, set the scene a bit for us. As the new iPhone comes out, what is the position of Apple today? It clearly is a giant, but does it have reason to be looking over its shoulder on now?

CECILIA KANG, The Washington Post: Sure.

Apple is surely at an inflection point. Apple is the dominant technology company in terms of their innovation, but the numbers have shifted, in that there are more phones, smartphones and tablets that operate on the Android platform than they do on Apple’s iOS platform.

And the battle or the competition has become downright ferocious. It’s really a battle between Apple and Google for what’s become a completely mobile — mainstream mobile nation and mobile world.

People are snapping up smartphones and tablets with no real end to their desire to have more and to get the latest versions.

JEFFREY BROWN: Charles Golvin, how would you describe the state of play in this mobile market?

CHARLES GOLVIN, Forrester Research: Well, I would call it a battle of more than just devices. It’s a battle of ecosystems or platforms, not just Apple and Google, but also Microsoft and Amazon.

And it’s a battle for customers’ loyalty, as Apple secures that loyalty with iPhone and iPad and the Mac and iCloud, and Google with all of their services piled on top of Android. Microsoft tries the same thing with Windows 8 on P.C.s and on tablets and on phones.

And they’re all trying to secure that loyalty of consumers and keep them within the orbit of their devices, software, and content.

JEFFREY BROWN: You use that word ecosystem. That’s what you mean, more than one device, putting it all together?

CHARLES GOLVIN: It’s actually that, but not just the devices, but also, as I said, the content.

The music that you buy, the TV shows that you rent or buy, movies, books, magazines, all of that content that you enjoy, and your own personal information that you put in to these cloud services, they’re all securing greater and greater loyalty, or some might say lock-in, into those ecosystems.

JEFFREY BROWN: Cecilia, I want to get to the Apple and Samsung verdict, because it happened I think just as we were about to go to the conventions, and we didn’t get a chance to talk about it on this program.

What impact does it have on this market that we’re talking about?

CECILIA KANG: Sure.

Well, in the not-too-distant future, there will be a decision on whether the U.S. — well, a court will decide to ban actually eight phones that Apple thinks that Samsung has created infringing technology of their patents.

So there will be actually potentially a block of sales of some smartphones in the U.S. market.

But the bigger battle really is over how this — what — how the decisions in the court affect technology and innovation going down the line if Apple won a big verdict, as you mentioned in the setup.

And some people say that you may actually see consumers getting lots of different, more types of innovative products. Not every phone, not every tablet will be black or white and rectangular and just with rounded corners. You might see a lot more design innovation going forward.

You may also see companies grappling, though, with their product line and their production lines and their assemblies and what that could do for sort of trickling down to prices on consumers.

It could be, some argue, mean slightly higher prices for consumers going into the holiday season or even into next year. Those are lots of big questions. And, as Eric said, what’s happened is, because there is so much competition, not just between Google and Apple, but between — including Amazon, et cetera, they’re all watching these patent cases very closely to see what kinds of innovation will come forth next to — so that each company can really fight — as they all do, fight to be the one-stop shop for anything that a consumer wants to get over the Web, over their device.

JEFFREY BROWN: Well, let me ask Charles Golvin over that, the impact of the verdict, both short, but more importantly, as Cecilia said, this long-term question of innovation.

CHARLES GOLVIN: Yes. I basically agree.

I think that even though the companies like Samsung and other competitors, like HTC and Motorola, who use the Android operating system, are being sent back to the drawing board to figure out new ways of doing things that have become very accepted by consumers, things like pinch to zoom an image and things like that, they’re being sent back to the drawing board to figure out new ways to do that.

And that really fundamentally is the definition of innovation, right, figuring new methods, new solutions, and I do believe that we’re going to see new industrial design, new features, new capabilities.

We have already seen it somewhat coming from Nokia, even though it hasn’t translated into sales for them, but very different industrial design and look and feel to their devices.

So, I think, ultimately, despite the fact that there may be some interim price impact on consumers, in the long run, it’s a good development because we’re going to see more diversity and more innovation.

JEFFREY BROWN: So, Cecilia, just coming back in our last couple of minutes here to the iPhone and particularly the fight, say, with Google, I mentioned — I mentioned them switching out the treatment of the maps, of the Google maps.

Is something like that important? I mean, it gets a lot of attention, and that’s a popular app, but where does that play, how does that play in the discussion we’re having?

CECILIA KANG: Sure.

Well, there’s two ways why — there’s two reasons why that’s important.

There’s the business battle. These are two companies, Google and Apple, that were once friends. They have become fierce frenemies, if you will. They’re very much battling on the software side of things, as well as the device.

But also for consumers — you know, Google has a pretty darn good map. And so for Apple to try to compete with that map, you know, if you are locked in, potentially, to the Apple ecosystem, as Charles mentioned, then you — it might be harder to get access to the Google maps or other types of platforms that — software that isn’t created by Apple going down the road.

And for a consumer, that means potentially less choice. So that’s how consumers are affected by that.

JEFFREY BROWN: And let me just ask you, Charles Golvin, briefly, in 30 seconds or so, the death of Steve Jobs, of course, there were a lot of questions about what this would mean for innovation.

Are we near the end? Are we seeing the end of the product lines that he influenced?

CHARLES GOLVIN: No, I don’t think so at all.

In fact, one of the things that Apple announced today — it’s a small product, it’s a new innovation in their headphone design — but they mentioned that three years of research and development to produce that product. And we have seen from the Samsung trial and other evidence that his involvement stretched back quite a far distance into early product design.

So I think we’re still going to see products come from Apple that have Steve Jobs’ fingerprint on them for at least another year and maybe two.

JEFFREY BROWN: All right, Charles Golvin, Cecilia Kang, thank you both very much.

CECILIA KANG: Thank you.

CHARLES GOLVIN: Pleasure.