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Apple’s iOS 8 To Help Drive iPhone Upgrades

NEW YORK – Apple’s planned iOS8 operating system will encourage Apple mobile-device owners to shift from Windows to Mac computers, encourage families to buy multiple iOS devices for family members, and build awareness of home automation, analysts said.

The OS upgrade might also disrupt the mass market home automation business, possibly making it unnecessary to buy a home automation hub that incorporates multiple wireless radios and protocols, one analyst said. Apple might also disrupt the market by eliminating monthly fees for monitoring and notifications, the analyst added.

Combined with a new larger screen iPhone expected to hit retail later this year, iOS 8 will drive a strong upgrade cycle for Apple’s installed base, analysts said.

In unveiling iOS to developers for a fall introduction, Apple is making its Mac and iOS devices work more closely together through a feature called Continuity, which will enable iOS8 devices to share content with nearby Macs running the planned Yosemite version of the OSX OS.

With such cross-device communication, consumers will able to start working on a Mac, then continue their work on an iOS device right where they left off. Apple’s iOS 8 will also let Yosemite-running Macs display caller ID information and text messages from a nearby Apple phone. Consumers will then be able to use the Mac as a speakerphone to accept the call.

From a Mac, users will also be able to call a phone number in a web page by clicking on the number and using a nearby Apple phone to call out.

Also to break barriers between Macs and mobile devices, iOS 8 and OSX Yosemite will make it possible for a Mac out of range of a Wi-Fi network to automatically connect to an iPhone to get to the Internet. And iOS 8 will add iCloud Drive, which enables documents of any type to be stored, accessed and edited across iOS devices, Macs and Windows PCs. Users can make edits on one device, and the updated version of the document will be available across all devices.

The encourage families to buy multiple iOS devices, the new OS will enable up to six people in a family to share calendars, reminders, purchased iTunes content, and other content such as pictures across iOS devices. The feature also notifies parents if a family member is trying to pay for content via a shared credit-card number, enabling parents to deny the purchase.

To turn iPhones and iPads into home-automation controllers, Apple is teaming up with multiple home-automation suppliers to bring out compatible products that share a communications protocol, security technology and a single app. From a single app, mobile iOS devices will be able to control individual systems or create scenes that coordinate actions among multiple systems. Consumers will also be able to control systems via Siri voice control.

To create compatible home systems, Apple teamed up with Haier, LED-lightbulb maker Cree, Kwikset, Schlage, Osram/Sylvania lighting, Honeywell, Haier, Philips, Broadcom and others. A timetable for availability wasn’t announced.

“The compelling features in iOS 8, the larger screen size form factors in upcoming iPhones, and U.S. carriers driving the mix toward more expensive smartphones with increasing early-upgrade programs should drive a very strong iPhone 6 upgrade cycle,” said Cannacord Genuity analyst Michael Walkley. These initiatives, along with Apple’s purchase of Beats, “should also strengthen the stickiness of the iOS ecosystem among its loyal consumers,” he added.

Walkley concludes that “Apple will win back meaningful high-end smartphone market share in [the second half] following the launch of the iPhone 6.” Canaccord surveys indicate “the channel is preparing for a record iPhone 6 launch,” he said.

Stephen Baker, NPD Group’s industry analysis VP, cited the potential of Mac-mobile integration to drive Apple sales. “Apple is circling the wagons, in a good way,” he said. Apple is “leveraging and taking advantage of their strong position by bringing their devices together even more closely than ever before. More integration holds people in the ecosystem and attacks the perceived weakness in Android fragmentation and the weakness of Windows on mobile devices.”

At the same time, Baker said, although Apple is leveraging its position to keep people on its platforms, it “is being slightly more open to allow third-party applications and devices to make their platform better.”

IDC VP Tom Mainelli also cited the integration of Apple’s mobile devices and Macs as a key to the success of iOS 8. “Continuity is an example of why people choose to stay in the Apple ecosystem and own multiple devices from the company,” he said. Continuity “will really make for a much better user experience,” he said. “Critics of Apple like to suggest that the company traps people in their walled garden of an ecosystem,” [but] “I think Continuity is an example of why people choose to stay in the Apple ecosystem and own multiple devices from the company.”

In addition, Family Share, the extension of iCloud via iCloud Drive, and the updated keyboard — plus the availability of third-party keyboards — “will make iOS that much more useful to consumers,” Mainelli said. Giving apps the ability to talk to other apps “really opens up a whole new world of possibilities,” he added.

Although it’s unlikely that iOS 8 in itself will make Android and Windows fans switch to iOS, he said, iOS 8 combined with “the expected hardware updates later this year might help accomplish that,” Mainelli said.

As for the OS’s impact on the home-automation market, Bill Ablondi, director of smart home strategies at Strategy Analytics, said Apple and its name-brand partners “will help establish [the] credibility of the overall market opportunity.” Though market-expanding, Apple’s iOS 8 could also prove to be market-disrupting, he said.

“It seems from their announcement that they are trying to do away with” the need for home-automation hubs that enable smartphone control of home systems that incorporate different wireless radios and protocols, Ablondi explained.

Although Apple’s HomeKit initiative probably won’t deliver any more features than current third-party home-automation apps do, “Apple is likely to build a UI that will be head and shoulders above the third-party apps,” Ablondi said. Although the iPod “never really did anything other digital music players didn’t do, it just did it more elegantly,” he said. HomeKit, he continued, “could be a way for Apple to see what’s going on in the home control space so they can add their secrete sauce to it.”

Ablondi also expects Apple to disrupt the business model for offering home monitoring and control capabilities. “Right now companies charge a monthly fee for monitoring and notifications,” he said. “I expect Apple to disrupt this model in some way.”