The iPhone 4 Is Selling Well

If Apples iPhone 4 wasnt selling as well as it is, it would make sense for the company to release the iPhone 5 this fall. But the smartphone is selling extremely well. In fact, Apple announced that during the last-reported quarter alone, it sold more than 20.3 million iPhone units worldwide. That doesnt seem to indicate times are tough or that Apple urgently needs a new iPhone.

One of the reasons Apple likely waited this long to release the iPhone 5 is that it wanted to deliver as many features as possible. Giving itself more time would allow for that. Perhaps it would be a good idea for Apple to wait even longer to offer up its next smartphone. After all, the longer it waits, the more capable components it can add to the device. Shouldnt that be one of its goals?

If Apple had to look across its product line and determine which product should be updated at the end of this year, its the iPad 2. That device is facing the most competitive pressure due mainly to the Samsung Galaxy Tab 10.1 and the many 4G-equipped tablets coming to stores this year. Simply put, it would make more sense to offer a 4G-ready iPad 3 this fall than a new iPhone 5.

One of the key things companies must always consider is whether or not consumers are still happy with their products. The longer devices sit on store shelves, the more likely consumers will believe theyre becoming obsolete. But right now, thats simply not the case with the iPhone 4. The device is still a top choice for consumers, and its not obsolete. So, why supersede it with a new product?

Over the last several years, Apple has offered up new iPhones like clockwork. The devices were announced at the Worldwide Developers Conference and released shortly thereafter. The policy, while fine for sales after the device launched, hurt Apples sales prior to WWDC when consumers simply waited to see what it would offer next. By waiting until next year, Apple can throw consumers a curve ball and keep them guessing (and buying) going forward.

If Apple felt more competitive pressure in the smartphone space, it would make sense for the company to offer a new iPhone. But when it comes to Android handsets, thats simply not the case. Sure, all the Android phones are outselling the iPhone 4, but no single Android device is. Until that situation changes, why should Apple rush to release a new smartphone?

Aside from Android, its important to note that no other platform, including the BlackBerry or Windows Phone 7, is even coming close to matching Apples market share. BlackBerry devices are losing their appeal to both consumers and enterprise users while Windows Phone 7 devices have gathered dust on store shelves. Realizing that, it would make more sense for Apple to make as much from the iPhone 4 as possible, and worry about the iPhone 5 next year.

One of the common issues with the iPhone has been unit shortfalls at launch. Consumers line up for the devices each year, and unless they pre-order the device, many arent able to get one on launch day. By waiting until next year, Apple could potentially nix those problems by placing production orders early and often, and having an ample supply ready to meet demand.

One of the nice things about waiting until next year is that Apple can wait for component prices to drop a bit before it puts the iPhone 5 into production. Right now, the best components on the market are expensive, compared with those they replaced. But early next year, prices will likely drop and then iPhone production costs will decline. Apple can use that either to price the iPhone 5 more affordably or generate even higher margins on a per-unit basis. Either way, its a win for Apple.

One of the complaints many consumers have with their mobile products is that they dont come with enough storage. The iPhone 4, for example, maxes out at just 32GB. With video becoming more popular each day, mobile customers want as much storage as possible. However, storage is expensive, which has stopped companies from delivering tons of it. If Apple waits a bit, though, storage costs should come down, helping make the addition of more capacity a bit easier in the iPhone 5.