How Will Apple’s iPhone 4S Stand Up To Competition? Depends On The Market

Quite a few commentators expressed a sense of deflation when Apple (NSDQ: AAPL) finally announced its newest device yesterday, the iPhone 4S. Now some analysts are weighing in with their prospects on how the new device might sell.

Apple’s move to launch a device with no changes in form factor — even with the faster processor, better camera and new antenna among the improvements — has got analysts bullish on the prospects for competitors, many of whom are developing products built on Android.

Gartner analyst C.K. Lu in Taipei, quoted by Reuters, seemed to sum up the sentiment well: “Apple no longer has a leading edge, its cloud service is even behind Android; it can only sell on brand loyalty now.”

The markets appear to be weighing in too, with shares in Samsung, HTC and LG all trading higher since yesterday evening’s news.

But Android competitors may not be the only ones quietly rejoicing today. Companies launching new devices on Microsoft’s Windows Phone “Mango” platform will now have a slightly less crowded field against which to compete. That might be the boost that a company like Nokia (NYSE: NOK) needs as it prepares to launch the first devices in its make-or-break Windows Phone smartphone push.

But don’t think that Apple is no longer a contender for selling millions of devices anyway.

Earlier this week, research from the mobile ad firm InMobi noted that Apple had a crack at really taking the market with a new iPhone “5”, with some 41 percent of consumers in the U.S., and 35 percent in the UK, planning to buy the new device.

Those numbers did drop by quite a lot (but did not disappear) with the prospect of “only” an iPhone 4S, going down to 15 percent and 12 percent, respectively. But one player, RIM (NSDQ: RIMM), looks like it might suffer anyway: the survey noted that 28 percent of BlackBerry owners in the U.S./18 percent in the UK said they would switch to the iPhone, even if the device was only an incremental upgrade on the iPhone 4.

Developing markets. As my colleague Tom pointed out in his post yesterday, there are around 55 million iPhone 4 owners who only bought the device in the last nine months. Assuming a large portion of those were on contracts, they will not yet be eligible for an upgrade. But putting aside what Apple might be missing in targeting that tier of early adopters and higher spenders, the iPhone 4S might help Apple significantly in another key area:

It can help Apple pick up “the next billion” users: those who have yet to buy a smartphone and might be more inclined to look for less expensive models. Apple is selling models of the iPhone 4S starting at a very competitive $199 on a two-year contract in the U.S., while (also on contract) the iPhone 4 has been discounted to prices starting at $99 (competing with the much-fabled “sub-$100 Android phone), or you can even pick up the 3GS free.

Lower-cost devices will make Apple a more accessible brand not only in huge markets like China and India — numbers one and two in the wider mobile market in terms of subscribers — but also gives it a route to targeting other emerging markets in Africa, the Americas and elsewhere in Asia. In other words, Apple hasn’t announced a price-busting, mass-market “iPhone Nano” but by default this is what the older models may have become.