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The iPhone 5 is a surefire hit, but faces long term challenges

by David Needle

September 11 2012

Apple shouldn't have any trouble getting current iPhone owners to buy the new iPhone 5.
Apple shouldn't have any trouble getting current iPhone owners to buy the new iPhone 5.

When Apple turns on the metaphorical "iPhone 5 for Sale" switch tomorrow it’s all but guaranteed to sell millions of the devices in the first week of availability.

Apple launched the iPhone 4S around this time last year and sold a million units the first day, a record number even though its new features were considered incremental. 

Frost & Sullivan said today that it expects Apple to sell between 1.5 to 2 million iPhone 5s within the first day. 

But a lot has happened in the year since the iPhone 4S was released. Apple’s move to ship the less than revolutionary iPhone 4S gave competitors a chance to catch up. 


The result has been a bevy of smartphones with bigger screens, NFC chips for mobile commerce and other features that made the devices more attractive to many buyers than the iPhone. 


“The Androids are taking over the world of smartphones,” said IHS analyst Daniel Gleeson. 


In a report released earlier today, IHS says it expects worldwide shipments of Android phones to reach 451 million in 2013 and cumulative shipments of smartphones based on Android to go over a billion by the end of next year. 


By contrast, IHS forecasts cumulative shipments of iOS-based devices will reach 527 million in 2013 and won’t reach 1 billion until 2015. 


Of course Android devices are made by scores of companies so for Apple to have about half the market all to itself next year is still an exceptional business. 


And with the iPhone 5 Apple will match or trump its rivals on the technology side. The new iPhone is expected to have a larger 4-inch screen, support NFC, include improvements to Siri and a faster processor, better camera and a smaller dock connector, which is expected to be a part of all future iOS devices as well. 


"No one can deny that Apple is the only smartphone vendor whose focus transcends beyond the hardware feature set to creating the overall ecosystem,” Abhishek Chauhan, Senior Consultant for Frost & Sullivan’s ICT Practice in South Asia & the Middle East.


“By creating a formidable ecosystem with an abundance of content, services and applications, Apple has won over millions of end users, who just have to have the next Apple product,” he added. “


“However, other vendors are also now building their own ecosystem. Proliferation of Android apps and emergence of Google Play app storefront threatens to slow down the growth of Apple.” 


Winning over smartphone buyers -- watch out for Amazon?


Frost & Sullivan thinks Apple will have no problem winning over the Apple faithful, i.e. current iPhone customers to the new iPhone 5, but convincing customers of competing devices to switch to Apple could be a challenge. 


Google for one is building up its Google Play store to compete more effectively with Apple’s App Store. And although the rumors Amazon would announce a smartphone last week turned out to be false, Pranabesh Nath, Frost & Sullivan Research Manager in the ICT Practice in Asia Pacific, thinks it could still happen. 


"Depending on how far Amazon wants to take the platform strategy in its search for platform control and profits, we may even see a smartphone from Amazon in the near future as it is the single largest point of content consumption,” said Pranabesh. 


And then there’s Microsoft. Pranabesh says he expects Microsoft to ramp up its service portfolio once its Windows 8 platform launches later next month. 


Microsoft “may be a very powerful contender in the consumer as well as enterprise side," said Pranabesh.

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  • David Needle
    1 year 7 months ago
    Good points. And you seem to be confirming a point made in the article that Apple will do fine with folks already in its camp, winning over others is going to be a bigger challenge.
  • Wicked1
    1 year 7 months ago

    Sorry, but the benefits of Siri are way overblown. I know of no friends who have said they are going to buy an iPhone so they can use Siri. There have been any number of articles about people who were initially enthralled by Siri, but have since abandoned her.

    Citing the size of the Apple app store is also way overblown. Who in their right mind decides to buy a piece of hardware because one app store (Apple's) has 600,000 apps versus "only" 510,000 Android apps? Once any platform gets over 100-200,000 apps it's just a matter of numbers competition.

    I have an iPod Nano, MacBook Pro, and a Mac Pro but NEVER use the Apple app store or iTunes. I refuse to be "locked" into one vendor's proprietary world view.

    I've come to realize over the years that most Apple folks are fairly limited in their desire to tinker with things - hardware, software, etc. I've had PC's most of my life and really enjoyed tinkering with the innards.

    While the Mac OS has some nice capabilities, I've learned that, for example, Finder and Spotlight don't hold a candle to Windows Explorer - I would dare to say Finder and Spotlight are brain dead by comparison. (Open up Finder and sort the files/folders on a drive - the folders are buried somewhere down the list together, whereas in Explorer they're listed at the top and all other files are then listed alphabetically below by type. Search for an Illustrator file in Finder or Spotlight and it will bring up EVERY file that has "ai" in the extension, including those with an "ait" extension or any other variation - Explorer only lists the "ai" extensions. Better yet, all the files in Explorer are listed by their full path and you can sort those files by location - in Spotlight you have to click on an individual file to see it's actual location on the system - a ROYAL pain.)

    By the way, my current cell phone is a Sony Xperia Arc S, which I love and my next cell phone will likely be a Sony Xperia Ion.

    In that regard, I only buy unlocked cell phones so I can update, tinker to my heart's content - something most iPhone and Mac users would never consider.

    I guess the main difference between PC/Android and Mac users is PC/Android users more commonly want to know why/how their hardware works, the vast majority of Mac users couldn't care less about that aspect of their hardware (or software, for that matter).

  • David Needle
    1 year 7 months ago
    Fair point. I don't expect any clear, outstanding break out new features, but the advances in Siri will continue to give the iPhone an an edge over others and as mentioned the 4G will be available in some regions where 3G isn't. As always, Apple's biggest trump card is the continued growth of the App Store and the overall user experience it's able to provide. Thanks for the comment.
  • Xennex1170
    1 year 7 months ago

    "And with the iPhone 5 Apple will match or trump its rivals on the technology side. The new iPhone is expected to have a larger 4-inch screen, support NFC, include improvements to Siri and a faster processor, better camera and a smaller dock connector, which is expected to be a part of all future iOS devices as well. "

    ?? Outside of the 4" screen (behind) everything else listed is at best matching what is available with competing smartphones.. What do you imagine the iPhone5 will trump with?

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