Apple Regains Its Mobile Competitive Edge

Mark is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

After spending a day using iOS 7 Beta on my iPhone 5, I'm confident that Apple's iOS 7 will be the best mobile OS when released this Fall. Apple (NASDAQ: AAPL) had fallen behind Google's (NASDAQ: GOOG) Android and Microsoft's (NASDAQ: MSFT) Windows Phone in many ways.  iOS 7 will put Apple out in front once again. 

Misplaced emphasis

As an iOS developer, I was priviledged to download a beta copy of iOS 7 as well as peruse the developer documentation for it.  Naturally, I have to be rather circumspect in my observations, but what has struck me about the comments from analysts and critics in the media is their lack of perspective.  This is probably due both to a lack of direct experience with iOS 7 as well as a lack of technical insight into its inner workings. 

This started with the rumors about iOS 7, describing it as having a "flatter" look, as if it were just a pale immitation of Windows Phone.  This simply isn't accurate.  What is gone is the skeuomorphism, the tendency to represent software objects with on screen "realistic" depictions of physical objects: software buttons represented by a mechanical-look button, calendar apps that affected the look of a paper calendar, etc. 

The new iOS look actually has much more depth and three dimensionality. Notifications and allerts slide over the screen on translucent panels.  Buttons have subtle contours.  Backgrounds in apps and the home screen are now, at last, animated. 

Now that iOS 7 Beta is here, the critical emphasis in the media seems mostly misplaced.  iOS 7 was very much about catching up to and hopefully surpassing Apple's competitors.  However, the areas where iOS has regained the lead have been mostly overlooked:

1) Animated backgrounds.  Android has had marvelous animated backgrounds for the home screen for some time, available from third party developers, while Windows Phone leaves little room for any background.  Apple's animated backgrounds are still very rudimentary, but Apple now provides developers the ability to build animated backgrounds into their apps, and this was demonstrated in Apple's Weather app. 

2) Better multitasking user interface.  The multitasking UI in iOS was cumbersome to use, and stopping apps was a tiresome process.  Now iOS users will be able to dismiss apps with a flick, similar to a feature of Android, but Apple's version is actually better thought out and easier to use.

3) Air Drop peer to peer file sharing.  Both Android and Windows Phone device makers have pointed to the inclusion of Near Field Communication (NFC) as an advantage over iOS devices.  Android devices use NFC for Android Beam, which is why Android devices need to be in close proximity when transferring information via Beam. Apple's version of peer-to-peer wireless sharing for Mac OS devices, called Air Drop, used Wifi and didn't require close proximity.  Air Drop has been available since Mac OS Lion, so it was only a matter of time before it came to iOS.

Air Drop is only one part of Apple's push into peer-to-peer device communication.  In "Why Apple's iWatch will be an iPod" I predicted that the first sign of the iWatch would be a greatly expanded set of APIs to support it.  iOS 7 will support a broad range of wearable devices, provided either by Apple or by third parties, using WiFi or Bluetooth.  No NFC needed.    

In other areas, it remains to be seen whether Apple will catch up or even pull ahead of its rivals, Google and Microsoft.  iTunes Radio will compete with other radio services and Google's Music All Access.  Siri will have access to larger data bases, becoming more informative.  Siri will even access Microsoft's Bing, but it's unlikely to equal Google Search. 

And then there's Maps.  Both Microsoft and Google tout their mapping products as having superior accuracy.  Microsoft Windows Phone uses Navteq mapping technology from its partner Nokia, while Google continues to improve Google Maps.  At Google IO, Google announced many enhancements to its mapping software that will keep it ahead of the pack, including real-time incident reports and course re-routing, and vector based graphics and 3D views.  Apple is unlikely to best its rivals in mapping any time soon, but it's gradually living down its bad reputation.

Underwhelmed investors

With iOS 7, Apple has been able to catch up with its rivals in important features, while maintaining its intuitive ease of use and reliability at the OS and app level.  In features, it's ahead of Windows Phone, and in reliability and stability it's still ahead of Android.  (I've discussed Android's technical deficiencies in "The Problem with Android.")  Having the best mobile OS should confer some advantage in the Mobile Device Wars, yet investors staged a minor walk-out on Apple once the keynote was over.  Why?

I think the mind-set among investors is that Apple needs to introduce either some new product category such as the iTV or the iWatch, or Apple needs to introduce a larger variety of iPhones, including a larger screen deluxe model as well as a low cost model targeted at emerging markets.  Apple didn't do any of those things at WWDC.

I basically agree that Apple needs to roll out new products faster, which is why I advocated doubling Apple's IR&D spending in "The Case for Lower Apple Margins."  This has brought me into conflict with numerous Apple fans who, believing that nothing about Apple should change, found themselves having to argue that it was somehow not a good idea for Apple to spend more for innovation.  With each passing month, the case for greater R&D spending becomes more self-evident. 

However, I would counsel some patience on the part of Apple investors. Clearly, the roll out of iOS 7 in the Fall is timed to coincide with new iOS devices, and the underlying changes to iOS suggest great new products in addition to the expected iPhone and iPad refreshes. 

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Mark Hibben has a position in Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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