Sep 10, 2013

    New iPhones may break Apple rivals

    The New York Times

    THIS morning, about 200 people - most of them from the news media - will gather in a Cupertino auditorium to watch Apple's chief executive, Mr Timothy Cook, unveil new iPhones.

    These media people expect Apple to reveal a long-awaited, less-expensive iPhone to woo buyers in emerging markets; brightly coloured alternatives - in yellow, blue and even pink - to entice teenagers; and a higher-end, gold-and-graphite model to draw those who enjoy spending lots of money.

    Of course, the news coverage will be comprehensive. And you will be able to split the followers of the reporters' blogs from the event into three categories: Apple fans, entrepreneurs who hope they can take advantage of new phone features, and rival technology executives worried that Apple could render their businesses irrelevant in one move.

    These annual iPhone unveilings have become a sort of Creative Destruction Day in Silicon Valley.

    And, with every even-slightly- improved iPhone that adds features or services offered by others, Apple has tightened the screws on a long list of firms, including other smartphone-makers like Nokia and BlackBerry, and gaming firms like Nintendo.

    Economist Joseph Schumpeter coined the phrase "creative destruction" in 1942 to describe the less-than-tidy way free markets lead to progress: Something gets destroyed and something new and exciting is built on top of it.

    Perhaps no other recent product has been quite as much an agent of destruction and renewal as the iPhone, with its long list of features and access to a store of nearly a million apps that can handle thousands of functions.

    Need a calendar, a phone book or even a notepad? The phone will perform their roles for you. Forget those pesky paper varieties.

    So what else is likely to be disturbed by the iPhone and other smartphones? Expand the question beyond technology products and think about smartphones competing for all kinds of consumer dollars.

    Ask a few 20-somethings if they would rather own a cool new car or a cool new smartphone. They'll pick the latter, as car manufacturers are learning.

    "The iPhone is the Ford Mustang of today," said Mr Thilo Koslowski, lead automotive analyst for Gartner Research.

    "These devices offer a degree of freedom and social reach that previously only the car offered."

    While some might see the iPhone as a destroyer - if you work for Nokia or BlackBerry, for example - there are others that see it as a creator. The app store connected to the iPhone has allowed thousands of small businesses to thrive.

    The destruction and renewal upon which the tech industry has thrived has accelerated, thanks to the Web, cheap smartphone apps and lower costs of doing business.

    So who is safe from the perils of the smartphone? No one, it seems. Not even Apple.

    The firm is no longer the king of the hill in smartphones. Sure, when the new iPhones are unveiled today, they will get outsized attention, and competitors will scramble to copy their latest features.

    The iPhones - at least, the ones being spun from the rumour mill that claim colour as the big innovation - do not exactly sound like great leaps in technology.

    That is the thing about this notion of creative destruction: You never quite know when you stop creating and get destroyed.