After selling 90 million iPhones (s aapl) from 2007 through 2010, an important base-ten milestone has almost certainly passed, the sale of the 100 millionth iPhone. Expect a self-congratulatory press release next month, but now is the time to think about the next 100 million iPhones.
According to NPD (via Fortune) (s twx), the iPhone 4, iPhone 3GS, and the iPhone 3G held the first, second, and 10th positions among mobile phones in the U.S. in 2010. Most of the rest were Android (s goog) devices. According to Gartner (s it), Android as a platform took second place worldwide among smartphones in 2010, and will almost certainly pass Symbian (s nok) for first in 2011. Apple and iOS will have to settle for third in 2011, passing RIM’s BlackBerry OS (s rimm). While the trend toward Android market share dominance will not be reversed, the real concern is whether Apple intends to continue to compete aggressively on hardware anyway. The signals are mixed.
After yearly releases of new iPhones, it’s now rumored that a hardware-free WWDC means no iPhone 5 until fall at the earliest. One argument for such a delay is an LTE iPhone 5, but every month, if not week, there are new Android smartphones to choose from, compared to just the iPhone 4 and the previous year’s iPhone 3GS from Apple. Can anyone imagine there being just one model of iPod? How about one iPod in one color? Nearly a year after the release of the iPhone 4, Apple is still promising (but has yet to deliver) a white iPhone 4.
Another issue related to dearth of iPhone choice, namely carrier exclusivity, still exits, continuing to negatively impact iPhone’s sales. In the U.S., the iPhone is available on Verizon (s vz) and AT&T (s t), representing approximately two-thirds of mobile subscriptions. That’s the equivalent of not selling the iPhone in all of the southeastern U.S. It’s even worse in a country like China, a major focus of Apple’s future growth. The iPhone is currently available only through China Unicom, which accounts for about 20 percent of wireless subscribers. The iPhone needs a larger presence worldwide now, and a larger-screened iPhone wouldn’t hurt, either.
Looking at the list of top-selling smartphones in the U.S., two of them also have 4-inch displays: the Droid X (s mmi) and the EVO 4G. According to NPD Group, consumer demand for smartphones with large displays grew to 24 percent of the market by the end of 2010, while growth in demand for smartphones with displays the size of the iPhone was flat. While rumors of the iPhone 5 having a larger screen have been inconsistent, the demand for such a device is clearly there .
Another market where there is demand is at the low-end of pricing, and the $100 Android phone (no contract required) is already here. However, the low-end market is at least recognized by Apple for its importance. From Forbes, at a meeting with analysts, COO Tim Cook asserted the company was “not ceding any market,” and that Apple didn’t want its products to be “just for the rich.” That sounds reassuring, but until Apple launches a prepaid iPhone for $200 or $300, it’s just talk.
Apple has had great success with the iPhone, but the current limited design choice, limited carrier options, and limited pricing could take away from that success. More models, more carriers, more price points: That’s the way forward for the second 100 million (and more) iPhones.