Mobility

Apple's iPhone X is boring, but the software and services it enables are not

While Apple likes to hype its newest hardware, it's the software and services that stand out with the iPhone X. Here's what that means for the future of mobile innovation.

I hate to be the bearer of bad news, but if you're still waiting for your iPhone X to arrive, relax. When it arrives, you're going to discover that it's basically the same as the iPhone 8 you could have had, and not much better than the 7 (or 6s) you currently have. In other words, it's a fantastic phone, but it doesn't move the needle much on gee-whiziness.

Yes, Face ID works. No, it's not better (and in some ways is worse) than Touch ID. Yes, the screen is nice. No, it's not $1000 nice. Yes, the iPhone X gives you the same access to millions of apps, an ever-swelling array of cash registers, and more. And here is where the real magic of the iPhone X becomes visible, though it's no more magical than the 6, 7, or 8. While it's premature to say we've hit peak hardware for the iPhone, it feels true to argue that the best smartphone innovation today has little to do with the phone, and everything to do with the smart (software).

Everything is awesome

Not that Apple talks this way. At WWDC and other events, the things that are "courageous" and "amazing" are always hardware. This makes sense because, without the hardware, no one gets to enjoy the software and services. Also, the hardware does look pretty.

Jump on an Apple earnings call, however, and those services start sounding sexier. For Apple Pay, active users more than doubled over the past year, with annual transactions up 330%. After recently adding Safeway to its roster of grocery chains, Apple Pay is now accepted at 70% of US grocery chains. As arcane as the experience seemed at first, Apple Pay is going mainstream.

SEE: BYOD (bring-your-own-device) policy (Tech Pro Research)

More broadly, Apple's services revenue (Apple Pay, App Store, etc.) hit $8.5 billion last quarter, with the company projecting it will hit roughly $50 billion in annual services revenue by 2020. To put this in perspective, Apple's services business in 2017 nabbed $30 billion, which makes that one business alone the size of a Fortune 100 company.

Even as Apple's different hardware businesses continue to grow, they're increasingly interesting because of the games/transactions/augmented reality/etc. that they enable, and not for the hardware itself. While Apple has been pushing this thinking since at least 2009 (the year it trademarked "there's an app for that"), the underlying hardware advances have never been less interesting, even as the software they enable has never been more so.

Augmenting your drab world

Given the centrality of the phone to our daily lives, dropping $1,000 for one no longer seems crazy. Depending on how you look at that price, it's actually cheap. For example, with rival augmented reality (AR) platforms like Microsoft's HoloLens going for $3,000, the iPhone X looks positively cheap, particularly when you consider that over 1,000 AR apps already exist on Apple's App Store.

Now layer in an ever-improving camera (12MP), faster processors, a wider screen, and more, and that $1,000 gets cheaper and cheaper.

SEE: iPhone X vs Galaxy Note 8: Which phone has better business specs? (ZDNet)

Do you need to spend the extra few hundred dollars to get the X instead of the 8? No, not really. As mentioned, I find the X works well but some things (app switching, toggling Bluetooth, using Apple Pay) to be harder with the X than with the 8 (or previous models). Dropping the home button is not a step forward (double-clicking the right button and then authenticating through Face ID is cumbersome compared to holding my phone out with my thumb on the home button), but over time we'll get used to it.

And we'll have to. Why? Because the software and services enabled by the iPhone will just keep getting better.

That's what innovation looks like today in mobile. It's no longer about the hardware even if, as CNET's Stephen Shankland told me, "year-over-year improvements aren't massive" but those that upgrade less frequently will better appreciate the hardware innovations. That's likely true, but someone updating from a 5-year-old phone will be less impressed by the hardware and more so by what she can do with it. That falls into Apple's services business, and it's the future of what makes Apple's iPhone ecosystem interesting.

Also see

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Image: James Martin/CNET

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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