Analysts: Apple Will Increase Smartphone Share

By Joseph Palenchar -- TWICE, 10/4/2011

New York - Many bloggers might have been disappointed that the new iPhone 4S doesn't include 4G wireless data or a display larger than 3.5 inches, but multiple analysts believe Apple will increase its U.S. smartphone share with its recent iPhone introductions.

Apple is tops in smartphone market share among smartphone users at 28 percent, Nielsen found in a survey of postpaid smartphone users in June, followed by HTC and Research In Motion (RIM), at 20 percent each.

In the market, multiple 4G phones are available, some with 4.3-inch screens, and new models from HTC and Samsung were announced recently with faster 1.5GHz-dual-core processors, compared with the iPhone 4GS's dual-core 1GHz processor.

Even though Apple hasn't caught up with other competitors in some respects with its new iPhone, Alex Spektor of Strategy Analytics said he believes Apple's North American share "will likely continue to grow because of availability on a new carrier, Sprint, and lower pricing for older generation models," including the 3G S for free with two-year contract and an 8GB version of the current iPhone 4 at $99 with contract. The iPhone 4 previously started at $199 for a 16GB version.

Spektor called the new iPhone 4S "an incremental improvement over the previous version, and Apple admits it themselves by calling it iPhone 4S rather than iPhone 5." Nonetheless, consumers will appreciate the new iPhone's speedier dual-core 1GHz processor, step-up 8-megapixel camera with image stabilization as a new feature, and better battery life, with 3G talk time going to eight hours from seven. The Siri intelligent voice-recognition component "is a nice addition to the iPhone's capabilities and will likely drive other device and software vendors to ramp up their voice recognition R&D," he added.

"But those seeking now-common 4-inch-plus screens will have to look to devices based on Google's Android or Microsoft's Windows Phone 7," Spektor continued.

Despite the iPhone 4S drawbacks, "smart, incremental pricing of Apple's three generations of models and broader operator availability will mean strong shipment volumes in the fourth quarter and beyond," Spektor continued.

For his part, SNL Kagan analyst John Fletcher  said, "Many were disappointed to not see an iPhone 5, but the 4S still solidifies iPhone's position as the product to beat with 1080p video, an 8-megapixel camera, the A5 iPad processor, wireless connectivity improvements and dual-mode GSM/CDMA [for international travelers]. And voice-activated features, so far a nonstarter on mobile, may also come to the forefront as a result of Apple's impressive Siri release."

With that in mind, and with the new lower price on an iPhone 4 and the free 3G S handsets, Fletcher expects Apple to increase its smartphone market share in the U.S., as does Ross Rubin, The NPD Group's industry analysis executive director.

Rubin cited the addition of a third U.S. carrier and the free price point of the 3G S, which he believes will operate only in AT&T's network. The announcements "will expose the iPhone to potential new customers," what with Sprint offering low-priced data plans and the free 3G S opening up another tier of customers. Apple expanded its share when it rolled out the iPhone 4 to Verizon early this year, he noted.

 For his part, analyst Jeff Kagan said Apple "has been able to wow the world year after year since the iPhone was first introduced four years ago. Not this time."  He added, "Typically when Apple announces a new model, users line up around the block in the middle of the night to be first in line to get the new device. With this device, I think Apple will be lucky to simply sell more iPhones opening day than they did the day before. Forget the line. No lin