Apple (AAPL) launched its iPhone 5 recently, and the response to it online has ranged from tepid to skeptical. The usual rant revolves around how the new iPhone 5 lacks the 'wow' factor, and how it is just a modest improvement on the iPhone 4S without any significant changes. Apple's new model comes packed with an 8MP camera and an improved ability to take pictures in low light conditions. The phone runs on iOS 6 and is larger (4-inch screen) and thinner than its predecessors. Apple's iPhone 5 runs on A6 processor, something that is touted to be significantly faster than the A5 processor that iPhone 4S runs on. Also, the new device supports 4G LTE networks and has the ability to surf Internet at much faster speeds.
But critics and analysts have pointed out that the phone lacks NFC ,or Near Field Communications, which allows users to share files and make payments at select locations. NFC is supported by most high end phones like Samsung's (SSNLF) Galaxy SIII, Lumia 910 by Nokia (NOK) and other models. These rival models also feature larger screens and slightly lower price tags than the iPhone 5. Many are arguing that Apple's iPhone 5 plays 'catch up' and doesn't really reach where it should reach.
Expectations are usually very high when it comes to Apple events and product launches. Unfortunately for Apple, everyone almost knew what was going to be announced at the event and what features the new phone would come packed with. Technology and design doesn't really work like that. If one takes a closer look at iPhone 5, it can easily give a run for any of the cellphones out there in the market. It has a camera that more than meets that of its competitors and it runs on 4G, which was elusive until now. Plus, it comes with iOS 6, which is certainly a more user-friendly operating system than that of Google's (GOOG) Android.
Skeptics and critics have been overenthusiastic about the new iPhone 5 and have, by extension, created unrealistic expectations. Apple is a company that believes in design and user experience more than a list of features. When it comes to features, it has almost everything that rival phones offer but it only makes the experience worthwhile. Having used an iPhone 4S for the last one year, I will not be upgrading to an iPhone 5. But those who have been using previous models of iPhone certainly need an upgrade. On that note, it is expected that at least 10 million iPhones will be sold in just a few weeks, and one analyst remarked that it may even help American economy to receive a boost.
Let us take a look at Apple's competitors' devices briefly. Samsung's Galaxy SIII runs on Android OS and features an 8 megapixel camera, NFC, 4G LTE, 4.8 inch display and a hefty price tag. Many people that I know have told me that the device is too large to hold and type easily. Google's Android is a great software and I do like it, but it has its own share of woes. The learning curve is steep and the software is not as easy on the eyes as that of Apple's iOS. Most importantly, Apple won patents litigation against Samsung and was awarded a billion dollars. But Samsung and HTC have vowed to sue Apple as it has used 4G LTE technology in iPhone 5.
Nokia has struggled to play catch up with its peers yet has received favorable reviews for its Windows Mobile device, Lumia 920. Lumia almost features the same specifications as iPhone 5 and Samsung Galaxy SIII. But, most people do not prefer Lumia because it runs on Microsoft's (MSFT) Windows Mobile, an OS that is still not as popular as Android or iOS. Google on the other hand may work towards building its mobile product portfolio with the help of Motorola, which it purchased a few months ago for $40 per share. The Motorola Droid Razr M is a great device and runs on Android OS again. It features similar specifications like 4G LTE, 8MP camera and a large screen. Only Research In Motion's (RIMM) BlackBerry devices do not match up to Apple's iPhone 5 and its rivals. The BlackBerry maker is facing a lot of problems because it has not been able to release its next-generation devices running on BB10 OS. In fact, investor confidence in the company is very low at the moment.
I believe the iPhone 5 is a great device and is probably the best cellphone that one can purchase at the moment. It has all the features that its competitors offer (except NFC, but who uses NFC anyway?) and fits well in users' hands without being too large and ugly (the width of the iPhone 5 is not increased, which makes it easy for a user to type without having to use both the hands.). It may not be a game changer, but the device doesn't have to be. It is just the right device at the moment and gives Apple enough time to innovate prior to the next product launch happens in 2013. Moreover, Apple has many new products waiting to be announced, including a TV and a radio station.
Apple closed at $678, an increase of 1.25%. With a market cap of $634 billion and an enterprise value of $591 billion, Apple is one of the most valuable companies in the world. The company has no debt at all and has an operating cash flow of $52.15 billion. With a profit margin of 30% and an operating margin of 36%, Apple is certainly the most valuable company in the tech world today. I would not worry about tepid reviews of the iPhone 5 for now.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.