Premium iPhone share growing as consumers choose iPhone 5 over Apple's legacy models

Posted:
in iPhone edited January 2014
More iPhone buyers this year are opting for Apple's latest model, the iPhone 5, than in previous years, suggesting more customers than ever are willing to pay for the best device available.

A new survey of more than 1,000 U.S. smartphone buyers by Morgan Stanley and AlphaWise found that 86 percent of respondents planning to buy an iPhone said they would choose the iPhone 5, which starts at $199 with a two-year service contract. In comparison, the same poll a year ago found that 82 percent said they would purchase the iPhone 4S, which at the time was Apple's latest model sold at that same price.

Morgan Stanley


In the December 2012 survey, 10 percent of customers who plan to buy an iPhone said they would choose the iPhone 4S, which sells for $99 with a new two-year service contract, while 4 percent said they would choose the iPhone 4, available for free with a contract.

In the same survey a year ago, 15 percent of customers said they would choose the iPhone 4, which was then sold for $99, while 3 percent opted for the iPhone 3GS, which was late 2011's free-on-contract handset from Apple.

Analyst Katy Huberty noted that the improvement in customers opting for the latest model is likely due to the fact that this year's model is a major upgrade with a redesigned exterior, larger 4-inch display, and high-speed 4G LTE connectivity. In comparison, last year's iPhone 4S model looked largely the same as its predecessor, the iPhone 4.

The survey from Morgan Stanley and AlphaWise also found that Apple leads the smartphone industry in customer retention. Among those surveyed, 83 percent of iPhone users said they plan to buy another iPhone, a 10-point improvement from a year ago.

Morgan Stanley


Apple's first-place finish was well ahead of Samsung, which has a 63 percent retention rate among users. However, customers' preference for Samsung grew significantly, surging 26 points from the 37 percent retention it had in the 2011 survey.

The poll also found that 64 percent of U.S. iPhone buyers had previously owned an iPhone. That's up 23 points from the 41 percent who were previous iPhone purchasers in 2011.
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Comments

  • Reply 1 of 58
    This year's model is à major update : smash in the face of initial commenters ...
  • Reply 2 of 58

    Quote:

    Originally Posted by AppleInsider View Post



    More iPhone buyers this year are opting for Apple's latest model, the iPhone 5, than in previous years, suggesting more customers than ever are willing to pay for the best device available.


     


    Of course. People wanted the larger screen last year and it didn't happen. As well as the 4S sold I still believe it could have been much better had Apple chosen a 4" screen last year.

  • Reply 3 of 58
    solipsismxsolipsismx Posts: 19,566member
    Of course. People wanted the larger screen last year and it didn't happen. As well as the 4S sold I still believe it could have been much better had Apple chosen a 4" screen last year.

    Do you think it still wouldn't be the most popular iPhone sold 3 months in if hadn't been 4"? I think every year the new iPhone has outsold the previous model. Didn't Cook state that each new device is outselling all previous devices combined?
  • Reply 4 of 58

    Quote:

    Originally Posted by SolipsismX View Post





    Do you think it still wouldn't be the most popular iPhone sold 3 months in? I think every year the new iPhone has outsold the previous model. Did Cook state that each new device is outselling all previous devices combined?




    I don't understand your query.

  • Reply 5 of 58
    solipsismxsolipsismx Posts: 19,566member

    I don't understand your query.

    Your comment implies that it's only the most popular iPhone because the display is larger by 0.5".
  • Reply 6 of 58
    icoco3icoco3 Posts: 1,460member


    Bestbuy has the 4S for $49.99 until around Jan 5th.  A good one for my wife and the price is just right to get her an upgrade.  She won't need anymore than that.

  • Reply 7 of 58
    drblankdrblank Posts: 3,383member

    Quote:

    Originally Posted by island hermit View Post


     


    Of course. People wanted the larger screen last year and it didn't happen. As well as the 4S sold I still believe it could have been much better had Apple chosen a 4" screen last year.



    I have to agree with you.  I personally think that Apple should make at least 2 different screen sizes having the 4 inch as one and then another at around 4.5 or 4.6. I think there is enough market demand for a larger sized screen, but they have to be careful not to make it too big.  I think 4.8 is too big, and 5 inch is just, well, dumb looking.  I could see Apple eventually coming out with a 5.5in tablet or something like an iPad micro.

  • Reply 8 of 58

    Quote:

    Originally Posted by SolipsismX View Post





    Your comment implies that it's only the most popular iPhone because the display is larger by 0.5".


     


    The story implies [actually it "states", not implies] that even more people are opting for the newer device over the old iPhones. I'm saying that the increase in percentage of people opting for the new device is because of the 4" screen. (I could be misreading the story but it sounds like an even higher percentage of buyers are opting for the newest device rather than buying one of the older iPhones.)

  • Reply 9 of 58
    drblankdrblank Posts: 3,383member

    Quote:

    Originally Posted by icoco3 View Post


    Bestbuy has the 4S for $49.99 until around Jan 5th.  A good one for my wife and the price is just right to get her an upgrade.  She won't need anymore than that.



    Yeah, I run into a lot of women that like small phones.  They typically aren't the male geek oriented mentality where bigger is always better.  It's a macho thing.  Personally, because I'm older and need a decent sized screen just to see what's going on, for me, I would happy with a 4.5 or 4.6 inch screen, as long as it's thin and lightweight.  I'm more than happy with the 9.7inch iPad.

  • Reply 10 of 58
    rogifanrogifan Posts: 10,669member
    Apple is doomed! Sell sell sell APPL. :D
  • Reply 11 of 58

    Quote:

    Originally Posted by drblank View Post


    I have to agree with you.  I personally think that Apple should make at least 2 different screen sizes having the 4 inch as one and then another at around 4.5 or 4.6. I think there is enough market demand for a larger sized screen, but they have to be careful not to make it too big.  I think 4.8 is too big, and 5 inch is just, well, dumb looking.  I could see Apple eventually coming out with a 5.5in tablet or something like an iPad micro.



    I don't see Apple making a tablet any smaller. I have the iPad mini, and anything smaller wouldn't work at all for iPad-centric apps. You'd be forced into the huge majority of Android type of tablet apps - stretched-out phone apps. No thanks. 

  • Reply 12 of 58
    solipsismxsolipsismx Posts: 19,566member
    The story implies [actually it "states", not implies] that even more people are opting for the newer device over the old iPhones. I'm saying that the increase in percentage of people opting for the new device is because of the 4" screen. (I could be misreading the story but it sounds like an even higher percentage of buyers are opting for the newest device rather than buying one of the older iPhones.)

    Oh, I'm not ruling out that the higher intention to buy (4% growth) and higher retention rate (10% growth) are due to the screen size but I don't see any evidence that correlates to a larger display being 'the' reason the iPhone is doing slightly better this year. This iPhone had the most radical changes of any YoY update. It could also be that isn't a new casing and not the new internals in the previous year's casing. What was the rise and fall of the intention to buy and retention rate between the iPhone 4 and iPhone 4S?
  • Reply 13 of 58

    Quote:

    Originally Posted by drblank View Post


    I have to agree with you.  I personally think that Apple should make at least 2 different screen sizes having the 4 inch as one and then another at around 4.5 or 4.6. I think there is enough market demand for a larger sized screen, but they have to be careful not to make it too big.  I think 4.8 is too big, and 5 inch is just, well, dumb looking.  I could see Apple eventually coming out with a 5.5in tablet or something like an iPad micro.



     


    I have to say that I don't think it would hurt to have a phone that is larger than 4". Pricing might be a problem.


     


    I think that if Apple released a slightly larger phone with the same pricing as the iP5 and then was able to drop the price of the iP5 then you might have a lethal combination. Having said that, I still think there is a huge market for the 3.5" 4S but maybe with an updated processor.

  • Reply 14 of 58
    gatorguygatorguy Posts: 21,291member


    For anyone interested in grabbing an iPhone5, now Fry's has joined Walmart in dropping the price to under $130 for the 16GB model. Only a dollar separates the two with Fry's coming in at $126, with a two year contract of course.


    http://dealnews.com/Apple-iPhone-5-16-GB-Smartphone-for-126-in-Frys-stores-32-GB-for-226-more/648390.html

  • Reply 15 of 58

    Quote:

    Originally Posted by SolipsismX View Post





    Oh, I'm not ruling out that the higher intention to buy (4% growth) and higher retention rate (10% growth) are due to the screen size but I don't see any evidence that correlates to a larger display being 'the' reason the iPhone is doing slightly better this year. This iPhone had the most radical changes of any YoY update. It could also be that isn't a new casing and not the new internals in the previous year's casing. What was the rise and fall of the intention to buy and retention rate between the iPhone 4 and iPhone 4S?


     


    Price is the difference between 4 and 4S.


     


    I still think size was the reason for the increase in buyers for the iP5*. You'll notice that there was a drop off in buyers of the 4S, a drop off that was larger than last year, apparently, between the 4 and 4S.


     


    [*Size was the only thing that was truly different]

  • Reply 16 of 58
    solipsismxsolipsismx Posts: 19,566member
    Price is the difference between 4 and 4S.

    I still think size was the reason for the increase in buyers for the iP5*. You'll notice that there was a drop off in buyers of the 4S, a drop off that was larger than last year, apparently, between the 4 and 4S.

    [*Size was the only thing that was truly different]

    1) No! The iPhone 4 and 4S are different internally. The 4S also took the same price as the 4 when it became the flagship model last year.

    2) No! The iPhone 5 is significantly lighter and thinner, has LTE, much faster in pretty much every internal component including the A6 ASIC no longer being a Cortex chip, and new connector to boot. How can you say that the display is the only thing that was different?
  • Reply 17 of 58


    its all about LTE


     


    The monthly fee is the same regardless of choosing:



    • "slow and barely works where I live" 4g


    • or the "damn this is really fast" LTE


     


    So spending $200 extra for the 5 is inconsequential.


    $200 over 24 months... is about $8 extra a month, when you are spending $100 per month for service.


     


    For me and those in my area, the small % premium of an iPhone 5 is well worth it for something that actually works.

  • Reply 18 of 58

    Quote:

    Originally Posted by SolipsismX View Post





    1) No! The iPhone 4 and 4S are different internally. The 4S also took the same price as the 4 when it became the flagship model last year.

    2) No! The iPhone 5 is significantly lighter and thinner, has LTE, much faster in pretty much every internal component, and new connector to boot. How can you say that the display is the only thing that was different?




    2. Take the differences between the 4 and 4S and the 4S and 5. Add them all up and you've only got 2 real differences when comparing the 3 models, one over the other (ie. the processor was as different in the 4 to 4S as the from the 4S to the 5 etc.) Yes, lighter and thinner could be one of the real differences but "I" "believe" that it was the difference of .5" that made the real difference.

  • Reply 19 of 58
    solipsismxsolipsismx Posts: 19,566member

    2. Take the differences between the 4 and 4S and the 4S and 5. Add them all up and you've only got 2 real differences when comparing the 3 models, one over the other (ie. the processor was as different in the 4 to 4S as the from the 4S to the 5 etc.) Yes, lighter and thinner could be one of the real differences but "I" "believe" that it was the difference of .5" that made the real difference.

    Whether you believe it or not you cannot justify that there is a 4% increase on intention to buy and a 10% increase on retention rate because of the difference in screen size. There is simply no data to support your opinion as fact.

    And lets also remember this is the 5th phone that had a subsidy. IOW, the iPhone 5 is the start of the 3rd two-year cycle for many buyers. I'm not sure what that means for buyers but it should be considered that most probably aren't buying a new iPhone every year and that a new case design has more "newness" over using the same case design for a 2nd cycle.
  • Reply 20 of 58
    My sister in law said her sister in law is getting my niece a 4 and paying the first year of service for Christmas. I said, "really? The free phone? Couldn't just swing to the $47 4S?

    It is about time that we Americans stop being fixated with 'free' phones and high monthly rates. I am hoping the tmobile plan next year disrupts the industry.
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