5 Little-Talked-About Details in Apple’s Big iPhone 5 Reveal

by Jeff Reeves | September 12, 2012 5:11 pm

So, there’s no shortage of Apple (NASDAQ:AAPL[1]) news today, and no shortage of analysis. Rather than scream into the void with yet another laundry list of facts, I’m assuming you know by now that the iPhone 5 has a bigger 4-inch screen and starts at just $199.

Instead, I’ll focus on five under-the-radar topics that were hinted at and talked around in the iPhone 5 event today in Cupertino. These issues might not have grabbed a lot of headlines now, but they are crucial to the story of Apple and its iPhone business going forward.

International is Everything: Unlike past events where U.S. buyers were the first to get their hands on the devices, Apple is rolling out its iPhone 5 globally from the word go — not just in the U.K. and Canada, either, but in key Asian markets that include Japan, Hong Kong and Singapore. All will get the new iPhone on Sept. 21. This is clutch, considering the fact that Apple derives a huge amount of money from domestic sales, but has reached critical mass by many estimates. This could guarantee a hugely favorable comp to past iPhone launches, and really juice revenue in the short-term instead of waiting for a longer, tiered rollout. (Read “Apple Shocker: It’s an ‘Also Ran’ in China”[2] for more.)

Apple Is Going Low-End, Too: The iPhone 5 was the big news, but equally important is that the iPhone 4 is now going to be free domestically, with the 4S just $99 under a two-year contract from the AT&T (NYSE:T[3]), Sprint (NYSE:S[4]) or Verizon (NYSE:VZ[5]). Imagine that — a free iPhone, even if it’s an old one. This is another way to combat the threat from competitors as Apple owns the high-margin high end of the market and squeezes the middle tier with an “old” phone sold for deep discounts. To some consumers, the last-generation iPhone is still sexier than some of the newest lines powered by Google (NASDAQ:GOOG[6]) and its Android OS. The move also will be a de facto price cut for global customers where carriers don’t pay a subsidy[7] akin to giveaways.

Not Giving Up on iPods: Yes, the iPhone 5 stole the show — with good reason, since it’s more than half of Apple’s entire revenue stream. But the iPod line also got some much-deserved attention as Apple announced updates across the board. The iPod Classic, huge and fashionably throwback as ever for music junkies with a massive collection, was the only gadget that remained untouched. The iPod Touch gets the same 4-inch screen as the new iPhone, gets an upgraded 5-megapixel camera, and graphics processing that’s seven times as fast. Why do this? Well, two reasons: People who don’t want an iPad but want a sexy portable media device for music and movies can easily grab a new iPod Touch for just $299. And more importantly, like the iPhone, Apple is slashing its “old” model pricing — just $199 for a 16 gig iPod Touch in the old model. This helps squeeze the low end of the market for those who don’t want to spring for the high-end iPhone or iPad and keeps Apple connected with more customers on the media front, even if they have another device with a data plan.

Accessories to the Crime: There was some fallout for Skullcandy (NASDAQ:SKUL[8]) today as the stock slumped almost 5% on news that Apple will be shipping premium earbuds with its iPods and iPhones. The high-quality headphone manufacturer will not be as in-demand thanks to complimentary “EarPods” with Apple gear. But while some have picked up on this as a hokey add-on akin to a toaster from the bank when you open your free checking account, it could portend a move into accessory sales and other gear. If “EarPods” can get a featured spot at this conference, who’s to say that protective skins or other peripherals — maybe a tactile keyboard for the iPad? — aren’t far behind.

What? The Foo Fighters? On a less positive note … Foo Fighters closed down the long event with a bit of glitz and glamor. Which makes one wonder what Apple is compensating for. It used to be the gadgets that drew the cheers. I love Dave Grohl and all, but what do you need a rock band for when you used to have products that were rock stars themselves? Smacks of insecurity to me …

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[9] Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he held a long position in Apple.

Endnotes:
  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. “Apple Shocker: It’s an ‘Also Ran’ in China”: http://www.investorplace.com/2012/08/apple-shocker-it-is-an-also-ran-in-china/
  3. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  4. S: http://studio-5.financialcontent.com/investplace/quote?Symbol=S
  5. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  6. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  7. carriers don’t pay a subsidy: http://www.investorplace.com/2012/08/apple-shocker-it-is-an-also-ran-in-china/
  8. SKUL: http://studio-5.financialcontent.com/investplace/quote?Symbol=SKUL
  9. “The Frugal Investor’s Guide to Finding Great Stocks.”: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb

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