As iPhone 5 launches, how long will Apple shine?

Our prize-winning Consumer Affairs Correspondent, and author of Dial M for Murdoch, sets the context for tonight's much anticipated launch of the iPhone 5

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Its reputation is almost as shiny as its iPhone, the latest model of which is being announced with characteristic brio in San Francisco today. Since Steve Jobs rescued Apple in 1997, its trajectory has, extraordinarily, resembled that of an aircraft taking -off. First in 1998 came the stylish iMac, followed in 2001 by iPod, in 2007 the iPhone and in 2010 the iPad.

Each revolutionised its market; and each displayed the essence of the company’s DNA: functionality, innovation and, most of all, beautiful design. Those clean lines and curves, bold and soft colours, gadgets solid yet sleek, made computing – for the masses, for the first time - exciting and pleasurable.

Those products could not even be imagined in a recent computing past dominated by dull grey boxes.

On a grander level, Apple has revolutionised the way we interact with each other, and with culture and entertainment: music, films, television, games and books – all of which can be accessed through its land-grabbing iTunes store. Old ‘content’ industries – record companies, book publishers and newspapers – have been left gasping.

Investors have been commensurately rewarded: at $617 billion, Apple is the most highly-valued business in the world. Its shares are worth 90 times more than they were a decade ago.

Yet, despite the vast riches showered upon shareholders, its future is uncertain. More than any other sector, tech firms have to innovate; and it’s not clear where the febrile, inter-connected world is heading; what the wired world will look like in five years, never mind ten. The near-halving of Facebook shares since its flotation in May aptly demonstrates this fickleness.

Business is littered with faltering companies-of-tomorrow, from Kodak to Nokia, from Myspace to Yahoo; BlackBerry maker RIM is a perfect example of a firm which got left behind, by the iPhone.

Competitors, especially Google, with its Android operating system for mobiles – and probably start-ups incubating in Sillicon Valley now – pose a threat.

Indeed, unlike its predecessors, the iPhone5 will not carry an app for the world’s most popular web-video service, YouTube, probably because it is owned by Google and has developed ads for mobile viewers: Apple is (understandably) worried by a competitor.

In Apple’s favour, it has accumulated a global fan-base and ample goodwill. Still, in its rise from arthouse also-ran to Wall Street champion, it has lost a little of the underdog cool of its David-against-Microsoft days. It is now Goliath.

Under the notoriously arrogant (yet brilliant) Jobs, the company demonstrated a prickliness, such as when, two years ago, it starkly denied – then humbly accepted – reception problems with the iPhone4.

Then there is its record on labour rights. A spate of suicides two years ago drew attention to the harsh, militaristic conditions at the Foxconn plant in China. In March, an audit commissioned by Apple from the Fair Labor Association reported "serious and pressing" concerns about excessive working hours, unpaid overtime and other failings. A New York-based NGO, China Labor Watch, found that conditions were even worse – “deplorable” - at its other Chinese factories. There is no evidence that Apple’s workers are treated any worse than, say, Samsung’s – but what is telling is the company’s response. In June, the first line of a letter from CLW’s executive director Li Qiang to Apple’s chief executive Tim Cook read: “Dear Mr. Cook, I have written to you many times before but have never received a response.”

Most consumers, of course, don’t know or care about labour rights, but, in the long-term for any business, a slide from confidence to hubris can be corrosive.

To succeed, Apple needs to be big, innovative and trendy. At the moment, it is managing to be all three. The question is: how long can it - and others in the dizzylingly-fast tech space - continue to pull off that impressive trick?

twitter.com/martin_hickman

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