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Apple’s Real Problem? Competition from Itself

Should you buy the latest iPhone, or get the 3GS for free? At this point, there’s little difference between the two.

Apple’s genius – making it so that the hardware behind its mobile devices is, to the average consumer, invisible and irrelevant – is also, perhaps unavoidably, its achilles heel. Announcements like today’s, which are mostly about upgrades of the internals to the existing iPhone 4, are bound to disappoint.

The ‘57 Chevy of phones has yet to be exceeded (cc Gonzalo Baeza)

This disappointment derives not from the substance of the upgrades. (A phone that is seven times faster, pulls data down better than ever, includes an awesome camera and an AI-powered voice-recognizing digital assistant is nothing to sneeze at.)

Rather, the problem is that Apple’s core competency thus far has been in making us not care about the guts of its phones. As Dan Frommer notes:

Remember that what makes an iPhone an iPhone is mostly software. Apple’s iOS is still what matters the most, and that doesn’t need a new case design to be great.

There will always be phones with larger displays, better cameras, and faster or more affordable data plans than the iPhone. But so far, developers have yet to figure out how to use that power to give consumers an experience that is substantially different from a middle-of-the-road iPhone like the 3GS.

So I would argue that the real competition for the iPhone 4S isn’t the Samsung or HTC whatsit – it’s free 3GSes or whatever else is on sale at your favorite carrier.

In our household, we’ve got both a 3GS and an iPhone 4. You’d think the technology journalist would have the latest and greatest, but no. I got my phone first, so that’s the one I’m stuck with. The thing is, occasionally we borrow each other’s phones. And functionally, there’s no difference, except that I’m less worried about breaking my 3GS, because of its superior case design.

The simple fact of the matter is that for most tasks, the real bottleneck is the performance of the network. Smart phones have hit a plateau – what was a new and transformative technology has become mundane for the early adopters. And it’s going to stay that way. Smart phones, like computers, have become tools. All that matters now is the software.

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