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:

  1. They have already paid off their iPhones. They would not face any extra costs in switching to a new iPhone
  2. Earlier customer satisfaction surveys showed that they once had 90%+ satisfaction with their product so they are likely to stay with the brand.
  3. Their iPhones are getting old and beaten up after two years of use.

The current non-iPhone non-smartphone users

This market is so vast that it’s practically infinite. Over 1.5 billion phones are sold each year and Apple only has about 5% share. Therefore there is a vast pool of users who probably have been interested in getting an iPhone. These potential buyers will find the iPhone 4S an attractive alternative to buying a non-smart phone. They will also notice that there is now a range of price points for various iPhone models starting as low as zero.

Current non-iPhone smartphone users

I’ll add this market to complete the picture. This market is similar to the current iPhone 4 market because, except for Blackberry, most smartphones have been purchased in the last 12 months. This is especially true for Android phones. These owners of smartphones are unlikely to be interested in switching a phone that is “brand new” unless they have a very poor satisfaction with it. If they are not satisfied, there are many options, and iPhone is one of them. There are too many conditionals in this market and I therefore don’t think it’s a good target for the iPhone 4S.

So What are the prospects for the iPhone 4S (and other iPhones)?

The market for the new iPhones could then be summarized as follows: 70 million early generation iPhone users who are eager to upgrade (with 90% probability) plus a subset of a billion buyers of new phones next year who are looking for their first smartphone. These two markets iPhone 4S is targeting are “easy” because the competition is weak. It’s either “don’t upgrade my old iPhone” or “buy a dumb phone or another smartphone for almost the same price as an iPhone”.

I don’t see the result for units sold being different if there was a hypothetical iPhone 5 vs. the current iPhone 4S (and 4 and 3GS as a portfolio). In fact, a “better” iPhone would not be better at winning this competitive battle because the bar is so low.

So to answer the question in the headline: because an iPhone 5 is not needed meaning that it would over-serve the market and price itself out of contention.

The question will be very different a year from now when most early Android buyers will be looking for a new phone and when most iPhone 4 users (all 70 million of them) will be looking for a new iPhone. That would seem like a good time to introduce a new iPhone “5”.

  • Anonymous

    Horace, why did you switch from IntenseDebate? Disqus has horrible UX for commenters (I can’t easily keep track of which comments I made that are up voted) and on my Mac/Firefox it sometimes just doesn’t work.

    Please go back.

    • Canucker

      Because IntenseDebate comments are apparently not easily searchable (and Horace reads these comments). I agree that Disqus is a retrograde step in many respects – especially in its rating of commenter “track record”.

      • Guyhopp

        iphone4S = iphone for Steve

    • I feel your pain. I switched because I wanted to be able to search the comments. That was the promise. It turns out that I can only search 30 days’ worth which is practically useless. There are some other minor benefits with Disqus but there are problems too. I also don’t feel great about the switch. It seems there is no good answer to using commenting systems as collaboration tools.

      • Disqus is one of Fred Wilsons babies. Ping him he might be able help move search up the prioritization stack

      • unhinged

        Stack Overflow?

    • Anonymous

      While I can see that it can be a somewhat of an inconvenience not being able to boost the self confidence by tracking up votes, I must confess that I find Disqus much more stable in the rendering of the comment section (especially when using retrograde computers and browsers, as I do at my day job).

      • davel

        This new system is blocked at work. So I can read the article but not the comments. There is something about this software that my company and I assume others do not like. So it gets blocked and becomes unusable.

        At home the comments is more user friendly other than I have to enter my handle each time I comment.

    • Robbo

      I like the Disqus option as it works well on the iPhone. The previous system seem to just list all replies by date, which wasn’t very helpful in trying to follow threads.

  • Great article. I would point out that not all 3Gs users are done with their contract since it’s still the low-cost iPhone option.

  • davel

    I am still trying to understand what an iPhone 5 is or was supposed to be.

    It seems that the 4S has all the items rumored before its release. Other than the name what is missing?

    Surely it cannot be that people wanted a different shape.

    I understand people want something new and maybe a shape distinguishes it as this year’s model, but they improved many aspects of the phone. So I am not sure what all the disappointment is about.

    • I would just define the “5” as a more significant redesign similar to the switch from the 3 series to the 4 series. I should say that the logic laid out above was probably formulated early in the iPhone planning because it just makes sense given the life-span of the device and service plan.

      • davel

        I thought the big items for 3 to 4 was Apple’s internal CPU and the retina display?

        They gave us the iPad CPU and the retina display is still the crispest one available.

        The only thing I can think of is what others above mentioned which is LTE which was just not going to happen this year. Analysts know it because they ask about it on the calls and Apple shoots them down each time.

    • Anonymous

      internally I’d say the iPhone 4S is exactly what was rumored about the iPhone 5. The only functional difference I can think of is a bigger display on the rumored iPhone 5 (and maybe LTE?).

      • A bigger screen might just be wishful thinking, even for the iPhone 5. There are numerous reasons why Apple would keep the 3.5″ screen, not the least of which are related to the supply chain and keeping costs down and inventories flowing.

    • David Emery

      The 2 real technologies that I’ve heard mentioned as serious iPhone 5 wants are NFC and LTE. But neither are particularly prime-time, and Apple’s been pretty careful about which technologies it pushes versus those it accepts as ready/mature.

    • Anonymous

      Bigger screen. Sturdier design. NFC.

      • Canucker

        Not sure that bigger screens are as desirable as many imagine. Certainly, they appeal to some people. However, Apple made its bed with the retina display. Enlarging this would create major headaches for apps unless there was an equivalent drop in resolution – which defeats the object. Apple has set the resolution for retinal discrimination.

        NFC and LTE are still piloting with vendors and networks. LTE in particular is a joke when it comes to battery life but, fortunately, LTE dissemination is so limited as to make this less of an issue. People with 1st generation 4G chip devices are sacrificing battery longevity for a theoretical bragging right.

      • davel

        I agree on both counts. A bigger screen fragments the game market.

        NFC is immature. Google made headlines with being the first, but how many places can you actually use it? How easy is it for someone to read your info and steal your bank account?

        LTE was never going to be in this years phone. Tim Cook has said on this year’s conference calls that the LTE hardware is too power hungry. It wasn’t going to happen.

        I know people who have LTE phones and they keep it tethered to a cord so they can use it.

      • Anonymous

        Indeed. I know many people who want small phones even at the cost of a mini-screen, but more who want regular or even large screens, or keyboards. My 4.3″ HD2 has 44% more screen area than an iPhone ! And I’ll probably get a Galaxy Note next, which will have more than double (219%).That should allow me to browse the web without constant zooming, watch videos with pleasure, and read comics.

        Also, I don’t know anyone who wants a specific DPI. That’s a very artificial criteria invented by Apple to have something positive to say about their screens. Apple would win customers by having bigger screens, even with reciprocally lower DPI. I wouldn’t change my desktop 26″ for a 17″ with twice the DPI (I think that’s about the ratio between 4.3″ and 3.5″, area-wise), and I can’t read anything unzoomed on a iPhone, even though it looks nice. For videos, I actually re-encode at a very low rez (iPhone 1, 480×320 I think ?) because I can’t see a difference.

        NFC will be there in less than 2 yrs, which is the expected life of a smartphone. I never said anything about LTE, which I don’t care about. it doesn’t enable anything new, just makes existing stuff faster, whereas NFC does enable new capabilites.

        Edit: LTE does enable extra speedy battery depletion ^^

      • Waltfrench

        A 4.3″ screen at 13″ looks just the same as 3.5″ at 10.5″. Unless you can’t focus at the closer distance. The angle to your eye is the same. There’d be no justification for changing the total number of pixels and therefore no change in layouts.

        So far-sighted types, especially we over-40 types would like the bigger size. Against that is size, weight and use of about 50% more power (battery, and screen is the biggie) for the same brightness.

      • Apple leapfrogged NFC and is the first phone in the world to be released to the consumer market utilizing Bluetooth 4.0. (which can do the same thing as NFC)

      • Anonymous

        There’s no leapfrogging involved, it’s just a competing, incompatible, and at the moment apple-unique equivalent.

    • Walt French

      Tail fins!

      If there’s any subconscious undertone to the worries, it’d be that Apple is being taken over by a COO mindset. Some people wanted some racing stripes to signal that Apple was going to challenge Androids to drag races. That’s not Apple’s game, but this is obviously a phone developed under Jobs’s leadership; Cook wouldn’t have gotten credit, anyway.

      I wiki’d to find that the 3GS debuted June 09; closest US competitor was then Android 1.5 Cupcake. Nobody close in features, performance, power. Incremental was still “best” as Apple defined the high end in all ways. Today, a large fraction of technorati do speeds & feeds charts and poo-pooh “nothing new” CPU, 8MP camera, etc. They wanted ornamentation that Apple was never going to emphasize.

      I think that Apple purposely chose to de-emphasize the model upgrade in the cause of diminishing the latest & greatest appeal of Android phones. Excepting the nascent NFC, the iPhone line now has hardware parity or better across the (US subsidized) price spectrum. (I liked the FUD about “fake 4G” to neutralize LTE.) But if they can sell their proprietary s/w features, as they have FaceTime, it won’t matter how much people actually use them; they will have a compelling, easy-to-understand feature that Androids won’t.

      Simultaneously, Apple avoids the impression that it’s only peddling fashionable toys, which a new body style would reinforce. This is clarity of marketing message, bigtime: (1) Way-superior access to human features (hey, “androids”: not do-it-yourself, clunky system integration) with no competition; (2) first-class, evolved hardware; (3) great customer care re: obsolescence, world phone flexibility, etc.

      The most interesting aspect of the disappointment by pundits is that Apple was too conservative. Yet every tech commentator I’ve heard says that Siri and iCloud will be killer if Apple can actually deliver. Sounds like a big reach to me.

      • Anonymous

        “expensive toy” refers more to the fact that the iPhone
        – is very fragile,
        – has a very small screen that’s uncomfortable for many adults to use
        – has no standard ports so connecting anything (memory, projectors, KBMS..) becomes an adventure in cable management/stocking.
        – Also, the GPU performance, used only in games, does mean that Apple actually is emphasizing the toy (game console) aspect.

        Which is perfectly OK. But does not spell “hardware parity” to me.

      • Standard ports, haha. the only standard port these days should be a radio. Also your expensive toy comment has been lobbed at apple since the iPod so it is hard to take seriously.

      • Anonymous

        You mean when a remark sticks around for ages, it means it’s invalid ? Wow.

        As for radio, as long as I can’t charge, display… via radio, cables are needed, sorry.

      • Walt French

        I’m trying to figure out if you’ve ever read The Innovator’s Dilemma or even the Wikipedia Disruptive Technology page that spells out the ideas in fewer words, in case you’re busier than the CEOs who live this stuff every day.

        I can’t find and evidence that you relate ANY of the ideas that underlie this blog to the stuff under your nose; your complaints read like a parody of why firms fail from new paradigms.

        Or are you just pulling our legs?

      • Anonymous

        Nice ad hominem. Doesn’t answer any of the remarks, though ?

      • They’ve been answered elsewhere, ad naseum. The fact that you contend that the (screamingly fast, best in class) GPU is aimed at the gaming market bespeaks your lack of understanding of what GPUs are for in modern computers.

        In other words,1) you need to catch up; and 2) you need to do some background research to understand what others are talking about on this blog. You’ll also note that spec pissing matches are kept to a minimum here. There are other sites for that.

      • Anonymous

        And you need to stop parroting marketing fluff and doing ad hominems. Are you aware that facts and explanations actually have value ? ( more than fluff and ad hominems) ‘Coz your answer is singularly devoid of these.

      • I think you also need to look up the work “ad hominem”. It doesn’t mean what you think it does, apparently.

        I’ve told you what I think this site is about and that for your needs you might want to look for another site. The fact that you consider the discussions to be “marketing fluff” is evidence that you do not understand the subject material.

      • Anonymous

        ad hominem means attacking the person rather than the argument, it means exactly what I think it means, and it is a pitiful debating tool.

        One can discuss marketing and strategies without pointlessly philosophizing, using off-base metaphors, personal attacks, and just generally empty words. You should try it.

      • Dan Andersen

        So you believe it’s a “fact” that the iPhone “is very fragile?” There’s a difference between fact and wishful thinking, obarthelemy…

        The iPhone’s GPU performance is important to much more than just games as it is well exploited by apps like iMovie, photo editors, and music creation/editors.

        By the way, Apple eschews cable management in the iPhone. Its “cables” are radio waves.

      • Anonymous

        Yes about fragile. I dropped my HD2 a few times, still running. My sister-in-law dropped her iPhone once, both sides shattered. That’s anecdotal, do you have stats ?

        As for the cable management, I’m not aware that Apple uses wireless chargers (HP did, though), and wireless projectors and TVs are rare. Not having to carry around a few special cables all the time is nice.

      • Anonymous

        Here’s a stat for you…90% user favorability rating, more than 10% higher than the next phone. I doubt any of those 90% have a broken phone that they are rating positively.

    • Anonymous

      iPhone 5 will be a different form factor, for purely psychological reasons (i’ll admit that I would be hesitant to upgrade my phone to one that looked identical externally to my current phone, it wouldn’t feel entirely new & exciting).

      However I think the far more important announcement was Siri – it’s a feature that will spread across all future apple devices, and become as individually famous as the iconic devices it appears on. If anything the “S” should stand for “iPhone 4 – Siri edition”

  • DehydratedSnowman

    Horace, do you see any concern (probably with the “non-iPhone non-smartphone users”) keeping the iPhone 3GS and 4 available?

    • The concern would be leaving money on the table. We saw something similar with the iPod when Apple diversified the product portfolio and went after lower end markets.

      • Anonymous

        Apple probably makes more profit per device on the iPhone 3GS at $399 than it did on the original iPhone in 2007. iPhone 3GS build costs are likely sub $100 territory by now.

  • BrianGreenbaum

    What I thought your post was going to say after I read the title was something in regards to Apple’s ability to meet demand by sticking with the existing form factor. As you pointed out earlier, supply is Apple’s biggest issue. A 4S instead of a new 5 should help them avoid supply shortages by reusing some of the production capacity currently allocated for the IPhone 4.

  • Surely “half of all iPhones sold were iPhone 4 models” doesn’t imply that half of all iPhones still out there are non-iPhone 4 models. Wouldn’t some percentage of the non-iPhone 4 models have been replaced by some percentage of those iPhone 4 sales?

    So, if 140 million iPhones have been sold, and 50% of those were iPhone 4 models, surely there are far fewer than 70 million non-iPhone 4 models still “in the wild”.

    Did I miss something?

    • Walt French

      Maybe, only a few of those older iPhones died or got stuck in drawers. Most would’ve been given to the kids, etc.

    • Anonymous

      That was my first thought upon reading this article.

      Then I realized that my iPhone 3G is still being used by my girlfriend.

      I suspect that most original iPhones are not being used as phones anymore, but I’d bet that the vast majority of later models are still in play.

  • The market wanted Apple to force the service providers like AT&T to provide LTE. They wanted to find out that Apple developed an appropriate set of low-power chips and just didn’t tell anyone, and ATT was supposed to have stood on the stage to tell everyone that they installed LTE coast-to-coast. They also did want a different phone on the outside with a much bigger screen. AND: A pony in every box.

    • And unicorns! AND FAIRIES!

    • Canucker

      Yeah, the missing pony is a major bummer. Apple runs to its own drum beat and is content to allow Android OEMs batter each other to death in the search for marketshare, realizing that their stickiness is superficial. Jobs must have just loved it when Bezos announced the Fire. He did more damage to Samsung and Motorola than lawsuits ever could.

  • David Emery

    Well, my anecdotal ‘research’ (a friend, my wife and I) agree with your analysis. We’re all planning to upgrade from 3GS since we’re near or somewhat past the end of our 2 year contracts. Now the big question for me is Verizon or ATT; my friend was thrilled to have Spring as an option (his preferred carrier.)

  • Shawn Petriw

    Simply genius. Reading this blog, listening to the 5×5 podcast, and watching the price of my shares yo-yo makes my day. I’m not concerned in the least that my last purchase of 5 shares was at $419. Apple is nailing it again, while everyone complains. And the Great Horace Dediu in one of the very few that get it, and the only one who can so accurately explain it.

    • I agree.

    • Anonymous

      Couldn’t agree more. I absolutely love the Critical Path podcast, and the analysis on this site as well. It’s a breath of fresh air in a sea of braindead “analysts” who couldn’t analyze their way out of a paper bag. (Not sure if the air & sea metaphors make sense together, but the meaning should be clear anyway.)

  • Canucker

    Why did people expect an iPhone 5? The tea leaves were clear as day. 3G -> 3GS. 4 -> 4S. I actually prefer to buy the S version as its more mature and has greater staying power when it comes to future OS compatibility (vis a vis the 3GS is supported by iOS5 and is still being sold – wither the 3G). The 3G and 4 products are more early adopter/edgy but there is a price to pay. The Android and Windows Phone have to change their various dimensions and styles because that’s all that differentiates them in a crowded market of frequent releases. Apple has no other competitors for iOS, doesn’t prematurely push out technologies just to be seen to be on the bleeding edge and doesn’t prematurely retire products because the favour of the month has just been released. The value proposition is very different as are the business models.

    Siri is also a stealth missile across Googles bow. This is how search revenues will be wrestled from Google. Siri cuts out the middle man. It’s odd that it isn’t implemented in iPhone 4 (I don’t buy the performance issue). But it’s in beta. I think it’ll be released, perhaps in more limited form, for iPhone 4 as soon as Apple has a way to realize/capture search revenues from it.

    • Anonymous

      Great point on Siri .Siri on iPhone and Silk seem to make for interesting attack vectors on Google.

      • Canucker

        A Silk-like browsing option on iOS is just a matter of time (basically the time it takes for Apple to clone Google Maps). The umbilical chord of dependence and revenue is being choked. Apple is slowly disengaging its direct competitors: Samsung, Google and Microsoft. Meanwhile Dell, Sony and HP are busy juggling chainsaws by candlelight.

      • Can you imagine what Siri would be like on Android?

        Siri, where is the nearest Thai Restaurant?

        There is a Thai restaurant 1 block from here. Would you like to buy some tie-die t-shirts? Lowest prices!

    • Walt French

      I’ll repeat others’ speculation that the total Siri package needs a lot of RAM, and that the 4S has it, more even than the iPad2. I wouldn’t be surprised either that the “GPU” circuitry is involved in processing the voice into phonemes or whatever.

      But regards 4S vs 5: going head-to-head with Android’s game is a losing strategy. Apple wants to emphasize human-oriented features that EVERY potential customer can understand instantly (Siri, iCloud, camera); evolved hardware and hand-holding service. That’s a game they’ll win on, when you’re dealing with the 95% of people who don’t currently use a smartphone.

      • Canucker

        Very good point on the GPU – that is the major performance delta between the 4 and 4S (as well as RAM, supposedly). I do think that a lot of the heavy lifting could likely be done centrally though (like Silk) rather than locally.

      • Walt French

        …as Gruber thinks it probably is. Sez Siri doesn’t work in Airplane mode. That’s why I said “involved” rather than doing.

      • Anonymous

        RAM might be a factor. You’re probably right that the GPU is involved, since those are well-suited to DSP operations (exactly the kind needed for analyzing speech), and Apple has also supported OpenCL for several years:

      • Maybe it’s not that the iPhone doesn’t have the specs for Siri, but that Apple itself doesn’t have them (All those newly built servers are dedicated to iCloud). If they released Siri for All the iPhones, iPads, and Macs simultaneously, there’s no way they’d be able to keep it running for long.

      • Walt, did you find a definitive answer regarding the amount of RAM? I’m hearing both 512 MB and 1 GB. Apple is notorious for not releasing this info, iirc. We might have to wait for the inevitable tear downs.

    • Kit

      I’d say that people were expecting a new design because of the prolonged wait between models. The 4S would have been greeted much more enthusiastically back in June, even if that meant shipping without iOS 5. Management really should have managed expectations better, perhaps having leaked some reliable information when iPhone 5 cases started hitting shelves. And once show time started, iCard was not going to pick up the slack. Now, 24 hours later we are waking up to what a decent job Apple has done, but what a far cry from the reality-distortion field which used to launch products. A minor misstep which I hope management learns from.

    • Hossein

      Voice commands have been around for a long time, but were not used much. One might argue that there were usability issues or the performance has not been good enough and Apple has solved those problems with Siri. We will see — my guess is that there are deeper reasons why smartphone users do not use voice commands often. My evidence is that the performance of Voice commands on Android is fairly good and you can easily answer your emails and text messages with it (and I know few people who actually do that). But those are the minority of Android users.

      Steve Jobs has said multiple times that people do not search on their smartphones and claimed “we have the data.” No other source has confirmed that. In fact Google reports/claims their mobile queries are rapidly growing. I think Steve’s words were more wishful thinking and also threatening language to put off Google in an early stage of Android.

      • My understanding is that Siri is a bit more than voice commands. It’s actually an AI agent. You won’t need to switch from SMS to Calendar to email or maps. Siri will figure out which app is appropriate for which request that you make, as well as which “workflow” thread. If ask Siri to make an appointment with someone, Siri will put it on your calendar after making the appointment, show you a map of the appointment location, or remind you of the appointment automatically. There won’t be a need to say, “Open calendar, put appointment with Joe on calendar,” etc. Siri might have to ask, “Should I put this appointment on you work calendar?” (knowing from context which calendar to use), but several steps have been saved. Fewer steps = less complicated.

        I might be all wrong about the capabilities, but this is my understanding of Siri.

      • Anonymous

        Correct. This isn’t simply voice commands – this is real AI behavior we are talking about with Siri, the future has arrived.

  • Anonymous

    It has been said that iPhone 3GS users will upgrade to the iPhone 4S because they are due, but due to the hype and rumors prior to this year’s Apple conference, expectations were set and unicorns were expected. Because of this, we’re hearing more negativity but indeed, Apple knows what they are doing. (yes I truly believe this)

    Granted, this does leave an entry way for the naysayers that will turn to a “more” powerful phone for the sake of specs, e.g. Google’s Nexus Prime being unveiled next week in San Diego. I have yet to meet Android users who are 100% satisfied. Even though the UI and version of Android is nowhere near polished as Apple’s iOS5, these are the users that Apple can care less about. They deliver on the experience and I believe the iPhone 4S will do just that.

    I have a friend who is still using his original iPhone and was so excited for this week for the iPhone 5. Since the announcement, even he is debating on waiting for the 5 because he doesn’t want to be locked in to a 2-yr commitment and miss out on the opportunity of upgrade pricing when the 5 is indeed unveiled next year. As quoted from another blogger on whether or not to upgrade now, “you need the best phone you can get. we live with these things 24/7.” -@blam

    • I’ve been noticing more than a few Android fans touting how the Samsung Galaxy S II HD LTE blows the 4s away because of LTE and the larger screen. Aside from the questionable benefits of LTE and larger screens at the moment, they seem unaware or forget to mention that the Samsung Galaxy S II HD LTE will be a Korea only phone whenever it actually arrives on the market. No launch date was announced nor has the company spelled out when or if the phone will be available in other markets.

      My guess is that Samsung has problems getting enough of these big HD screens for a launch larger than its “local” market. I’m sure that Samsung will sell this phone or an equivalent in other markets eventually, but that supply chain can be a real bitch.

      • Anonymous

        I think your talking about the same phone that is being unveiled as the new google nexus phone next week for verizon.

        Makes little difference internationally.

  • Great article as usual. However, I also think some people fail to see the importance of the software being delivered by iOS5 and are too focused on the hardware. The iCloud will ensure that users are even more invested with the Apple ecosystem, effectively locking them in as users for many more years. Apple is thinking long term, and decided that there was no need for an iPhone 5. Just an overhaul of the hardware while emphasizing the actual benefits of the iPhone that differentiates it from the competition.

  • Anonymous

    There are still a lot of people in the market for their first smart phone. Apple is now on a tick-tock model similar to Intel and it makes a lot of sense. This way each loyal subscriber over a 2 year time frame always gets to use the latest industrial design.

    I think for the end consumer psychology this is an important strategy. It gives the consumer peace of mind that at least for the next two years they won’t be entirely obsolete. I expect Apple to sell near 30 million if not more iPhones this next quarter.

    • Canucker

      Intel – absolutely! It took PCs about 20 years to plateau in major performance gains. It’s going to take smartphones 4 years. What then? The differentiator will be design and software. The components will be commoditized. Apple knows this from the PC (and iPod) business. They are playing a longer game.

      • Anonymous

        Apple is playing a very long game. And this is a chess match.

      • Tatil

        Other than adding NFC, there was not much useful new tech Apple could put into the new version of iPhone. (NFC is not all that useful without a lot of support from banks anyways.) It is odd that tech nerd crowd would care so much about the outside case design and a random naming convention rather than the internals: A5, more powerful graphics, new camera. Does it really matter what Apple calls it, 4S, 5, Blue, TechHero, Matrix or whatever?

      • Anonymous

        This is not actually true. There remain a range of useful items that COULD be put into phones but which Apple have (so far) declined to use — and which the competitor companies appear unable to imagine using (easier to wait and copy Apple).

        Today those might include
        – low power laser — can be used as a laser pointer, to give a straight line whenever that’s needed (eg laying cables, doing woodwork), ranging (ie distance to an object)

        – 3D camera (at the time the camera is taking, you flood the area with a shaped IR pulse and time how long it takes the pulse to return to each pixel — now you have not just the image but distance info, and can apply computational photography to create 3D models of what you saw

        – bolometer (basically a thermometer, but one that would not be affected by the temperature of the phone itself)

        In the future we could add: energy regeneration from one or all of
        – motion/vibration of the phone
        – body heat
        – solar
        Ideally these would mean you’d almost never need to charge your phone, but even if they only extend battery life by 50% or so, that’s still nice in many cases.

        And so it goes — open up your imaginations.
        Eg imagine a watch (iPod nano 2013) wirelessly coupled to the phone so that, when the phone rings, I can look at my wrist to see who is calling and decide whether or not to take the call. Heck, the wrist could buzz softly and we’d never need ringing phones (with all the embarrassment and anger that generates in public spaces) again.


        You asked HW and that’s what I gave, but you could also do this on the SW side. Imagine an agent (let’s call it “Siri”) that knew that you were sleeping — because it monitors motion or whatever through your smart watch. When a phone call comes in, rather than ring it could say “Maynard is currently asleep. Do you REALLY want to wake him up, or would you rather leave a message?”

        again etc etc etc

      • unhinged

        handley, from your list I see nothing that cannot be implemented as a separate device that would plug into the iPhone (perhaps with integrated battery to compensate for the additional power draw of the non-recharging options).

        Now, I know you’re not generating an exhaustive list and there are going to be some items that make sense being part of the phone, but it’s not obvious to me what those would be. I suspect Apple has devoted some resources to analysing this particular aspect but will be weighing every additional component very carefully against a large number of criteria, such as power consumption, development cost, potential audience size and so on. Apple is of a mindset that it is better to perform such analyses in private rather than in public and I continue to be surprised by the number of people who express the opinion that because something is not in a shipping product Apple must not be evaluating it.

      • Anonymous

        The original iPhone set a new standard for phone form factors (all touch screen), today’s phones are alls imply variations on it. the only major divergence is from the odd unsuccessful dual screen phones about (Moto should bring the razor form factor back with two internal touch screens – just as an experiment.)

        Wake me up in 5 years when the iPhone 7 introduces a resizable 2.5″ to 7″ screen technology. 😉

  • Yowsers

    Siri seams to approach the “new input method” you’ve mentioned briefly before as an important element in the change-overs to the next big thing. Touch input has been designed to be (and is) quite intuitive, and this voice control seems set to take intuitive interaction to yet another new level (they call it beta stage, but it looks fairly polished to me.)

    But will it have the impact that touch has? I would think this voice control will have an impact on the non-smartphone upgrading population more so than the others. If it has the impact that touch did (that is, a compelling one), it might cut across all categories in the upgrade cycle.

    • To me, the interesting thing about Siri (apart from the interface itself) is that it will only operate on the 4S. I find it hard to believe this is purposeful – that is, the intent by Apple is to push the 4S by limiting Siri to it. Instead, I think it requires the raw horsepower that is associated with the 4S to function properly. That suggests that, while others may successfully implement a Siri-like interface, they too will require hardware that can make it function properly.

      It’s kind of like the touch interface on the iPad; others may and probably will emulate it, but not in anywhere near as polished a manner. And that’s part of what’s kept other tablets from being able to make headway against the iPad. [The exception, of course, is a blatant ripoff like the Galaxy, which is having to fight tooth and nail against Apple’s legal department to pull it off (for now).]

      Once again, Apple has held back this technology until it was well seasoned, and made sure it has the hardware to make the technology work almost flawlessly.

      • davel

        I think you are right. I would bet that some GPU functions or other embedded hardware in the new phone is necessary for some functionality. Siri looks very smooth, but I am not surprised it is beta.

        Language is a complicated thing. The fact that it is beta and only works in a few languages is key. It may take several years to expand to other languages.

        If they could do chinese it would seal the deal in china.

      • Canucker

        Makes me wonder how long it will be before we see people reporting that Siri gave them “bad” answers. Like Antenna-Gate, some bozo is going to complain that “show me boobs” will corrupt his hormone-crazy kid; “where is nearest high point” directs him to a crack house or “how intelligent am I” yields a list of local kindergartens….

        You’re asking the wrong question!

      • John

        Is this the new “the dog ate my homework”?

      • Anonymous

        Will Voice catch on though ? It has been available on the desktop for commands and data entry, on phones for voice dialing… for ages, and nobody uses that.

        The AI that comes with Siri might help, and people might prefer to use it through voice rather than typing, but that remains to be seen. I’ve played around with my Android Voice Search… I’d rather type.

        Also, entrusting an advertiser to make recommendations about restaurants, outings, … is iffy. Google very clearly separate ads from search results, I don’t know what Apple’s policy on these matters is.

      • Anonymous

        It’s likely Siri worked ok on the iPhone 4, but it wasn’t perfect – and why would apple introduce a radical new software product on a non-perfect hardware solution?

        Best to keep it on the best hardware possible for it’s introduction, and next year after Siri has proved a success, and the iPhone 5 is released, no one will care that it isn’t available on the original iPhone 4.

    • davel

      Language is more natural than fingers.

      When you make a phone call you are not using your fingers. Phones have prerecorded numbers so you dont have to dial.

      Speech is richer than text.

      However speech is hard. Many decades of research has failed to make a useful computer speech interface. Think of calling up some company and going through their menu. Saying a number like your phone number, account number, etc always is problematic. It is more accurate to type it in because the computer doesnt understand you. Why is that? Because speech is not natural for a computer, but it is natural for humans.

  • I largely agree with your conclusions, but I want to quibble slightly with your numbers. In particular, in your characterization of “The current non-iPhone non-smartphone users”, you say “Over 1.5 billion phones are sold each year and Apple only has about 5% share.” But to quantify this market segment, it’s more relevant that smartphones have a 33%-ish share (according to ).

    I have been thinking that the release of the new iPhone might cause a spike in iPhone market share, as the new iPhone attracts everyone who has been intending to switch but waiting for the new iPhone. (And the ‘waiting for a new iPhone to come out’ segment might be most vulnerable to the new iPhone having an insufficient number of unicorns.)
    But the iPhone sales numbers have been growing so sharply that I don’t feel certain that the ‘waiting for a new iPhone to come out’ segment is is a large share of the whole.

    • It was Tim Cook who said that they measure their share vs. all phones. He cited the 5% figure and said “We believe that, over time, all handsets become smartphones. This market is 1.5bn units annually”.

  • Luis Alejandro Masanti

    I think that this is all “Apple’s standard practices!”

    Put in the words of Steve: “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

    Maybe we can compare this with the iPod+iTunes (the order is not perfect)

    The first stage is a rampant introduction > original iPod > original iPhone
    Then, make it better…
    Then, build the ecosystem > iTunes > App Store
    Then, make the base wider > iPod mini/nano/shuffle > iPhone 4S, 4, 3GS
    Then, make the ecosystem wider > iTunes U + podcast > Siri…

    I think that the Siri introducction is the first step (dot) of a change in smartphone industry.

    On the other hand, also tipical of Apple is the “controlled” introduction.
    If Siri comes with iOS 5… Oct 12th would be the colapse of North Carolina Data Center (Remember MobileMe).
    With Siri an “only 4S” feature, the first weekend Apple will have to manage just a couple of millions iPhones…

    Horace, I would like to see your analysis on how will the lower priced 4 and free 3GS will help to expand the marketshare: maybe a lot of non-smartphone users decide to 3GS…

    • I think the “free” subsidized 3GS is going to be like that first hit of crack for a lot of non-smartphone users. They might not be getting Siri, but they’re getting roped into the whole Apple ecosystem and becoming Apple customers. They might not care about iCloud until they’ve come to rely on it, at which point it becomes harder to walk away. The ecosystem is very sticky!

      • Anonymous

        Is perhaps the no-subsidy 3GS price of $399 a far bigger deal than the “free” subsidized US price?

        Are people looking for a free phone on contract likely to make up much of the market who also are willing to pay $70-$80 USD a month for a smartphone voice+data plan?

        $399 off-contract is getting well into smartphone prepay handset pricing in the international market. It gets even more interesting when you consider some carriers may offer a phone subsidy when you buy a large amount of prepay credit (for instance, get a $100 off a phone when you prebuy $200 of airtime/data credit) – or alternatively give away free airtime credit with the handset purchase (buy a 3GS and receive $100 free airtime/data credit).

        $399 is still triple the price of the cheapest unsubsidized android handsets – but the phone build and user experience is so much greater that with a little bit of carrier incentive, the discounted iPhone 3GS lands squarely in the mass market ready to be snapped up.

    • Anonymous

      “With Siri an “only 4S” feature, the first weekend Apple will have to manage just a couple of millions iPhones…”

      This is a REALLY good insight.
      It certainly seems likely that the heavy duty lifting for Siri/Nuance is done remotely.

      On the other hand (and people forget this) there has to be SOME connection to the local device — it’s the local device that know who “Sarah” is and what “Mom’s phone number is” and what my songs are (so it knows how to interpret “play songs by Leonard Cohen”). Will Apple upload all this sort of data into the cloud for use by Siri? IMHO that makes sense — but you can imagine a certain class of people becoming paranoid about this. I’d say —- read the license carefully and see what it says about “If you activate Siri, Apple may upload [in encrypted form, blah blah] any and all sorts of info from your phone into its servers”

      OK, so assuming ALL the heavy lifting is done on servers, there’s no technical reason to limit this to iPhone4S — we could have it on any iOS device and any Mac.
      The question, then, is what is Apple’s interest?
      They COULD limit it, on the grounds that it would “force” people to buy iPhone4S. This strikes me as a silly argument — people will buy iPhone4S as fast as Apple can make them, regardless.
      The alternative is to treat Siri as a strategic asset, like iTMS —not a money center, but a way to get people to stay within the Apple eco-system. THAT would suggest that it’s in Apple’s advantage to get it running as widely as possible as fast as possible.

      But of course Apple (and anyone else) has no idea how popular it will be, and how many servers need to be provisioned. So a trial run of three months say, on iPhone4S only, allows them to gather this data, then with iOS 5.1 they can move it down to say all iPhones, then with iOS 5.2 all iOS devices, then with OSX 10.7.4 to macs.

      • Anonymous

        Oh, left out one thing.
        Another way to view this is that Apple will be running a large server farm, but there is the problem of paying for it. MobileMe was clearly a disaster. But you don’t want users to get used to things for free.

        So another way to spin it would be free Siri for iPhone4S — so everyone tries it and agrees it works well (or at least good enough).
        Then Siri for everything but iPhone4S is part of your “iCloud Pro” subscription for $25 a year, which includes the match-my-track non-iTunes song stuff, and further cool features as time progresses.

        Obvious services, in time, would be the kinds of things Google offers today — image recognition, text and voice translation, song recognition, etc etc.
        (Consider, eg, adding to the mix that you’ll get traffic data that is live, not the delayed-by-15 minutes traffic data of Google maps).

        At $80, with substantially less mail storage than Google offered, MobileMe was of no interest to anyone. At $25, with COMPARABLE services, and better integration, I think iCloud Pro is interesting. But that “COMPARABLE” services matters — Apple cannot afford to, once again, offer eg crappy translation that never improves while Google and Bing offer free translation that gets better every month. Convenience is worth a small cost — but a convenient crap service is worth nothing.

  • El Aura

    A good deal of the 2G and 3G iPhones might no longer be in their original owners hands, and their current second-hand owners will be unlikely to spring for a brand new iPhone (even a new unlocked 3GS might be too expensive for them). Additionally all those who bought a new 3GS in the last 15 months are unlikely to upgrade (for the reasons you cited).

    • Anonymous

      True, but due to accelerating sales volumes, those earlier devices only account for a small fraction of total iPhone sales.

  • Canucker

    Eight days….. The October 12th availability likely defines the minimum logistics window for shipping about 5 million devices to six major markets* assuming there is no local caching due to the security risk of leaks. Ironically, if another Apple employee had lost a prototype iPhone 4S in a bar, would anyone have noticed?

    *Australia, Canada, France, Germany, Japan, UK and USA

    • Anonymous

      October 12th is the rollout of iOS 5 & iCloud. October 14th is the release of the iPhone 4S (with preorders starting on the 7th).

      • Canucker

        OK – ten days 🙂

  • Bruno Martinelli

    Horace, I think your view is a bit US focused. I’m in Brazil, and as in most asian and european countries, we only have 1 year contracts for our phones. More than half of iPhones are selling overseas.
    But nonetheless, Apple made changes to the phone that make it worth it for us.

  • Are we seeing a “Tick-Tock” cadence?

    Siri, iCloud, iOS 5 == very aggressive leap ahead in services and software. The device hardware is a big leap forward with the A5 and “world phone” internals, but most hardware risks were taken back with the iPad 2. This year is an “S”-year for the iPhone. Software. S.

  • I think that when Apple launched 3GS (small refresh to 3G) it gave some breathing room to Android to gain traction with all their ‘speeds-and-feeds’ phones (Droid, Galaxy S, Evo..)

    I think they might do it again with the 4S when it comes to attract non-smartphone users. Especially if Icecream sandwitch and Nokia/WP7 are well executed (Siri’s hard to demo in a cellphone store compare to shiny eye-candy). The 4S is a great move for profitability, but maybe not as good for growth as a re-designed/larger 5 would have been?

    • Canucker

      There is no breathing room in this market. It is brutal. Don’t underestimate Apple’s ability to project the market ahead 3-5 years. If Apple felt it “needed” to release the iPhone 5 in the Spring of 2012, it would. It doesn’t and it won’t. Microsoft has a deeper understanding of this than Google. They also know that the ADD behaviour of the Android OEMs will exhaust them and we’re only on the second mile of the marathon. There is far more uncertainty around the future of Android than iOS or Windows Phone which accounts for the attempted land/marketshare grab. But if you cannot defend what you have grabbed by depleting your ammunition and out-distancing your supply line, well…. the British Expeditionary Force in 1939 comes to mind (or Rommel in 1944).

      • Anonymous

        Smartphones use ammunitions and supply lines ? Even at the metaphorical level, I don’t grok what you’re alluding to here ?

      • This blog and the comments are about the mobile business and various companies strategies, not so much about the phones themselves. We use metaphors to describe these strategies. Can you grok that?

      • Anonymous

        Not when the metaphor is about expanding consumables and stretching supply lines, of which the smartphone industry has… none ?

        I’m sure someone does have the insight to explain how that metaphor applies ? What consumables were expanded in driving Android’s market share to about 2x iOS’s, and which logistics risks were created ?

      • Canucker

        Sorry if I wasn’t clearer, I meant that Android OEMs are trying to stake out expansive marketshare in order to make up for the fact that they are essentially offering the same handsets. This marketshare may shrink if there is not a vibrant underpinning ecosystem. Unlike the PC market, there is room for more than two OSs (likely at least 4) but Android is built on shifting sands, unlike Windows Phone and iOS – not to say these systems will encounter tremors.

        As for ammunition, perhaps this will be in the Google ghetto handset due next year. Supply lines may refer to the power needed to keep the 4G chipsets humming for more than 2 hours.

      • Anonymous

        Thanks for the clarification.

        I do think there is a lot of differentiation in the Android market: phone size, screen sizes, screen technology, keyboards, gaming doodads, style… even camera and sound play a part, though not so much as ‘taste” choices as simply good vs bad ^^ All Android phones may run the same apps, but many people will be adamant about getting a huge screen, or a very tiny phone, or a keyboard… The talk a few months back was about too much fragmentation, now I guess the rhetorical pendulum has swung the other way ?

        I think the ecosystem thing actually limits the room available for OSes. It’s much easier to put together a phone, or an OS, than it is to get thousands of apps and oodles of content. I’d be surprised if we end up with more than 3 OSes sharing 90% marketshare, with a few extra marginal ones for super-feature-phones (the phone equivalent of what consoles are to the PC market, I guess). I do agree that Android has significantly less lock-in than iOS or Windows. That may be one of the reasons for its success though.

        The “4G sucks battery” argument doesn’t fly: if you don’t want it, don’t get it or disable it. The important thing is that people who want it can get it *now*. Next year, all new phones will benefit from new, power-savvy components. Being early to the 4G game does not preclude taking advantage of future advances: phones have a very short shelf life. It does mean getting a shot at 4G-adopters before other suppliers, though.

        The ammunition part I still don’t get. There’s not really a limited amount of phones that can be released ?

      • Canucker

        Yes, there is a strong effort among Android OEMs to fill out the space and this is leading to more choice. But this is where the spent ammunition comes in. Companies have limits to the budgets they can spend on developing new devices and advertising them. Apple has the advantage of tremendous economy of scale for everything from complex parts and down to case materials. The advertising budget of the Android OEMs must support many more devices and their longevity is artificially shortened. This is offset by innovation – when the performance curve is steep. At the point of stabilization of technology (which we are surely approaching), all phones start to look similar and differentiation becomes more difficult. Android does have differing form factors, sliders, etc but this is also burdening the OS for optimization. I am sure the fact that Apple has only three current models (4S, 4, 3GS) is behind the fact that iOS5 will run on every model (not to mention the iPad). How many Android phones released in 2009 or 2010 will run ICS (assuming its released by the OEM)?

        I agree the ecosystem is a limiting factor for numbers of OS’s. RIM is tying to mitigate that through Android emulation. Will be interesting to see how that pans out. That’ll make it iOS, Android and WinPhone until Bada or a newbie enters the market. I reckon in a couple of years the OS split (for smartphones) will be iOS 25%, Android 50%, WinPhone 25%. The profit split will be 50%, 15%, 35% respectively (with Microsoft earning from Android as well as WinPhone). The Android OEMs won’t mind so much as they are all (aside Moto) have Microsoft mistresses on the side.

      • Anonymous

        Indeed, I worry if the cornucopia of brands and models on the Android side is sustainable. I see it more as an experimentation stage, with consolidation of both suppliers and models to follow. I think only Samsung and HTC are making money in he Android space right now. In the process, several form factors and design will have been validated though. I’m curious about the giant Galaxy Note for example. People laughed at me when I went for a 4.3″ HD2 a while back, now everyone is rushing to get a same-size Galaxy S2…

        The OS optimization for variable screen resolution is hard indeed, and has caused issues. Android 4.X is supposed to bring more solutions. Having used 2.x on anything from the Xperia Mini to an 8″ tablet, I can attest first hand that the issue is not the bogeyman it’s made out to be though. Sure, you can end up with interfaces taking up too much or too little space compared to content, but it’s not a make-or-break issue, more an aesthetics one. Things remain perfectly usable, and ergonomics is OK.

        I think in the long term MS will be stronger than that. People will want Office on their tablets, hence get Windows ones, and from there, also get Windows phones. That’s assuming Hardware/OS/apps/content parity, which is pretty much there already. I own both an Android tablet and a Touchpad. Both are OK, but I keep banging my head about documents. Import/export to QuickOffice or Google Docs don’t cut it, neither do online solutions. Also, we’ll see once MS/Nokia launch their wares, but I think Apple’s share will go lower than that on phones. The market is becoming a components-driven commodity one, and Apple’s up against… component suppliers and low-margin OEMs. Lock-in is nice, but only a small part of the potential market has been opened up already. New sales are key, and Apple is not faring too well there, with MS/Nokia looming.

      • Canucker

        There is certainly a competitive war going on within Android that is partially obscured by the increasing marketshare. The fear for HTC/Samsung must be the low end (ZTC, Huwei, etc). Steve Jobs would heartily disagree with you about screen resolution issues. That IS the essence of the difference between Android and iOS. Some people do care, some do not. But Apple doesn’t compromise on interface consistency (you might argue back “Lion!” and I’ll concede the point).

        I think you are overestimating Microsoft – specifically the interdependence of Office. What I’ve seen of Windows 8 suggests to me that Microsoft is still trying to ram Office into a touch format without abandoning its mouse/keyboard input. I don’t think it will fly – or more likely, will be no more compelling that the alternatives for importing Word/Excel etc into other environments. I was bullish on iOS because Apple is making major headway into the business environment. It is going after the high end. And the stickiness of iOS users and their apps and other devices (something the others are far behind in developing).

        Not sure what Nokia really brings to the table what HTC and Samsung haven’t already. In fact, I think the Nokia impact will largely be to draw Samsung/HTC more into the WinPhone camp – they do not want to be squeezed in that OS ecosystem and also do not trust Google. For sure, without Microsoft, Nokia would be looking more like Kodak. They do have excellent awareness in developing markets, but those are fickle and already being attacked by the likes of ZTC.

      • Anonymous

        Nokia brings… a back-to-wall dependence on Windows, that HTC and Samsung have, probably wisely, eschewed. To survive, Nokia *must* make their Winmob offering successful; HTC and Samsung really didn’t care either way… in all probability, there even was/is a bit more profit for them in the Android handsets, and the market was already leaning that way, so… Winmob product have been very low-key “bet hedgers”. Nokia will change that.

        We’ll see about Office. I don’t think ergonomics will be an issue, a keyboard and mouse will be required anyway. Format compatibility is the key.

      • But isn’t it curious that Nokia could have used multiple OSs but did not? Who wouldn’t want choice? Especially among suppliers of key components of your product. In fact, the most crucial component.

      • Anonymous

        Indeed. I think they made a big mistake or 4 (failed at building an OS, failed at building an ecosystem, failed at hedging their bets, failed at handling the transition), but that 3rd is probably the lesser, and choosing to be the big boy of Windows phones is probably better than being Yet Another Android Supplier. MS probably sensed an opportunity and offered a much sweeter deal to be an exclusive supplier. Or Nokia is crazy.

      • Anonymous

        Surely a short term financially beneficial decision? Microsoft paid a lot of money to nokia to make it happen.

        However thanks to the absolutely identical hardware standards that android & WP7 run on, it wouldn’t take more than a brief amount of time for nokia to switch to stock android in their phones if Microsoft fails, correct?

        Not sure how likely that will be with Elop in charge though…

  • Just remember. You will only be able to reach download speeds of 14.4 kbps on AT&T’s network and NO ONE else’s.

    • Canucker

      Unless you visit Canada (Bell and Rogers also have HSDPA+). Likely also true of other countries. You Americans need to travel further afield 🙂

  • KGB

    “So to answer the question in the headline: because an iPhone 5 is not needed meaning that it would over-serve the market and price itself out of contention.”
    … on/exactly!!

  • I’m not sure your analysis is correct here.

    Half the article is based on the premise that “half of all iPhones sold to date have been iPhone 4” therefore there must be 70 million people using the original iPhone, iPhone 3G, or iPhone 3GS. However, this is not true. Some percentage of the current iPhone 4 owners owned a previous generation iPhone which is no longer in use. Perhaps some of those phones were re-sold or handed down, but many of them are broken or otherwise out of commission.

    In short, 140 million iPhones sold is not the same thing as 140 million current iPhone users.

    • seth_ze

      True enough, but the analysis still holds up. There are a substantial number of iPhone 3GS users who will be just comming off their contracts. There will also be a substantial number of iPhone 3Gs (note small S) still in use and many of these will upgrade to the 4S, 4 or 3GS to upgrade to iOS 5

    • deV

      I thought something similar while reading this. Apple hardware of all types has high resale value. Meaning it is much easier to sell your iPhone at any given time and get a new one without losing much. For example, iPhone 4 appears to be selling for $500 to $600 on eBay. iPhone 4S is $650 on contract.

      Therefore, current iPhone 4 owners are more likely to “upgrade” to 4S than anyone else who is on a recently renewed contract. And if iPhone 5 (bigger/better screen, etc) were released you would have seen more of that.

      • deV

        Oops, typo. I meant off contract.

    • There are more than 140 million iPhone sold. We don’t know exactly how many shipped last quarter but it’s probably above 150 million to date.

  • I just want to say one thing — after wasting the last several years on Ars Technica’s forums/comment areas, wishing it would be intelligent chats of the sort that were to be found there many, many years ago, I am absolutely PSYCHED to have noticed, finally, that Asymco has a comment section and a great set of posters. Thank you Horace, and everyone else — I think this is the site I have been searching for!!! 🙂

  • davel

    I just learned that Steve Jobs has passed away.

    Rest in peace.

    • Anonymous

      Requiescat in pacem seems too prosaic for Steve Jobs. As a kid, I always liked the latin inscription on the RAF memorials at my school chapel – it seems appropriate to his life.

      Per ardua ad astra. – Through struggles, to the stars.

      • I think Steve would love that too… given the ‘dent in the universe’ that he always seemed to obsessively want to cause.

        Per ardua ad astra.

        Eduardo, thanks for introducing us to this phrase. I’ll always remember it in memory of Steve.

  • Christian

    Whoever thought it was a good idea to introduce “version numbers” into hardware should be beaten with the cluestick.

    I see that they “sneaked” in. Alas, there never was an “iPhone 2” (this was the 3G, indicating that it supported 3G networks) nor an iPhone 3 (this was the 3GS, with an added “S” for Speed). Then all of a sudden we get a “versioned” iPhone 4. And now all the hubbub because the “iPhone 5” gets called “4S” – at the end of the day they could’ve named it “4.1” or “2011” or – god forbid because the design isn’t “new” – simply “iPhone 5”.

    Same with the iPad – we had the “iPad” (look ma, no version!) and then the “iPad 2”.

    Sure, there is a need to differentiate between revisions; at least as long as the hardware features are changing at the current pace (front cam, back cam, no cam, mic or no mic). Looking at the notebook market (Apple specifically), there’s the “MacBook Air” and the “MacBook Pro”. Period. No need to differentiate, because guess what: the hardware is – from a consumer “feature” perspective – identical. There are minor differences as to what the geeks look at (CPU, RAM, Graphics cards, disk space, all the garbage that absolutely no one outside of the geek echo-chamber cares about). But at the end of the day – they are all able to run the same set of software. Some models are slightly slower, some models have longer battery life, others may store more of your data. Does your mom care?

    I know a couple of “regular” people outside of IT. Some of them have an iPhone. If you ask them what model it is they get that look like you’re dumb and say: “Well, it’s an iPhone but you already knew that”. And exactly THESE people make up 98% (or even more) of the whole target market for smartphones.

    Every time I see an Android advertisement boasting CPU (“Hey, it’s DUAL CORE at 1.2GHz”), RAM (“Now with 512MB of memory”) or even connectivity (“You can stick an SD Card into it!”) features – really, every single time I look at these ads I think to myself: “Someone is not getting it”. The average user simply does not care about this. They have better things to do than to decide between a 1.2GHz Dual-Core and an 800MHz Quad-Core. This is completely irrelevant to them. At the end of the day it boils down to “Does it do what I want to do”, “Is it usable”, “Does it play Music”, “Can I watch Youtube”, “Can I play Angry Birds”.

    My mom – who is 58 – has had a mobile phone for at least 10 years. The first time I got a SMS from her was when she got her iPhone (the original one). Because it was the first phone that neither required T9 input (remember that?!) nor featured a “keyboard” which is completely unusable unless you have very good motoric skills and eyesight. She still uses her original iPhone up to this day and her worst nightmare would be to *upgrade* to another model. Because hers works just well, thank you very much. My three-year-old son showed her recently that her phone is able to show YouTube videos. She was slightly shocked :).

    Enough ranting for now … sorry this turned out longer than I thought but I’ve just read so many reports about yesterdays “disappointing iPhone 4S” – people should start looking at the target audience and stop the navel-gazing.

    • I thought about this a few days ago and came up with a very good reason why the iPhone is different from the MacBook Air, for example. When Apple releases a new Mac, the old one is completely discontinued. They get referred to by names such as “late 2010” for tech support purposes, but that’s it.

      The iPhone is different, however, in that Apple will soon be selling three different years’ versions at the same time. They must have some sort of name to differentiate. Version numbers make as much sense as anything else.

      • Anonymous

        It’s not just that, though that is a good point.

        When a technology is new, even non-obsessive consumers care about the changes and new features. This continues until the hardware is, mostly, good enough, at which point the non-obsessives buy what’s available, and use it until it stops working. This is essentially where the Mac market has been for a few years — so you and I care that the new model contains a quad-core Ivy Bridge and USB3, but Joe User just sees it as just another Mac that, presumably, works like every Mac.

        When the general perception is that phones are good enough, and there’s no reason to think about their specs, I expect we’ll see a new naming strategy by Apple — but not until then.
        To get to that point for iPhone, I think we need at least LTE, and whatever Apple’s NFC solution will be, and perhaps on-board Thunderbolt.
        In iPad, we need the double-res screen and a substantial boost in RAM (which Apple limits, as far as I can tell, not because they hate us but because RAM uses a surprisingly large amount of power, so at each device iteration, Apple tries to include as little RAM as it can get away with).

    • Joe

      Worth noting that iTunes does not identify the iPad 2 with a “2”

    • I live in Mexico. When I see someone with a touchscreen phone and ask them what type it is, the invariable answer is “iPhone”, even when it’s obviously an android.

    • Anonymous

      Apple now sells 3 models of iPhones, but they were all at one time the premier iphone.

      Unlike the Mac or iPod, it does not have 2 or 3 different lines that can be marketed differently to different target markets and without the need of version numbers.

      To eliminate the version numbering issue, apple would need to create a separate new brand designed for a different price target.

      So maybe alongside the next “premier” iPhone release, we will also see the introduction of a lower specced, thinner “iPhone Air” that replaces the low end iPhone 3GS and iPhone 4.

  • Hossein

    Why is there no iPhone 5?

    If iPhone 5 was supposed to be one with larger screen, it was impossible. Because of bad engineering choices in 2008 (when App Store was introduced) Apple is stuck with the current screen size (if you assume retina display resolution is an upper bound on resolution) for the time being. Fixed UI width and layout may be reasonable decision from an artistic view but was shortsighted from an engineering perspective.

    Considering this, all Apple could offer in iPhone 5 was a redesigned form factor but they had to keep the same screen. And I agree with you that there was no point in doing so considering the current market.

    • seth_ze

      And your assumption that the iPhone 5 had to have a bigger screen was based on what? Chinese case manufacturers?

      For every punter that wants a bigger screen on the next iPhone I can find you another that wants the screen kept the same size or smaller. Bigger is now always better.

      • deV

        The majority of the high-end phone market has bigger screens than the iPhone 4/4S.

        While you’re right that there is a limit where bigger is no longer better, that limit is not 3.5″. It’s probably where most high-end Android phones are targeting now: 4.3″ down to maybe 4.0″ (for women/small hands).

        Short of everyone switching to bluetooth headsets for all calls though, phones bigger than 4.5″ or so are probably rather excessive. Good thing there are choices, huh?

        Android is designed for multiple resolutions, right down to user interface images that contain stretchable regions. In addition, developers can include different images and other user interface resources to target different resolutions. In other words, Android got it right.

      • Tatil

        The reason “high end” Android phones offering larger screens does not have much to do with some research into usability or user interface… They can only compete on aspects with simple numbers, just like Windows PC manufacturers.

      • Hossein

        Have you done meta-research or any literature review on usability studies on this topic or is it the gut feeling of an Apple fan boy?

      • Tatil

        I am yet to see TV commercials that emphasize the usability of an Android phone. The most common one right now is a long fight sequence of a woman in tights battling two large robots. The other one advertises the gimmick of a 3D screen. It did not help Nintendo, but maybe it will help these guys. Blackberry commercials were the only ones (other than Apple) I can remember that showed one scene after another depicting the phone in use up close.

        For the usability studies, you can easily find graphical demonstrations online that if a person with average sized hands holds a phone, the thumb reaches the farthest corner on a 3.5” size screen. If it gets larger, either the user foregoes reaching the corners or he needs to bring in the second hand. Furthermore, most of the world is not as tall as Americans and women on average has more diminutive hands, so that does not quite argue for a bigger screen, either. 4” would probably not be the end of the world, but it is still a compromise. If you think bigger is always better, carry a laptop, or better yet, buy an iPad.

        I’d say these are better observations than what you brought to the table, which was what exactly? You’ve been fairly silent on an “engineering reason” for “variable UI width and layout” and even more silent on the “literature review on usability studies” that you so righteously demanded.

      • Hossein

        I am not an HCI expert. I am a mobile systems researcher. Having said that, your argument is clearly flawed.

        The argument based on “a person with average sized hands” is flawed because it ignores the range of hand sizes and user preferences. Diversity in hand sizes is only one of the reasons why different people prefer different screen sizes.

        From an engineering perspective, a mobile operating system and development environment should not be designed around a fixed screen size. Apple has made this mistake and will soon pay for it. Imagine two years from now. All other mobile platforms will offer a wide range of screen resolutions and sizes to serve every segment of the market, but Apple will not be able to change their retina display.

      • deV

        Specs are a way of describing reality. I suppose you can choose to ignore reality, but maybe you should keep that to yourself.

        You guys simply say this stuff without actually holding Android phones in your hand. And if you have, you used some no-name low-end brand 2 years ago.

        I’m sorry the Galaxy S II is thinner, lighter, more powerful, has smoother web browsing, has useful widgets on the home screen, voice interaction already available, not to mention a huge number of other features that are simply better than an iPhone. I know it’s something you’re all in denial about.

        Regardless of the fact that Android phones have better specs, Go use the phone. You can’t judge usability without using it. Period.

        Or you can continue plugging your ears and covering your eyes. It won’t make anything you say any more truthful.

      • Specs are no more a way of describing reality than price is a way of describing value.

      • Anonymous

        Well, specs are tangible, price is fungible, so the comparison is a bit lopsided.

        Specs describe most of the hardware of a product. Not all of it, but most. They don’t cover OS, Apps, Content, Ergonomy… but they *do* durably describe a product’s hardware, which I’d argue is the most important part. The OS/Software/ Content part of a product can, and will, change. Not the hardware.

        Example: My HD2’s value derives mainly from its 4.3″ screen. That lone screen size spec describes most of the reality of what my phone is to me: It’s a screen on which I can view stuff reasonably comfortably. Which any phone with a smaller screen isn’t. The converse is true, too: I’m fairly sure any phone with a big enough screen would be OK to me.. Other specs also matter somewhat (sound is so-so, camera is bad, weight is bad, rest is unremarkable either way). I’ve switched it from WinMob to Android long ago, more for fun than anything else and haven’t upgraded the Android since first install months ago, nor tried WinMob7 on it: it’s currently good enough, so the Software side of the “reality of a product” seems very moot to me. OSes can change (at least, Android versions, more with a bit of digging), Apps change, Content can be found… hardware stays.

        Hence, my next purchase will focus mainly on one spec: screen size. And then on other specs (weight, screen quality, sound quality, sturdiness), and then on tertiary specs (camera, CPU, GPU, resolution, battery). OS and ecosystem don’t really matter, except for major no-noes like imposing iTunes. All major OSes are usable enough and have good enough apps for a phone. I really think OSes are over-emphasized in current discussions. Hardware, then Apps are way more important in general; and on top of that, all 3 major OSes are pretty much at parity on all aspects.

        Maybe for the general public specs/hardware don’t matter as much for successful use of a product, but still: would you not notice if someone changed your 23″ screen for a 19″ ? That’s about the same +44% *area* ratio for a upgrade to 4.3″ from 3.5″). I’m very focused on screen size, but many people are as focused as me, on other specs: camera, keyboard…

        I agree that price on the other hand has very little correlation to value, and can change at any time.

      • kevin

        You should remember that before iPhone appeared, most consumers were trying to buy phones that were smaller. BBs were seen as an exception due to the need for a large enough keyboard to make it usable, not for a larger display.

        The early owners of iPhone (thru June 2009) were over 63% men. Now that percentage is down to 52% men. Some believe more women are buying iPhones because the other high-end smartphones are just getting too big.

        Btw, how do you know the limit is not 3.5 but 4.5? Or is it just your gut feeling?

      • Hossein

        *If* iPhone 5 was supposed to be one with larger screen, it was impossible.

    • Tatil

      Yeah, I guess it is so much better to keep designing modified button sizes and layout for screen sizes and aspect ratios picked for flimsy reasons.

      I am curious what is the reason to try many different sizes from an engineering perspective? Most people keep them at more or less the same distance. The fixed size reduces software development time and cost. The large volume on a single size reduces cost of manufacturing. It creates a vibrant accessory and app market. Surely these are not “art” related reasons, are they? Where did you get your engineering degree? 🙂

    • Alan

      They need the same screen resolution but not the same physical size. All the android phones with bigger screens have lower resolution. So growing the screen to 3.7 inches would increase the size of UI elements about 10% in area but would still give close to 300 dpi (as opposed to the 326 of the current size screen).

      I think the main cost is that it would need an edge-to-edge LCD which is more expensive to manufacture. This would be needed because the size of the phone itself is limited by what fits nicely in a hand and pocket.

  • Anonymous

    My heart goes out to his family at their loss.

  • Joe

    So far apple is following a “tick/tock” release pattern similar to what Intels strategy with CPUs is (architecture and performance alternating). For the reasons articulated here by Horace I could see this being a stble pattern going forward as well, continuing with the 5 next September.

  • Talltrash

    Great post, Horace. One of your best.

    • I agree…. (and I’m one of Horace’s readers who has treated his latest analysis with skepticism, but this one is spot-on, I believe)

  • Loose6767

    The improvements in the 4S are actually pretty good and had it simply had a ‘5’ label, it would have been hailed as the 2nd coming. The key feature missing was the larger screen….which probably would have put it in that price range you mentioned.

  • SirapBandung

    This reminds me of an article by John Gruber posted more than a year ago. To quote:

    “That’s how Apple builds its platforms. It’s a slow and steady process of continuous iterative improvement—so slow, in fact, that the process is easy to overlook if you’re observing it in real time. Only in hindsight is it obvious just how remarkable Apple’s platform development process is.”

    You can read more at:

    Just sharing.

  • OhYeahBaby

    Don’t forget the fact that every year they use the same hardware the cost to produce it goes down. That’s why they can give the 3GS away for a contract now, and last years iPhone 4 for $99+ contract. Why introduce a new model when they can make more money using the same exterior design? Even so, the interior of the 4S is brand new, so probably not much saving there. Still, next year should they introduce an iPhone 5, the 4S will be a killer at $99.

  • Tatil

    Just like my iPad prediction at the time, I cannot tell whether Siri will be the product that succeeds enormously and that indisputably starts a new revolution, but natural language based interface is obviously the wave of the future. If the technology is ready for useful interaction within the next 2 years, hardware focused corporations will lose their market influence even further. Dell or HTC cannot compete in this touch and language based computing era unless somebody else hands them an OS, in return for lion’s share of the profits. RIM claims to need a dual core processor just to implement a touch based OS more than 4 years after the first iPhone, how long do you think it would take for them to match this achievement if this really takes off?

  • Gordon

    My major objection to this analysis is it’s based on the statement “The other 70 million or so iPhone users have either a 3GS or a 3G iPhone.” The implication is that because 140 million iPhones have been sold, and that 1/2 of those, were the 70 million iPhone 4s, that there are 70 million iPhone users on a _non_ iPhone 4 (which would include the Original, the 3G, and the 3GS) . This is not the case. Luckily, we have some accurate stats from one of the most popular iOS apps out there – instapaper:

    From this, we can see that 27% of users are iPhone4 ,and only 11% are _non_ iPhone 4 (Original, iPhone 3G, iPhone 3GS) – so, only 40% of the 70 million are likely candidates for an upgrades to the iPhone 4S – or 28 million. Still, a decent market to go after, but a decidedly smaller number than 70 million.

    Also – final note, a small minority of the iPhone 4 users are “Early Adopters” – and will likely upgrade to the iPhone 4S immediately. I’d put the number at somewhere around 5-6% – so that opens up another 3.5 million users. BUT, key difference in that 3.5 million users, they are 95% likely to upgrade to the iPhone 4S, whereas there is a chance that many of the iPhone 3Gs, and certainly the iPhone 3G users, will consider upgrading to the iPhone 4, and save $100.

    • Mark212

      I can’t figure out your comment, Gordon. If 140m iPhones have been sold and half of them are iPhone 4 models, then the other half are non-4. This is like saying that if a bachelor is an unmarried man and half of the 140 men in the room are married, then there are 70 bachelors in the room. It’s a tautology.

      You may think that Marco Ament has better stats than Tim Cook, but that’s a tough sell. You may also think that some set of the current iPhone owners may choose the 4 over the 4S, but that’s not Horace’s point in this blog post.

      He’s making the point that Apple really isn’t trying to be better than Android, it’s trying to create an attractive phone for (1) people who have old iPhones and are coming off their contracts and (2) non-smartphone users, of which there are more than a billion each year.

      • Gordon

        Sorry Mark, I should have been explicit. Yes, 70 million non-iphone 4 devices were sold – but only a fraction of them are still being used. The other ones have been discarded, depreciated, put in a box, or just been worn out.

        The point I’m trying to make is you can’t consider the entire 70 million non-iphone 4 devices sales as potential upgraders to the iPhone 4s, only those that can be associated with active users today.

        Marco’s numbers closely represent what I see out in the wild in terms of how many iPhone 4s are in use vs 3GS and (veryrarely) 3G users.

      • El Aura

        Your interpretation might be biased by the anomaly that the US market constitutes. In most other markets, (a) carriers unlock the phone after the contract is up and (b) multiple plans exist that are much cheaper when you forgo the handset subsidy.
        I know of at least three 3G iPhones of people around me that are still alive and kicking. One is running on a pre-paid plan, another a cheap (ie, $10 to $20/month) plan, and the third is running on the same data/voice plan available with new iPhones but because the 2-year contract is over, the monthly price was reduced from $45 to $25. Moreover, when I sold my 16 GB 3G iPhone a year ago, it fetched almost €300. People don’t discard things that are worth €300 and people don’t buy things for €300 to discard it. Have a look at E-Bay auctions to see the value these old iPhones still have. They are far from being discarded (hardware failure excepted).

      • El Aura

        P.S.: I just checked auctions for the 3G (the 2G was not sold officially outside the US). Finished auctions are between around €100 for the 8 GB 3G and €150 for the 16 GB 3G.

    • Secular Investor


      The data you quote is unreliable and misleading, as Instapaper themselves make clear:

      ” This sample does not represent all iOS owners. Specifically, it only represents people who:

      * Paid $5 for the Instapaper app, and…

      * Are using at least the 3.0 release from five months ago, and…

      * Logged into the app with an account (or created an account from it), and…

      * Connected to the internet long enough for an update request to be received by the service.”

      • Gordon

        Completely agree that it’s a biased sample, and I’m open to other surveys to offer better data. When I offered it, I recognized it’s biases, but couldn’t see any reason why it would _significantly_ under/over count the ratio of 3G/3GS/Iphone4 devices in active use.

        Would be interested in seeing more accurate data though.

    • That’s because he’s counting iPads and iPod touches. Take them away and you see it’s almost 3 times more iPhone 4’s than other iPhones.

      • Dan Andersen

        Apple has sold over 250 million iOS devices. Horace’s numbers are for iPhones only.

    • Anonymous

      Maybe the way to ask the question is this, how many people who bought an iPhone are likely due an upgrade between now and Oct 2012?

      Likely anybody who bought in 2007 or 2008 upgraded by 2010, because they were early adopters. People who bought in 2009 however are unlikely to have upgraded yet, as they’ll have been waiting for the 2011 model.

      Based on the population of sales in 2009 and assuming around half the phones sold in 2010 were 3GS and will be up for replacement – we’d be looking at around 40million iPhone user upgrades over the life of the 4GS.

    • Bhamgroundhog

      I agree totally. My family has two 3Gs (16gb and 32gb). We really anticipated the “5” with a larger screen (3.7 or 4) as our age makes reading from the smaller screen difficult. Now we either go to an Android with larger screen or sppend less on the 4.

      • kevin

        You can go to a larger screen on Android but they all have a lower resolution than iPhone 4 so it may actually be more difficult to read due to the lack of sharpness or clarity of the text.

        Have you actually looked at an iPhone 4?

        iPhone 4 and 4S have a resolution of 960×640 fitted on a 3.5″ display. Other than in South Korea, the best Android has a 960×540 resolution but fitted on a larger 4.3″ display. Most other Androids still have a 800×480 resolution fitted on screens sized from 3.7″ to 4.5″.

      • Amadoucisse

        what about the Nexus Prime?

      • Anonymous

        Nexus Prime (4.65″, 1280×720, 320 DPI), Sensation XL (4.7″, 800×480) and Galaxy Note (5.3″, 1280×800; 285 DPI) are all up for release this month or next.

        All have a bigger screen, which I find by far the most important factor. 2 have higher resolutions. The Prime has similar DPI, the Note, is close, and the Sensation XL lags far behind.

      • Yeah, because a 5.3″ PHONE is really practical.

      • Anonymous

        To every one its own. Where do you see it as “not practical” ?

        – fits in hand: check (comfortably too, a 7″ Nook Color also does, less comfortably though ^^)
        – fits in a pocket: check

        I actually plan on getting that phone. I see no real downside as it fits in the 2 places it needs to, has a large comfortable (dare I say practical ?) screen… On the downside, it’s a bit on the heavy side (same weight as my current 4.3″ HD2 though, so I should survive), is set to be a bit pricey, and will excite the same fashion police who was laughing at my HD2 2 yrs ago, and will probably, again, see the light after a while.

      • How about the HTC Titan? It sounds like it has an amazing screen.

      • Anonymous

        4.7″… 800×480 ? Damn you, Windows Mobile ! Even half-blind me finds that DPI not very convincing. I fully agree that size is more important than resolution, but still, with other phones / OSes, we can have both !

      • deV

        That’s what the “Retina display” marketing may say, but that’s really not how it works. Older people, just like they always have, need text to be bigger. Not smoother.

        When was the last time you heard Grandma say: “I can’t read this. The text isn’t smooth enough”? Okay, now how about “The text is too small to read”?

        And like @Amadoucisse said, the 4.65″ Nexus Prime next week will have a ppi of at least 320 ppi (based on leaked screenshots), compared to iPhone 4/4S at 326 ppi. The only phone which might be better for this purpose is the (also 1280×720) Galaxy Note, which comes in at a staggering 5.3″ size. Which is really only practical if you use bluetooth headset and have a purse… But still, extremely easy to read.

      • Anonymous

        Nexus Prime is achieving that with a PenTile arrangement, so it’s not really comparable.

      • kevin

        Well deV, I happen to be an older person, who uses reading glasses on a daily basis for reading printed material.

        But not for my phone, because my iPhone 4 is so much sharper than my previous iPhone 3GS. I don’t need the text to be any bigger, although I recognize that can be the case for many (as seen by the fact that libraries are stocked with “Large Print” books.).

        And that’s why I asked if he’s seen an iPhone 4. The best way to get the right phone is to go try it out for yourself.

    • kevin

      A recent Comscore survey shows that as of July 2011, about 10m out of 22.2m iPhones in the US were iPhone 4, The rest are 3GS, 3G, and original iPhone. In the rest of the world, the percentage of iPhone 4 is likely higher, as the original and 3G were limited in distribution. (Survey can be found by going to, and then clicking on offer for the complimentary paper on iPhone 5).

      So agree it’s probably less than 70m, more like 40-50m of previous iPhone owners. But whatever that number is, it is much smaller compared to the many who own BBs, Symbians, or high-end featurephones, and might be ready to switch.

      • kevin

        I should make clear that Comscore, as usual, is counting users, and not simply phones sold.

  • Secular Investor

    My sympathies to Steve Jobs’ family, friends and all members of the Apple “Team”.

    Like millions of others I was greatly saddened by the news. I haven’t felt this deeply affected by the death of a public figure since the death of President Kennedy.

    Steve Jobs was a colossus, a genius who transformed the lives of billions in so many ways, many of which are still to become apparent in years to come.

    Despite the loss of his charismatic, inspirational leadership most analysts believe his death will not affect Apple for the at least next 3 to 5 years because Apple’s product pipeline is so deep and well prepared.

    Some say that in the longer term Apple may be affected. I’m not so sure. He was extremely aware of his own mortality and planned for his demise. It is said his DNA is deeply imbedded in Apple.

    Henry Ford was another genius who transformed mass production, but the company continued to grow healthily for decades after his death. Thomas Edison’s legacy was a plethora of companies many very successful for decades such as General Electric.

    Companies bearing Edison’s name

    Edison General Electric, merged with Thomson-Houston Electric Company to form General Electric
    Commonwealth Edison, now part of Exelon
    Consolidated Edison
    Edison International
    Southern California Edison
    Edison Mission Energy
    Edison Capital
    Detroit Edison, a unit of DTE Energy
    Edison Sault Electric Company, a unit of Wisconsin Energy Corporation
    Metropolitan Edison
    Ohio Edison
    Toledo Edison
    Edison S.p.A., a unit of Italenergia
    Boston Edison, a unit of NSTAR, formerly known as the Edison Electric Illuminating Company
    WEEI radio station in Boston, established by the Edison Electric Illuminating Company (hence the call letters)
    Trade association the Edison Electric Institute, a lobbying and research group for investor-owned utilities in the United States
    Edison Ore-Milling Company
    Edison Portland Cement Company

    Source Wikipedia

  • “Why is there no Iphone 5”. This analyce is based on theassumption that Apple is totaly perfect company regarding product development. What if the reality is that Iphone 5 is delayed due to HW problem (component vedors can also be delayed), SW problem etc. If you have worked with product development you should always work with backup projects. What if Iphone4S is the backup project ?

  • wowpeter

    Is it just me, why no one think that the iPhone 5 was pulled from the announcement on purpose… what a co-incident that Steve Jobs passes away the day after the iPhone 4S announcement. I think the Apple management team knows that Steve is getting very sick and that he is about to pass away. In-order to limit the impact on a new product launch, they pull the iPhone 5 from the announcement and delay its launch…

    • Charles Lindsay

      The design cycle for a mobile phone is literally hundreds of person-years long. The manufacturing cycle is thousands of person-years long, maybe longer. And most of it is secret, fewer people = longer cycle. Accepting this, Steve certainly signed off on the design of the iPhone 5 and the iPad 3, and probably had useful things to say about the iPhone 6 and iPad 4.

      It’s unreasonable to think Steve’s decline would have changed their schedule much.

      • wowpeter

        Company delay marketing champaign or delay releasing of new products when they know something negatively big that might happen (or had happen)… Just think about it, iphone 4s was release, steve jobs die the next day, and guess what did the press write about? Steve Jobs death… most media ignore the iphone 4s, as it is already old news… From a marketing stand point, if they release the iphone 5 (knowing that steve is about to die), it is like marketing suicide. And I think this is the reason why iphone 5 was pull back from being announce and have the iphone 5 release delay. It makes perfect sense from a marketing standpoint!

    • Jzlatic

      I think we can safely assume that the Apple troops knew SJ’s end was near and, if they seemed a little flat at the Oct. 4 event as some critics contend, we now know why. A big tip of my hat to the troops for marching on despite what must be very difficult circumstances, conflicting emotions and high pressure.
      A coincidence that SJ lived to see the birth of Siri. I say not. That was fitting and proper. His timing remains impeccable. The scene can be likened to the Lion King presenting his newborn to the tribe. Long live the King!

  • Anonymous

    Not to mention, the iPhone 4 is the most beautiful phone ever designed – it’s not exactly a tragedy that this form factor gets a two-year lifespan, instead of one.

  • Pingback: i-Phone 4S. No phone 5. - Page 8()

  • One thing I found surprising was the non-US pricing of the iPhone 4 8GB (in Europe 549EUR retail). While it’s very much in line with the Apple iPhone pricing logic, it’s still 50EUR more than the price of e.g. Samsung Galaxy S II 16GB. In non-subsidy driven markets I’d guess Apple will have a hard time keeping marketshare in the high end.

  • Anonymous

    Design is not just how it looks, but also how it works. I think the iPhone 4S is a reminder of that.

    A tick-tock approach seems to be ideal for the subsidized mobile market. Software and services update for the tick, and a major hardware refresh for the tock. By keeping the iPhone visually similar, it allows users to focus on the significant improvements in software and services. iCloud and intelligent voice are major changes, and with a major hardware refresh, they would have been marginalized over the commentary over any hardware design changes.

    • SSM

      Well said. I couldn’t agree more.

  • Glimmerman

    I thought this version of the iPhone would be 5 since Apple was introducing both the A5 chip and iOS5, however, in retrospect, it makes sense not to link the phone hardware and software versions so they are not expected to move in lockstep in the future.

    • Anonymous

      Apple is more about looks than innards. I guess we’ll get a 5 when the casing changes.

      • Didn’t Apple just refute your claim with the iPhone 4S which LOOKS exactly the same as the previous iPhone4, but has upgraded INNNARDS?

      • Anonymous

        Upgraded innards rank an name modifier. Brand new look ranks a brand new name.

    • Dan Woods

      I did too.
      iPhone, iPhone 2 (named 3G because it had a 3G chip in it), iPhone 3 (named 3GS because “iPhone 3” was too close to “iPhone 3G”), iPhone 4 (getting rid of the whole “3G” naming issue)…

      I think the reasoning for this is the 2-year refresh cycle.
      iPhone > iPhone 3GS > iPhone 4S
      iPhone 3G > iPhone 4 > iPhone 5
      makes more sense for a device that has to last 2 years.

  • Jzlatic

    All-knowing pundits said Apple getting into the phone business was a colossal mistake. The market was “too competitive” for Apple, they said. The iPad was predicted to be a huge failure. Consumer Reports recommended against buying iPhone 4. Wrong, wrong, wrong. The predictions of those “experts” now dismissing iPhone 4S will also end up in the dustbins of non-history. The new phone’s differentiation will win the day. It will do things, along with Apple’s ecosystem, that other phones can’t. In the largest majorities, people will either have one or wish they did. It’s the right phone at the right time and Apple is moving in the direction of owning the phone space much like they own the music player and tablet space.

  • rj

    It almost seems like apple is going with a 2 year refresh cycle in conjunction with the 2 year contracts that people sign up for. 3, 3s and now 4, 4s. Lot of talks about 4g but most anecdotal comments I hear is that current phones batteries’ suck…there was a nice article by Shimpi yesterday on why it makes sense for apple to wait until qcom comes out with a single data/voice chip.


  • P. Gallagher

    Explains it all!

  • Anonymous

    What would be the IMPORTANT part of a new iPhone (as opposed to the usual “more, faster, lower power”)? I see two immediate changes that matter:

    (a) NFC and what that enables.
    On the one hand payment, on the other hand a new way for phones to interact with [one hopes] less of the friction that currently accompanies attempts to set up any sort of sharing, whether by Bluetooth or WiFi.
    This would appear to be a market where the basic technology is in place, what’s necessary is
    – the web of contracts and deals with banks, gas stations, supermarkets etc.
    – a UI/security paradigm that gives us what we want (easy sharing by touching two phone together or whatever) WITHOUT what we don’t want (having to type in passwords etc, but ALSO having strangers able to pull stuff off our phones while we’re distracted by something else)

    Until one or both of these are in place, NFC seems like a waste of resources. (Very much analogous to putting 4G hardware on a phone that will never be used in a location with 4G towers.)

    There is a psychological “option” advantage to having hardware that isn’t (currently) useful on your phone, the “security” that, when everything is in place your phone will be ready. This seems to be what drives a lot of the sillier statements by Apple critics, but Apple appears to believe (IMHO correctly) that this is vastly overrated: phones turn over in two years, that matches the pace of people’s lives, and most people are content to wait until new features (like NFC) appear on their doorstep — they don’t feel a need to use them on day one that they launch.

    (b) Form factor.
    If users as a whole were asked, is there REALLY a substantial demand for larger screens? I honestly don’t know, but I suspect Apple does. If there IS such a demand, I suspect iPhone5 may be the one where we see two form factors launched. There’s really no reason NOT to consider this option. MacBook Pro came in one form factor — until one day it came in three form factors. Likewise for MacBook Air.
    I think people confuse Apple’s methodical “one step at a time” approach with rigid ideology. Why would Apple NOT cater to users who want a larger screen (especially if it has the same number of pixels, so that SW compatibility is not an issue)? The more important issue, I imagine, is keeping up with demand — until Apple has managed to get itself to a position where launches are not followed by months of inadequate supply, and is able to launch across the world rather than the current rollout, it makes little sense to further complicate the supply situation by having to juggle two screen sizes.

    • El Aura

      I very much agree with you except for comment about a larger screen just coming with the same resolution. Every app developer designs the interaction with the app by looking at the size of a finger (or the area on the screen returned as being touched). That size is measured in millimetres, make the screen physically larger and every app developer can add more interaction tools onto the screen while offering the same physical accuracy. Sure, they don’t have to but an app really optimised for a larger screen would take that into account.

      On the visual front, the same is true, if the minimum physical size for an icon is x millimetres that will map into a different number of pixels on the current screen and a larger screen with the same pixel numbers.

      It is not that Apple cannot create multiple screen sizes, it just that it has so far chosen not to do it, for the obviously reasons of simplicity and consistency. Apple wants apps to be as perfect as possible, adding multiple screen dimensions means they either are less perfect on one of the screen sizes (and initially that would predominantly be the larger screen size) or the developers would have to work a good deal more to create a second version.

      Sure, Apple’s position is not set in stone but ignoring or denying the reasons why it has so far chosen to stick with 3.5″ is either negligent or ingenuous.

      • Anonymous

        A 4″ screen is little more than 10% larger than 3.5″. The difference is much less than the difference between finger sizes and eyesight. I truly believe that for men over 40 (and I am one) that the larger screen using the same resolution and the same apps would present a much better experience.

        I agree with Handleym that Apple will come out with two sizes eventually – it’s just a matter of time. Personally I would have liked to see it now but I’ll concede to Apple for judging when the time is right for them.

        I just hope Cook isn’t relying too much on Excel calculations to make that choice.

      • Anonymous

        Increasing the screen by 12% without changing the resolution risks pushing the display below 300ppi and into the realm where pixels are resolvable for a 20/20 eyesight.

        If they do increase the resolution then that’s a huge headache for developers, unless they push it enormously higher.

        All this for a device that will be less ergonomic as you won’t be able to reach every quarter of the screen with your thumb while securely holding the phone one-handed.

        Screen fragmentation is a serious problem, even for Android – and it would be a bigger problem for iOS with the higher premium on pixel perfect apps and the lower level graphical layouts. It’s not something that they will do without a lot of consideration.

      • Anonymous

        I agree that Apple should keep resolutions the same and make things simple for developers.

        On second thought, they could lengthen the screen to a 1.6 aspect ratio. iPhone apps wouldn’t have to use the added pixels although movies could make good use of the space. If unused by the app, the extra space could be used for iphone status info (personal hotspot comes to mind).

        I question though whether 300ppi is the practical lower limit for resolving pixels. Is that really an issue other than a marketing one? The iphone 4 line is at 326ppi while the 3 was at 163. A 4″ screen would be at 285ppi while giving 30% more real estate. A 4″ screen with a 1.6 aspect ratio results in 302ppi and 27% more area.

        The thumb reach is a good point and new to me. It might be a problem for some hands. All the more reason to offer two screen sizes, 3.5 and 4″. Also, a 4″ with the 1.6 aspect ratio mentioned above is only 9% wider.

      • deV

        As someone who owned a very thin and light 4.5″ phone, that size is slightly too big for one handed use. My hands aren’t that big. 4.3″ would be fine. 4.0″ would present no problems at all, even for small hands. 3.5″ is a bit on the small size.

        Taken to the extreme, I just read about a screen that had 2200 ppi or so. It was a less than one inch display. Must look great through a magnifying lens built into some VR glasses. But tiny screens with ultra-high pixel densities just aren’t that useful in real life. The size of the screen is still what’s important at the 12″ distance that we hold our phones.

  • Anonymous

    What I just realized, and find intriguing, is that as long as the YoY growth rate stays at about 100%, then at any time about half of all iPhones have been sold within the previous 12 months. Now, given that Apple is selling three different models, that doesn’t tell us how the models are split, but it is something to keep in mind with regards to upgrade cycles. Also, assuming a relatively stable 100% growth rate and 2 year contracts, we can roughly estimate a maximum of 25% of sales to come from upgrading users (if my math is correct.)

  • Anonymous

    I agree that Apple should keep resolutions the same and make things simple for developers.

    On second thought, they could lengthen the screen to a 1.6 aspect ratio. iPhone apps wouldn’t have to use the added pixels although movies could make good use of the space. If unused by the app, the extra space could be used for iphone status info (personal hotspot comes to mind).

    I question though whether 300ppi is the practical lower limit for resolving pixels. Is that really an issue other than a marketing one? The iphone 4 line is at 326ppi while the 3 was at 163. A 4″ screen would be at 285ppi while giving 30% more real estate. A 4″ screen with a 1.6 aspect ratio results in 302ppi and 27% more area.

    The thumb reach is a good point and new to me. It might be a problem for some hands. All the more reason to offer two screen sizes, 3.5 and 4″. Also, a 4″ with the 1.6 aspect ratio mentioned above is only 9% wider.

  • Anonymous

    One key fault to your argument is that I do not incur a penalty for upgrading from a 4 to a 4S. Just started a new 2 year contract. I’m also getting a benefit since my wife will inherit my 4 (she had my old 3GS).

    I agree that the 4S was a little bit of a let down with the expected hype about a 5, but it’s a decent step up for those that want to make the jump.

  • Chrisleake800

    The way i see it is like this…….since iphone 4 release they have had all this time to develop all these new features which are great but why…..and i cant stress highly enough!!! Why couldnt they design a nice casing (new phone) and bang bobs your uncle iphone 5 is here!!!! Its mind bogling. Now i see your point about most peoples contracts not ending until next year but sales would stil be astronomical if it was released now or next year……its just mind boggling to me. Its almost like they designed all this stuff but could not be bothered to design a new handset. As it happens my iphone 4 contract is up for renewal this month and i wont be upgrading to 4s…..pointless im guna sit it out and wait for 5 or whatever they call it.

    • Do not be surprised if the iPhone 5 does not look any different than the 4S or 4.

    • Why do they have to change the casing? The iPhone 4 is arguably the best looking phone out there by far. Apple doesn’t make aribtrary casing changes to any of their products if there’s not a reason to. They aren’t producing throw away products – they design things to last. You don’t see them arbitrarily changing the appearance of their computers every time a new one comes out, except for minor refinement.

      Every once in a while they make a wholesale change, but not all the time.

  • Cwjj

    “Therefore there is a vast pool of users who probably have been interested in getting an iPhone.”
    I was with you up to this point. But to assume that nearly all, a majority or even a double digit percentage of Android or other Blackberry users are even ‘interested’ in switching is nonsensical. The entire analysis falls apart after that.

    • The phrase you quoted is in the section titled “The current non-iPhone non-smartphone users”. That market does not include Android or Blackberry users. They are included in the last segment whose title is “Current non-iPhone smartphone users” which I identified as uninterested in the new iPhone.

      Do you still think the analysis falls apart after that?

    • GeorgeS

      Every survey of smartphone owners I’ve read about has found that Android phone owners are far more likely to change brands and even OS than iPhone owners. The percentages are usually well into the “double-digit” range.

      • There are new Android based phones coming out almost monthly, one is usually more bad ass than the next, of course they are going to be more likely to switch than an iPhone user who gets to see a new release every year.

      • deV

        They sure do change phones with so many great options available. As often as the contract allows.

        But most do not change OS. Looking at the numbers, there is no mass exodus from Android to any other OS. Android just keeps gaining a few percent from every OS except iOS, which is also gaining a fraction of a percent per quarter.

    • Yonikatzir

      Me, My wife, and my mother are all current blackberry users, and are all switching to iPhone next month

  • Latifa 7

    I have a question that’s so irrelevant to this article please if someone would reply to it i’d appreciate it alot
    So I cant really make up my mind on whether to get the iphone 4s alone or get a blackberry 9900? and is really iphone 4s worth the money im just afraid it would becomes so out of date when the actual iphone 5 comes out. which do you think is better and why

    • I had a Blackberry Curve for one contract of two years, two replacements under warranty, switched to IPhone 4 when available, and have no clue why anyone would want a Blackberry.

      Not trying to be a wise guy here, but I have FAR fewer dropped calls with the iPhone (90% of the “dropped” iPhone calls may have been caused by ME accidentally hitting Mute, honestly. Haven’t had a real drop in months.)

      and I am at least twice as fast texting on the iPhone. Go figure.

      • Latifa 7

        I’m going for the iphone 4s then 😀

    • ADVILL

      Ask users, you are one of the billion Horace is mentioning, but it seems that you have to ask….a lot

    • Butos

      Ok, simPly put it this way, blackberry is obsolete as we speak. So buying an iPhone 4s is worth the money and the upgrade. Keep in mind that Apple pride themselves on the software and features. For example, I am completely satisfy with my iPhone 4 but want the new one because of Siri and mirror image to my Tv. It all comes down to what you want. If you like me, you will upgrade your phone every year and it does not cost me a dime. Why? Because I can sell my iPhone on eBay for the same price I bought it. Go ahead do yourself a favor and get you an iPhone 4s, you won’t regret it. Crackberry is yesterday’s news.

      • Latifa 7

        Thanks for your reply, Im certainly going for 4s.
        thanks alot for helping me out

    • Dan Woods

      It sounds like you’re concerned about your phone being obsolesced.
      The iPhone upgrade path is accounts for a 2-year lifecycle. The 4 is much better than the 3G, but only marginally better than the 3GS, The 4S is much better than the 3GS, but only marginally better than the 4.
      It would be safe to assume that the 5 will be a marginal improvement on the 4S, but a huge boost over the 4.
      The iPhone 4S will still be a great phone for at least 12 months, if not 24 or even 36 months.

      RIM believe that QNX-based Blackberrys will be available early 2012, making the 9900 as obsolete as a Motorola ROKR.

      • Latifa 7

        Appreciate the the time you kept to answer my question, you made me want the iphone 4s even more haha!
        I was just disappointed with apple as they didnt change the design of the 4s, I was waiting for a slimmer design that’s all. It doesn’t make sense to wait for iphone 5 as it wont be coming out until the end of next year.
        I also asked alot of BB users, and they were pretty much disappointed with their devices, it doesn’t take long for it to freeze and crash sometimes.
        Overall I shouldn’t look at the outer look of iphone4s but the inside of it. I pretty sure as well I wont be bored of it since there are plenty of things to do not to mention my assistance Siri. I will purchase the white one as it would look great with color cases! Iphone 4s all the way

      • Ludwig

        I was formerly using a Black Berry and switched to iPhone. When I it happened, I had the impression of moving in the Twenty First Century. Since five years not, I am attending Friday’s morning meeting with consultants from several companies: within a year or so, the all traded their Black Berry for IPhones! All of them!

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  • Wade

    I think this article is way off considering many iPhone 4 users (users who got the iPhone 4 when it was released) will be eligible to upgrade at the full discounted price as early as November 18th. I LOVE my iPhone 4, so why wouldn’t I want an iPhone 4S which is the iPhone 4 and MORE. Do you really think an 8MP camera and 1080p video aren’t worth while upgrades?

    • MT


    • Anonymous

      No, they’re not for the majority of people. You are forgetting that most people just want a phone. Some also like the ability to use it to take photos and listen to music and use apps. But they don’t care about or don’t know anything about the number of mega pixels. And you can do all that with iPhone 4. The people that actually care for a few more MP are the technology junkys (which I am by the way) and the ones that just like to be on top of the latest trends. But Apple wants to sell to mass and this group is small. They just seem bigger because they’re the one doing all the noise on the internet.

  • A brilliantly written article. I agree with most of your points on this. I think that the expectations for an iPhone5 were blog and media generated. Apple is on schedule. Nothing, with the exception of the obvious, has changed. It was always going to be a minor upgrade.

    The question now is whether iPhone5 will be released in July or is October the new iPhone release date?

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  • I’m an iPhone 3GS user and my phone is shot, I don’t just want a new phone I need one. I was hoping for the iPhone 5 announcement because I wasn’t that impressed with the 4 and I can’t wait until next year for another announcement, so I’m switching. So in my situation, their strategy failed.

    • Bayland61

      I don’t get it. You’re disappointed that you can’t choose a fictional phone that never existed and therefore had no specs to attract your interest, so you will switch to a non-Apple phone? If you weren’t impressed with the iPhone 4 or 4s, what leads you to believe that an iPhone 5 (whatever that is) would impress you. I can’t think of a strategy that would have succeeded for you. Curious to know what you will switch to and why.

      • What you call a “fictional” phone that never existed actually had rumors of features and specs that I would have been interested in. People want more than just a few additional specs, I really want a phone with a larger screen and hdmi connector. Based on rumors, others as well thought that the new iPhone would have a larger screen. What spec wise really changed with the iPhone 4S? New chip and a better camera? Come on, after almost a year and a half, that’s it? Most of the major changes are in the OS, not the phone.

      • GeorgeS

        Brian, do you base your life and decisions on rumors? If so, you’re setting yourself up for continual disappointment, as rumors will always exceed reality.

        If you want an HDMI outlet, just get the Apple Digital AV adapter.

        The better camera you pooh-pooh is, apparently, greatly improved. It’s not just a few more megapixels, which is usually the route other manufacturers have taken. (That results in a WORSE camera, by the way.) The optics are imporoved, you can take photos from the locked screen, and more.

        A larger screen? If it were physically larger, with the same number of pixels, it would look worse. If it had more pixels, apps would have to be redesigned to fit. (Just ask the Android developers.) It might also be physically larger.

      • No arguing with fanboys. Theres’s more than one color in a Skittles bag folks.

      • Silencio

        Way to admit defeat graciously. Bayland and George present logical counterpoints, you play the fanboy card.

        If tech specs and feature checklists are more important to you, I’m sure you’ll enjoy Android.

  • One presumes that the iPhone 4s is the free phone two upgrade cycles from now… could it also not be viewed as a way to future proof profits by having a single form factor/design for every market?

  • deV

    I underestimated the iPhone 4S. The A5 in it is actually quite fast, according to benchmarks released last night. It appears to be the fastest phone on the market.

    In practical terms, what does this mean? First off, it is the best phone for mobile gaming. And it may attract more game developers due to that. Could continue to put the hurt on Nintendo.

    It also likely has web browsing performance surpassing that of the Galaxy S II. The S II could zoom and pan while playing Flash animations with completely smooth rendering. iOS does not attempt to play Flash, but the rest of the page should be even smoother than smooth, whatever that means. In case it’s not clear, I do not see much advantage for iOS/A5 on the web browsing front. iOS doesn’t even attempt anything difficult.

    iOS does not attempt to do anything interesting on the home screens. No widgets, live tiles, or any sort of display of useful information short of opening an app and getting the information that way. There’s also no live wallpapers or any other sort of eye candy. So the processor does not help anything as far as the home screens.

    Siri may or may not make good use of the processor. Additional uses may include photo or video processing of some sort, though most of that would obviously be relegated to larger devices, just based on practicality of the workflow. I certainly would not want to edit that kind of thing on a small screen, especially when the resolution is far below the source and output resolutions.

    So Apple really complicates decisions with this phone. It does so many things right but leaves so much to be desired. Just combining the processor with a 4″ display and I may have become a convert. Nah, maybe that’s not even true. There are too many places where iOS could take advantage of that great processor and doesn’t. The smallest-in-class screen is a huge -5 on the feature list. It’s unfortunate that there is no phone out there currently that is “the best” in all of the major features.


    Buan ziua Horace,

    Normally I agree with you, but this time, while I am sure Apple people talked about this, I think it is not basis of their decision making.


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  • Yes it does make perfect sense. I am your perfect example, I have the 3gs and will upgrade now.

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  • Saltysol64

    So called “expert” bloggers don’t seem to be capable at actually producing much of anything…other than hot air so I’ll add my own. Apple puts a great deal of effort into the design of their products and then typically stick with the design for a couple of years before changing the form factor. The expectations for a completely new design were largely driven by a blog-o-sphere run amuck.

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  • i am just wondering when it will come out, i think this phone is gonna be really hard to manipulate this phone will set a bar that rivalry phones cant match.

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