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As the current Apple vs. Samsung patent case continue, both sides will be presenting significant amounts of documentation to make their case. Highlighted by Ina Fried for Re/Code (and covered by others), one set of slides presented by Samsung as part of their cross-examination of Phil Schiller, Apple's Senior VP, talks about the iPhone's slowing growth rate as the smartphone market expanded, and the factors that were impacting on Apple's success in the then upcoming financial year of 2014.
It should be noted that Schiller has indicated that he does not agree with much of the document, and that it did not represent Apple's policy.
Slide from presentation in Apple vs. Samsung (via Liz Gannes, recode.net)
That said, many of the elements of the rise of the smartphone are present in these year-old slides. The consumer's desire for lower-priced phones with larger screens; the pressure from carriers for phones that offer them more value through customisations or lower subsidy requirements; and how rival smartphone manufacturers were buying market share with comparatively large advertising budgets.
Finally, the section on the opposition sums up the rise of Google and the Android ecosystem nicely. "Competitors have drastically improved their hardware and in some cases their ecosystems" by "spending 'obscene' amounts of money on advertising and/or carrier/channel to gain traction."
The slides do reflect the current smartphone landscape, and while they lay out a picture, they do not show what Apple planned to do about it. If you look at recent news from Apple, reactions from Cupertino match up with the points from the slide deck.
Addressing the screen size issue, the rumors around a larger screen size gather pace, with many websites familiar with the supply chain noting potential larger screens. Apple also appears to be focusing on the screen with the potential use of sapphire in the screen construction.
I would be hesitant to make a direct link between the pricing issue and the iPhone 5c, especially as the lower cost model took the place of the iPhone 5 if it had been demoted to the middle rung of the pricing structure on the launch of the iPhone 5s. That said, the recent introduction an 8GB model in the iPhone 5c for the highly competitive European market addresses the issue of the subsidy premium for carriers and the lack of alignment.
Apple continues to receive the lion's share of the profits in the smartphone market, but their market share is dropping. Both Android and Windows Phone are continuing to take market share away from Apple, and the high-margin/high-profit strategy requires Apple to have a notable slice of the market.
Will Apple decide to change strategy?
Arguably they could continue on their current course and vision set by Steve Jobs, but over time the market share would drop, even if unit sales increase. Tim Cook is his own man, and will make his own decision on this subject. The indications are that Apple will react to the consumer demand , which means the odds on both a larger screened iPhone and more tweaks to the iPhone 5c range to bring in further into the mid to low range budget handsets are likely over the next year.
