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Summary:

The context for this is whether or not Apple needs a cheaper iPhone model — one that would allow Apple to sell a new model iPhone for a lower-than-typical price for an Apple premium device.

feature phones

The last few months have revealed a significant first for the iPhone in its six years: the outsize popularity of cheaper, older model iPhones. The iPhone 4 and 4S together, are almost as popular as the latest model, the iPhone 5. New data released Monday by Kantar Worldpanel Comtech sheds more light on who has been buying these devices: a lot of new iPhone owners are people who have never owned a smartphone before.

According to data sent to me by Kantar, 38 percent of customers who purchased iPhones in the last three months upgraded from another iOS device device, 31 percent upgraded from a basic feature phone, and 20 percent switched from an Android device.

While the late-adopter crowd is still No. 2 among Apple’s most common customer, that group has grown immensely in the last year. Kantar analyst Mary-Ann Parlato told me that a year ago, just 9 percent of iPhone buyers were former feature phone users. She notes that this large increase can be attributed to discounted devices, like the iPhone 4 and 4S — which are available for free with contract or $99 with contract respectively in the U.S. She also thinks this number will “stabilize” over the next year.

Kantar’s study finds that the biggest potential threat is Windows Phone, which is specifically priced and marketed to first-time smartphone users. And it is doing really well with late adopters: 42 percent of those who purchased a new smartphone running Windows upgraded from a basic feature phone over the last three months.

Still, even if Kantar doesn’t think that 31 percent rate among new smartphone owners will continue its dramatic rise, I think this is important to note because of the “halo effect” Apple is going for. As Apple CEO Tim Cook noted at the company’s last earnings call, “We believe the [iPhone 4] for the price point we’re offering is an incredible value for people that allows people to get into the ecosystem with a really, really phenomenal product.”

The key phrase there is “get into the ecosystem,” which means downloading apps, movies, music and other Apple software and maybe eventually buying an iPad or a Mac. That’s the plan anyway — whether it will work, especially among more price sensitive customers, remains to be seen. But Apple has been targeting these late adopters and it appears to be working.

The context for this, of course, is whether or not Apple needs a cheaper iPhone model — one that would allow Apple to sell a new model iPhone for a lower-than-typical price for an Apple premium device. There is some recent evidence to show that Apple is continuing to find ways to attract new customers without drastically altering its supply chain and product lineup.

  1. Frank A NYC Monday, June 3, 2013

    IOS is an easy transition for a new smart phone user. Especially if they own an ipod.

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  2. apple might be getting these new customers but at the same time it is losing vast majority of its customers to samsung galaxy.

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    1. GuestCommenter Tuesday, June 4, 2013

      Vast majority? Vast? Majority? Who? When? How?

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    2. That’s a bunch of BULL!

      Apple is growing its customer base exponentially, not losing it.

      Why do people like to lie about Apple? Their hate blinds them!

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    3. It isn’t losing net customers. Samsung sells a lot of cheaper phones in developing markets, that’s how it makes its phenomenal numbers, not w high end galaxy phones.

      People are switching to Samsung but people are also switching to iPhone. Last stats I saw showed iPhone had higher retention rates.

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  3. As the owner of two Samsung Galaxy phones (S and Note) I can state with certainty that Apple need not spend sleeping nights worrying about Samsung … they are slow, unreliable and quite frankly a big disappointment to me. I should have bit the bullet and gone with an iPhone, it’s clearly superior. Mind you I’m no fan of Apple’s premium pricing model but sometimes, you do get what you pay for.

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  4. As the owner of two Samsung Galaxy phones (S and Note) and an older Samsung “smart phone” I can state with some certainty that Apple need not spend sleepless nights worrying about Samsung … my experience is that the devices are slow, unreliable (less than a two foot drop resulting in a cracked “Gorilla Glass”screen rendering the phone inoperable) and quite frankly a big disappointment.

    I should have bitten the bullet and gone with an iPhone, but as a long time TMobile user I didn’t have the option until very recently. The iPhone is clearly superior not only due to iOS but in build quality. Mind you I’m no fan of Apple’s premium pricing model but sometimes, you do get what you pay for (or far less, as in the case of the Samsung phones I’ve used … I’ve seen much more positive results with the HTC and LG phones I got for my daughters).

    Just my two cents.

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  5. Lydia Lacey Tuesday, June 4, 2013

    IOS was the first smartphone for both my parents, which they found simple and easy to use. I’d definitely recommend the iPhone for the not so tech-savvy of people…and, well everyone. iPhones rule!

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