iPhone 5: Mixed messages from the channel

Some commentators and analysts see little benefit, while others point to areas of revenue such as accessories, BYOD or selling non-iOS devices

It may have been the most anticipated release of the year, but the iPhone 5 launch has met with a lukewarm reaction from channel analysts and experts.

Some see little benefit to the channel, while others point to areas of revenue such as accessories, BYOD or selling non-iOS devices. Although it should be said everybody ARN spoke to underscored that the iPhone 5 will walk out the door at retail and through telcos.

That was highlighted by a UK survey of 1402 respondents by Macworld, which showed that 36.9 per cent of consumers are planning on purchasing the iPhone 5 regardless of what new features the sixth-generation device offers.  Figures are expected to be the same or higher worldwide.

Telsyte research director, Foad Fadaghi, said the launch will impact carriers, retailers and IT integrators differently.

The arrival of the 4G models will work well for the carriers, he said: “Essentially, people are going to move on to the 4G networks and it is going to be driven into the carrier stores over time.”


He suggested the channel should tap into the iPhone peripherals market, as it looks to be a better avenue for revenue than competing with the Apple store to sell the iPhone 5.

“There are always opportunities for the channel; they might come from peripherals even. Seeing that a lot of accessories have significant higher margins than the products themselves, the profitability from it is skyrocketing,” Fadaghi said.

Anittel managing director and executive chairman, Peter Kazacos, said the problem with the iPhone having a strong market share is that there is only one way it can go, which is to be eroded.

“The idea is to ensure that the iPhone marketshare doesn’t get eroded too much. It’s at the stage where the people who want it, have got it,” he said.

According to Kazacos, the launch is not very beneficial to the channel as not every part of the channel can sell it.

“It is restricted to certain telcos. I think that is a shame in a market that should allow people to have an opportunity to sell the product,” he said.

Vendors such as Samsung and Nokia already have in place a system that is more channel sales friendly, according to Kazacos, so he sees more opportunities for the channel to sell non-iOS devices.

amaysim Australia founder and CEO, Rolf Hansen, said the launch means larger telco providers will shift their focus onto locking customers into contracts.

“Consumers will then be able to see the clear differentiation and choose between the high-end contract lock-in markets and the no lock-in contract market,” he said.

Hansen claimed the iPhone 5 will drive increased data usage. Telco service providers could benefit by bundling the smartphone with data plans.

“All the operators will be very successful if they bundle the iPhone with 4G. Vodafone, not having a 4G network, will be slightly disadvantaged,”  he said

Informa telecoms and media principal analyst, David McQueen, said while the new hardware might not quite stack up against other products expected in market, it is Apple’s ability to create stylish, desirable products attached to a rich set of services that set it apart and creates differentiation.

“It looks like Apple has delivered a new iPhone that offers few surprises but promises a significantly better user experience as a result of its faster LTE connectivity, processor speeds and better Retina display,” he said.

According to McQueen, while 2012 has been a strong year for Apple, iPhone sales dropped by more than nine million units from Q1 2012 to Q2 2012, as consumers waited for the release of iPhone 5.

“With Apple’s strong existing relationships with a number of major carriers, the new iPhone model promises great potential sales for Q4, even in the face of new LTE-capable devices from Samsung, HTC, Nokia and Motorola also being launched in Q4,” he said.

Double-edged sword

However, Ovum chief telecoms analyst, Jan Dawson, said the iPhone is a double-edged sword when it comes to carriers.

“On one hand, it sells very well; on the other, the subsidies tend to be very high on the iPhone when compared to other devices,” he said.

Dawson said some telco providers and other resellers will be at a slight disadvantage as consumers will most likely purchase the device directly from Apple or a carrier. “I don’t expect other resellers to do as well as the carriers or Apple store.”

Opportunities still remain for other vendor players in the market, according to McQueen, who said Apple will struggle to “have it all its own way” to the end of the year as it faces continued pressure from Samsung, and Nokia, with its new range of Lumia devices running on the Windows 8 platform.

“iPhones are in the hands of more consumers. They willl be taking it to work and connecting to their corporate networks. Growth in the consumer market will drive growth in BYOD, as well,” Dawson said.

That is something everybody is unanimous about. BYOD offers opportunity.

Kazacos said the new look is an incentive for some people to invest in it. Some of the iPhone 5’s functionalities, such as videoconferencing using facetime over the 4G LTE network, would allow for more businesses to adopt the device.

“Access to the 4G LTE network using the new iPhone 5 is a big plus – that was a problem that many businesses faced with the iPad,” he said.

Kazacos added Passbook, the company’s ticket and boarding pass manager, will be a hit with businessmen as it will make easier to use the iPhone as a ticketing mechanism.

“But Apple needs to ensure it improves its mail system. Windows mobile is gaining more momentum, and the one thing they do have is a much richer mail engine,” he said.