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Day October 5, 2011

Why is there no iPhone 5?

I’ve been asked what will be the effect on the market of the iPhone 4S. Actually the question was what would be the effect on the market of there being no iPhone 5.

I’d answer that the iPhone 4S is a product designed to compete for two markets: (1) half the current iPhone users who bought a phone prior to the iPhone 4 and (2) non-iPhone users, typically non-smartphone users.

I’ll describe each market briefly.

The current iPhone users

Tim Cook said that half of all iPhones sold to date have been iPhone 4′s. That means that about 70 million iPhone 4′s have been sold. Those are not a target market because of three reasons:

  1. The vast majority of those users are still paying for their iPhone 4 through the subsidy model used to sell them and to change phones today would incur a cash penalty.
  2. Customer satisfaction surveys show that they have 90%+ satisfaction rating for their iPhone 4 and we can therefore assume that they are not looking for something better
  3. Their iPhones are practically new and they still work and are upgradeable.

The other 70 million or so iPhone users have either a 3GS or a 3G iPhone. These are a very different market for three reasons:

5by5 | The Critical Path #9: Getting To Know You

Dan and Horace talk about some of the more profound implications of “intelligent assistance” in personal devices both in terms of business models and in terms of industry dynamics. Getting assistance is an implied bargain we all make as internet citizens but what do we pay for that assistance?

via 5by5 | The Critical Path #9: Getting To Know You.

This got a bit deep.