The Breakdown

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3 reasons why the Apple iPhone 5 will fail

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45351 full

Okay, I'm obviously taking a highly contrarian position here. But in the context of iPhone 5 mania, it's a worthwhile undertaking — especially given that an analyst at JPMorgan thinks that iPhone 5 sales could add a half a point — Half a point! — to U.S. GDP growth this year. The iPhone 5, which Apple is debuting tomorrow, could literally save the economy, which actually isn't all that surprising an outcome if you believe, as I sometimes do, that the U.S. economy these days consists of Apple, the auto industry, and little else.

The iPhone 5 isn't that different from the iPhone 4S. True, it's expected to incorporate features that newer Android phones already have. With 4G LTE service and a larger screen, the iPhone 5 should be faster than its predecessor and provide lusher viewing of photos, videos, games, and so on. The battery is also reported to be beefier. But so what? Is the iPhone 5 going to rock anybody's world? It's likely to be a commendable refinement/improvement on the former model. But world-rocking in the smartphone world seems to belong to the Android Nation.

The iPhone 5 will make the wireless providers very, very, very angry — angrier than they are already. Not that they have a choice about their rage. If they want to keep iPhone 4S customers and capture new customers with the iPhone 5, they'll have to sell the device and play by Apple's rules, heavily subsidizing what is far, far from an inexpensive smartphone. Apple racks up the profits (the iPhone is where the bulk of the company's profits come from). Verizon and AT&T see their profits chopped. How much longer can this pattern continue? Will the iPhone 5, of which many millions will be sold in a matter of weeks, be the last straw in this struggle?

The iPhone 5 won't deliver the growth Apple needs. If everyone who's been using an iPhone 4S moves to the iPhone 5 in short order, that will mean tons of sales for Apple. But will Apple be able to convert Android and even BlackBerry users (and maybe even Windows Phone users) to the new device? That's a big question. So is Apple growth prospects in the developing world, something my old CBSNews.com colleague Erik Sherman zeroes in on.

Bottom line: Crazy as it may sound, even adding half a point to U.S. GDP may not be enough to make the iPhone 5 a glorious success.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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