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Apple Disappoints With iPhone Announcement, But Will Customers Care?

Brian Cantor

Call Center IQ would like to exend its deepest condolences to those affected by the loss of Apple's Steve Jobs. Jobs' vision for Apple not only propelled it to claim a significant role in the evolution of technology--it also helped establish one of the greatest examples of branding and customer experience. Rest in peace, Steve.

Looking for unparalleled insight into how customers behave? Look no further than the impending release of Apple’s iPhone 4s.

After months of aggressive hype and speculation, Apple finally unveiled its latest phone at a special media event Tuesday. And while the phone indeed brings some new and exciting features into the market, it ultimately produced an overwhelming sense of disappointment among media types.

The reason is simple: the iPhone 4s is not the iPhone 5. And for the better part of the year, all indications were that the October 4 announcement was to introduce the iPhone 5 to the media and consumers. If an iPhone 4s were to be announced, it was to be a minor modification to the existing iPhone 4 and a "cheap alternative" to the "fully-featured" iPhone 5.

In fairness, Apple never confirmed it would introduce an iPhone 5 this year—it, in fact, did not even make the nature of its fall special event clear until very recently. That, unfortunately, did not stop anyone—from consumers to Wall Street analysts to tech bloggers—from treating such an unveiling as a scheduled certainty. For the past few weeks, most articles discussed rumored specifications and features for the iPhone 5. On Tuesday, many major blogs and publications titled their coverage of Apple’s announcement some derivative of "iPhone 5 Announcement Live Blog."

But as the announcement crossed 90 minutes in length without any hint that such a major upgrade to the iPhone was coming, the disillusioning reality became clear—October 2011 would not usher in the era of iPhone 5. The disappointment was palpable.

And yet if there were ever an example of a company being hoisted by its own petard, it is the iPhone 4s announcement. To tech-enthusiasts, Apple has a reputation for using glitz and clever marketing to successfully distance its offerings from products that are technically quite similar. In this case, much of the backlash Apple is facing stems from the marketing distinction between the terms "iPhone 4s" and "iPhone 5."

Substantively, the announced iPhone 4s is very much aligned with the prototype analysts envisioned for the iPhone 5. Dual-core A5 processor? Check. Improved 8-megapixel camera? Check. Voice assistant (Siri)? Check. Better battery life? Check. Faster-performing antenna? Check. Support for the Sprint network? Check. Save for the much-discussed teardrop design (form factor, admittedly, can be a big deal to observers), this phone very much is the iPhone 5 the media expected to encounter Tuesday.

Sure, there was some hope that Apple might surprise with the inclusion of 4G LTE support or some kind of revolutionary usability feature, but there was no real evidence to suggest the supposed iPhone 5 would be any different than what Apple is calling the iPhone 4s. So if the media was positioned to accept the new features as part of an iPhone 5, why is it coming down so hard on the iPhone 4s?

For starters, the nomenclature calls attention to what the new phone really is—a "fine-tuning" of a pre-existing product. The changes make the iPhone device more technologically competitive with offerings from Android device creators and add the classic Apple "twist" to features like voice recognition, but that is all they really do—they level the playing field. They do not revolutionize phones the way those features of the original iPhone did, they do not add 4G LTE support and they still do not surpass some of the technological advancement seen in the most high-tech Android devices. Instead, they simply bring the iPhone up to relative speed, assuring the technology trade-off for its user-friendly features is not quite so drastic.

(For those who follow Apple as a business, there was also a feeling new Apple CEO Tim Cook would aim to truly "wow" in his first special announcement in Steve Jobs’ shoes. Instead, his event could not have been more low-key and uninspired).

Ultimately, however, the success of the iPhone 4s will be judged by its connection with customers—not the opinion of ultra-tech-savvy bloggers and ultra-skeptical financial analysts.

Obviously, because there many customers are attracted to the general idea of the iPhone, and the iPhone 4s will effectively become the standard model, it will not completely flop. The most relevant success metric, therefore, is not whether the iPhone 4s sells a bunch of units but whether it is compelling enough to attract previously-uncertain or pro-Android/Blackberry customers to the world of Apple mobile. And it is the performance against that metric that will reveal invaluable insights about customer behavior.

One key question concerns whether customers assess value based on preconceived expectations or actual reality. The media, which craves juicy stories, will obviously sour on product launches that lack anticipated astonishment, but it is unclear customers will feel the same way. Will they see the iPhone 4s as a disappointment because it did not truly "evolve" the smart phone with a new design, a new name (iPhone 5) and a completely new feature set? Or, will they see it as a great upgrade to the existing iPhone that introduces cool features like Siri and an improved camera? Are customers, especially when dealing with a trustworthy brand, glass half-empty or half-full?

The idea of steak vs. sizzle also comes into play. Moreso than ever, the iPhone 4s reveals the extent to which Apple is in the user experience business rather than the technology business. Yes, the 8MP camera is top-notch and the Siri assistant does things no mobile voice-recognition suite is currently doing, but the essences of these features, as well as high-quality antennae and dual-core processors, have been available in Android-powered devices for a while. Customers who embrace the iPhone 4s over Android devices will be saying things like, "I care more about functionality than technological power" or "I trust Apple to develop a great product more than I do companies like HTC and Motorola."

In either case, it will be the power of the Apple brand or the manner in which the new features were presented—not the actual "steak"—that sells. With so many tech companies facing challenges in "hot" markets (such as that for tablets), this could be a very valuable lesson.

Collectively, these issues create a scenario in which Apple’s recent dominance in customer satisfaction and loyalty will be tested. If there were ever an iPhone upgrade customers could afford to skip, this is it. The changes are nice, but they do not totally revolutionize the iPhone, and any "revolution" they do bring is further minimized by the fact that everyone knows an iPhone 5 is on the horizon. Will customers nonetheless trust the improvements are worthwhile and, by virtue of their belief in Apple, see this as so must-have that waiting for the iPhone 5 is unattractive? Or, will they demand Apple provide more incentive for a re-purchase?

Android devices have made significant headway as customers grow to appreciate their innovation, and yet they still lack the loyalty and luster customers shine on Apple’s iPhone. Tech-savvy critics are often baffled why iPhone customers would choose a "shiny" device over a more powerful one, and substantively-underwhelming announcements like that of the iPhone 4s will not change that opinion.

But customers do not think like the critics; and their response to a product that stirs little excitement for critics but could still be very "cool" to mainstream audiences will reveal the extent of that divergence of opinion.

How would you have handled the iPhone announcement? Are tech customers likely to care about "expectations" the way tech critics do? Questions like these will be at the forefront of the Marketing 360 Exchange. Do you qualify for a FREE invitation?