iPhone 5 Faces Mobile Market Unlike Anything Apple Has Known
In the 24 hours leading up to release of the iPhone 5, the tech world is trying to get a handle on just how big the launch of Apple's latest smartphone will be. While expectations for any Apple event are always high, some analysts are cautioning that the iPhone 5 will face some serious challenges.
On the extreme positive side, one analyst believes the iPhone 5 could shift the mobile market along with entire economy.
The Apple iPhone 5 is expected to bring about the "biggest upgrade in consumer electronics history," Topeka Capital analyst Brian White said in a research note this week, according to SlashGear.
White expects that while Apple sold 1 million iPhone 4S smartphones in the first 24 hours, the iPhone 5 is likely to rack up 1.3 million to 1.5 million preorders in the same windows. While Apple sold 4 million iPhone 4S units in three days, White expects Apple to sell potentially 5.5 million phones in that time.
In the September quarter, wrote White, Apple could sell between 10 million and 12 million iPhone 5 devices.
With rumors of the iPhone 5 and its launch nearly a year in the making, White isn't alone in his sky-high expectations. Jefferies analyst Peter Misek earlier this month wrote that the iPhone 5 launch "will be the biggest handset launch in history."
With 170 million global smartphone subscribers coming out of contracts this year, and 450 million more next year, Jefferies sees "significant and very fertile ground for the iPhone 5's success," Misek wrote.
Stephen Baker, director of NPD Group's Industry Analysis, also expects Apple to have a very successful iPhone 5 launch. But in a Sept. 11 blog post, he tempered the hype surrounding Apple's Sept. 12 event by suggesting that there's little low-hanging fruit left.
"The iPhone 5 will launch into a U.S. smartphone market with very different dynamics than the launch window of the iPhone 4 or the iPhone 4S. And these dynamics have nothing to do with the strength of the new-product offering, its hardware configuration, its marketing, or even its competition," wrote Baker, pointing out an NPD study that found smartphone growth during the second quarter at just 9 percent, and with that attributable to the prepaid market.
The iPhone, as well as Samsung's phones, have continued to gain brand share over the past year and their joint share now exceeds 50 percent, which is likely to make it more difficult for Apple to easily take share from weakened competitors, because many of the easy share gains have already been accomplished. On the operating system side, iOS and Android have such dominant share that, as with brands, growing faster than the market will increasingly require taking share from a much stronger competitor, as opposed to merely vanquishing those who are already falling by the wayside.
On that wayside are brands such as HTC, Motorola and Sony, which have struggled to compete against Samsung for customers open to the Android operating system. During the first quarter of this year, Samsung overtook Nokia-which led the phone market for 14 years-to gain the top billing. Another leader, RIM, held just a 3 percent market share during the second quarter, down from 11 percent, according to NPD, while in a year's time, Apple grew its share from 28 percent to 31 percent and Android's share rose from 53 percent from 59 percent.
Apple has made quick work of converting Motorola and HTC users, among others, but it will be another story to take consumers from Samsung, which since the iPhone 4S's release has introduced the Galaxy S III, the Galaxy Note II, the Galaxy Tab 10.1 and the Galaxy Nexus, among other devices.
NPD's Baker adds that his comments in no way suggest Apple won't have "an extremely successful" launch, but simply that the challenges Apple now faces are greater.
"Blowing away all weakened competition, as Apple has done to this point, makes it infinitely harder to continue to blow away the remainder," wrote Baker, "because they are, by virtue of their current position, much more competitive than those that have fallen by the wayside."