Why the iPhone 5 launch will be the "biggest upgrade in consumer electronics history"

September 11, 2012 8:41 am

Summary: The iPhone 5 launch isn’t just going to be big according to Topeka Capital analyst Brian White, it’s going to be the “biggest upgrade in consumer electronics history”. It will be, and here’s why.

I can all but guarantee that you’re nowhere near as jazzed about it as Topeka Capital analyst Brian White, who says that the iPhone 5 launch will be the “biggest upgrade in consumer electronics history”.

Gallery: iPhone 5: Rumor roundup

White notes that the iPhone 4S had pre-orders totaling 1 million in 24 hours, but he believes that this figure will rise to 1.3–1.5 million for the iPhone 5. He also believes that the sales over the first three days will rise from the 4 million that the iPhone 4S saw to 5–5.5 million, and that for the September quarter Apple could sell a whopping 10–12 million units.
White goes on to list a number of reasons why he things the iPhone 5 will be a big hit — bigger screen, LTE capability, faster processor, iOS 6, and so on — but in the analysis he misses the wood for the trees, for getting that the vast majority of Apple customers don’t care about the hardware specifications at all.
The reason that the iPhone 5 — or whatever it ends up being called — is going to be big is that it will be the first major redesign of the iPhone since the iPhone 4 was released back in June 2010.
Consumers like a redesign because it means that their new handset doesn’t look like everybody else’s handset. To people who like to pore through endless specification sheets and hardware teardowns, it seems odd that people will base their purchasing decision on something as simple as a product looking different, but they will.
And Apple knows this, which is why I suspect that the company takes a tick-tock approach to product releases, choosing not to redesign the iPhone for every release because not doing this builds up demand.
Another reason why the iPhone 5 launch will be massive is that the user base is bigger than ever, which means more people than ever are either eligible to upgrade their existing handset, or are currently using an old iPhone and want to upgrade. The bigger the user base for the iPhone is, the bigger the demand for a new handset will be. After all, it is a lot easier to sell to an existing customer than it is to convince someone to switch to the iPhone from an Android, BlackBerry or Windows Phone device.
That said, there doesn’t seem to be a shortage of people willing to jump ship, abandoning their existing handset for the new iPhone. Even knowing nothing official about the next iPhone, a survey carried out by Techbargains showed that 22 percent of Android users are willing to dump their current handset for the new iPhone, while 38 percent of BlackBerry owners say they will buy the new iPhone.
However, to prove the point that it is easier to sell to existing customers that it is to convince people to switch platforms, the group that is showing the strongest demand for the new iPhone are current iPhone owners. 64 percent of iPhone 4S owners said they will buy the new iPhone, along with 71 percent of iPhone 3G owners. However, the crowd most eager for the iPhone 5 is iPhone 4 owners, with a massive 74 percent saying that they will buy the new iPhone.
And remember that a lot of those old, unwanted iPhones will either be sold on the secondhand market, or passed on to family members or friends, adding to the iPhone user base.
People who own iPhones want to own the latest iPhone. I bet that thought makes Apple chief executive Tim Cook smile.

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