LTE-Compatible iPhone Likely to Ship in Late 2012, Early 2013—IHS
Apple’s evolutionary approach with the Apple 4S was greeted positively by analysts we contacted Wednesday. The improvements in the iPhone 4S were “largely expected,” which has generally been the case with recent iPhone revisions, said Walter Piecyk, analyst with BTIG, “but lack of surprises has not translated to lack of growth,” he said. At the same time, aesthetic changes associated with a new form factor “are more likely to drive an upgrade cycle” which was borne out with upgrades to iPhone 4 versus those to iPhone 3GS, Piecyk said. When the iPhone 4 launched in June 2010, unit sales growth jumped more than 68 percent sequentially in Q3 that year, he said. In contrast, the iPhone 3GS launch the year before drove 37 percent sequential growth in the quarter following its June 2009 launch, he said. Part of the stronger 2010 sequential sales growth was also a result of price drop on the 3GS, “which continues to enjoy a long tail of profitability,” he said.
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The rumored iPhone 5, the LTE (Long Term Evolution) smartphone that some speculated Apple would introduce this week “most likely will arrive in late 2012 or mid-2013,” said a report Wednesday by IHS iSuppli. The next-gen device will roll out “when an affordable chipset solution allowing a thinner form factor is available,” IHS said. Apple’s incremental approach to upgrading the line “makes sense,” IHS said, given the success of previous iPhone 4 models and speeds Apple has reached with the existing 3G HSPA (High-Speed Packet Access) standard. “There is no appreciable benefit to adopting LTE, especially given the current spectrum and uplink speed constraints for LTE, it said.
The iPhone 4S did get a tech upgrade, including an Apple A5 dual ARM core processor, which “should increase the performance significantly, and will put Apple right at the leading edge of the dual-core trend in smartphones,” said Francis Sideco, analyst at IHS. The dual-core processors, combined with dual-core graphics, will mean faster performance while minimizing power consumption for longer battery life, he said. With EvDO (Evolution-Data Optimized) compatibility, the iPhone 4 is a “true world phone,” Sideco said, saying Apple is likely using a baseband chipset solution from Qualcomm that combines support for HSPA and EvDO standards. Apple didn’t respond to our request for comment.
Allen Nogee, analyst with In-Stat, cited Steve Jobs’ departure as CEO in August as one reason for Apple’s cautious approach and “not wanting to do anything very radical at this time.” Regarding the next-gen network, he told us LTE coverage is spotty, with those operators that do offer it only having it in some areas. “In the U.S., where LTE is actually ahead of Europe and elsewhere, Verizon has pretty good but not great national coverage and AT&T only has a few cities,” Nogee said. Apple could have gotten an LTE phone to market “if they wanted,” he said, “but battery life would be poor, and it would have cost a fair amount more to build.” The company opted instead for a faster processor and longer battery life, features that “they would appreciate more than LTE,” he said.
The Siri personal assistant technology introduced in the iPhone 4S is “significant,” Nogee said. The feature, which lets users send messages, schedule meetings and place phone calls via voice command is “not a feature that Apple rushed out,” Nogee said. “They waited until the iPhone had enough processing power to correctly handle this before releasing it,” he said. It remains to be seen how well the voice recognition technology works, though, as the concept has had a number of unsuccessful trips to market. If it performs well, it’s a feature that could “set the iPhone apart from the crowd,” Nogee said. “Apple has realized that a screen interface, while versatile, still has its limitations, and if we are ever going to get to the Star Trek Communicator, we need voice,” he said. Piecyk of BTIG said, “Siri looks great if it performs like the videos show, but many companies have tried, with limited success,” to bring voice recognition-based applications to market.
IHS called Siri “very attractive” for automotive infotainment applications due to the voice recognition and text-to-speech capabilities along with its “conversational responses to inputs.” Although that capability exists today from other companies including Google, Apple’s support through a standard feature on the iPhone 4S “is likely to make such voice recognition a standard feature,” IHS said.
AT&T, meanwhile, could be the primary beneficiary of the iPhone 4S release in the U.S. because it will continue to have an exclusive on the 3GS which it can now offer to its postpaid customers for free, BTIG’s Piecyk said. AT&T can also benefit at the high end “because it will offer the fastest speeds on its HSDPA+ network,” he said.
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EBay didn’t waste time putting an iPhone instant sale program in place following the iPhone 4S announcement Tuesday. The online marketplace company announced a smartphone trade-in promotion beginning Tuesday, ending Wednesday, for eBay Instant Sale, an electronics trade-in program that eBay said has generated more than four million smartphone offers since launching in October 2010. The promotion allows customers to lock in a pre-determined cash offer for select smartphones, “in excellent condition,” that can be used toward the purchase of the iPhone 4S, eBay said. On Tuesday, eBay Instant Sale generated more than 50,000 trade-in offers for smartphones, a company spokesman told us, which is more than 15 times the average number of offers generated on Tuesdays last month. A smartphone offer was generated every 2 seconds using eBay Instant Sale Tuesday, and 90 percent of the smartphone trade-in offers generated Tuesday were for iPhone products, he said. Ten percent of phones were non-iOS devices, including Android and BlackBerry. Of the iPhone products generating trade-in offers Tuesday, 65 percent were iPhone 4 devices, 30 percent were iPhone 3GS devices and 5 percent were iPhone 3G devices, he said. Qualifying smartphones and their maximum trade-in value for the promotion include the AT&T iPhone 4 ($357), Verizon iPhone 4 ($318), AT&T iPhone 3GS ($229), HTC EVO 3D ($200), HTC Thunderbolt ($200), HTC Droid Incredible 2 ($200) and HTC Sensation 4G ($225). At the end of the promotion Wednesday night, the spokesman said, eBay Instant Sale will continue to offer competitive promotional trade-in values for these devices through Oct. 18 but prices after Oct. 5 “are not pre-determined,” he said. Prices for trade-in smartphones will be subject to change daily, but will remain competitive in the market during the course of the promotion, he said. At instantsale.ebay.com, customers enter basic information about their smartphones and receive an instant offer, eBay said. Once the offer is accepted, sellers are sent a postage-paid shipping label, and will have seven days after securing an offer to ship the smartphone, eBay said. Payment is deposited into the customer’s PayPal account once the phone has been received and evaluated, it said. According to the FAQ section at instantsale.ebay.com, there are no fees associated with Instant Sale transactions.