iPhone 4S unleashes more creative destruction

October 4, 2011

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Apple has an astonishing ability to casually unleash creative destruction. Its latest iPhone, the 4S, offers faster data-processing and downloads, as well as voice-powered software. This may not have lived up to the most feverish expectations of investors: Apple shares fell while the market rallied. But it will do more than enough to create headaches for companies ranging from Research In Motion to American Greetings.

Smartphones started by devouring the personal digital assistant, as any former Palm Pilot aficionado can testify. They terrorized the market for fixed-line phones, which are now in sharp decline. Apple’s newest gadget shows just how hungry smartphone makers, and Apple in particular, are to eat rivals’ lunches.

The new iPhone’s camera offers sharply better video. That will further hurt sales of digital still and video cameras. Its software allows easy and free texting to other Apple devices. That’s bad news for telephone operators, who make fat margins on such services. Instant messaging has also been the killer app for BlackBerry users.

Apple also unveiled a function that lets users digitally create their own greeting cards and send them in physical form. That may not excite Apple’s most ardent fans, but it was enough to send shares of card-makers American Greetings and International Greetings reeling. Oh, and the new iPod Nano allows runners to track their performance, which will take a chunk out of the market for personal fitness monitors and shoes with sensors.

In a sense, though, these are the easily quantifiable effects of the new iPhone. The device also comes with voice-powered software allowing users to search the Internet, answer queries, take dictation or set up phone commands. It’s hard to judge how effective this software is until it actually hits the shelves. But investors on the lookout for Apple’s creative-destructive impact are surely drawing up a new list of victims.

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So suttle yet just as devastating. The introduction and launch of iTunes and the iPod were just as luke warmly received.

This voice powered software will separate the men from the boys. Of course until they grow up into real live men.

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