What does $76 billion buy? A weak hardware update, nice services

Well that was underwhelming.

I’m rather surprised by the total mismatch between expectation and reality with today’s iPhone launch event.

When you’ve got billions upon billions of dollars sitting there at your disposal, expectations naturally run high.

As I’ve written before, the company does need to occasionally justify it’s huge valuation. Justification is delivered through delighting consumers.

Consumers are, I think it’s fair to say, not delighted this evening.

Where’s the iPhone 5?

Where’s the next iteration to the cool stuff?

Where’s the redefinition of the mobile platform as we know it?

No.

What we saw tonight was an exercise in steady-as-she-goes.

The new announcement — the iPhone 4S — is a complete and utter disappointment. There is no single magnet draw to the device for the consumer beyond it being broadly ‘better’.

Services? Well. They are impressive. Mightily so. iCloud, iMessage — I’m looking forward to seeing them hit the marketplace fully. The problem today is that it’s nothing new. They’re old. Indeed if you happen to know any semi-geek, they’ve probably had a version of iOS 5 running for a few months now.

Siri — the voice recognition system — that is smart. Again, it’s nothing new at all. That’s not to take away from the technical innovation, that is impressive. I am very much looking forward to using it, provided the service can handle my semi-Scottish, semi-British accent.

What we missed today was Steve Jobs. If he’d led the line up today, I think the reality distortion field would have held up nicely. I don’t think many people would have questioned the strategy. But when you start reading posts like this one from the FT (“Apple’s iPhone 4S disappoints investors“) you can clearly see something was missing from today.

Price pressure on the rest of the industry is going to be quite exciting to behold. Just what kind of damage will a highly competitively priced iPhone 3GS do to the mid and semi-low-end markets?

Given that there’s clearly an iPhone 5 coming at some point, how many people will be upgrading to the 4S? How many people will be queueing?

Me? I’ll definitely upgrade. But in an orderly manner. I won’t be queueing. I don’t see any particular need to do so.

It’s going to be exciting to see how consumers adopt the various iServices. I’m keen to see if iMessage begins to take attention away from SMS. I’m particularly delighted that finally the ‘frustrating’ issue of having to dick about with physical iTunes files appears to be coming to an end.

By failing to seriously delight the market, Apple has made it rather easy for the rest of the market to compete. Tonight’s event has given a lot of breathing space for the likes of Nokia — their big announcements on Windows Phone are due at the end of the month. There was a danger that some amazing statements from Apple could have overshadowed everything Nokia, RIM and the Android community put out this quarter.

Let’s be clear though: Apple certainly shouldn’t be underestimated.

Is it fair to say the shine has come off though? Quite possibly. We’ll need to wait until the next few big announcements to say for sure.