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Older model iPhones are more popular than ever

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The big number everyone’s going to be watching for during Apple’s(s AAPL) earnings announcement on Tuesday is how many iPhones it sold during its second fiscal quarter. We don’t know the total yet, but a study published by Consumer Intelligence Research Partners estimates how many of those were the latest model iPhone 5: about 53 percent of all iPhones sold worldwide.

It also found that the rest were iPhone 4 and iPhone 4S models, which sell for free with a contract or for $99 with a contract, respectively. That breakdown is slightly improved from December, when a CIRP survey shows that just half of all iPhones sold were the newest model iPhone 5.

CIRP January through March iPhone model purchases
CIRP January through March iPhone model purchases

This is a very different sales pattern than what we saw in the second quarter of the iPhone 4S’s availability. When that device was the latest model, it accounted for 73 percent of all iPhone sales in April 2012, a significantly larger share than the iPhone 5 had as of March, according to CIRP, whose data comes from a survey of 500 customers who’d recently bought an Apple device.

The iPhone 4S sold 33% of all iPhones in the survey period, while the iPhone 4 represented 14% of all iPhones. In contrast, in the similar period following the launch of the iPhone 4S, the lower-priced iPhone 4 represented 22% of sales, and the free iPhone 3GS represented 5% of sales.

As a share of iPhones sold, 33 percent is the highest share a legacy model iPhone has carried in at least the last two years, according to CIRP’s data. Apple wants to sell iPhones no matter what, but ideally it wants to sell more of the most expensive iPhones, not the severely discounted and free-on-contract devices; that way its average selling price stays high.

Something similar is taking place with iPads, CIRP found: Between January and March, the iPad 2 — which originally debuted in early 2011 — grabbed a larger share of iPad sales, up from 27 percent to 32 percent. The newest model, the iPad with Retina display, dropped from 43 percent of sales in the holiday quarter to 36 percent of sales during the January quarter. Meanwhile, the smaller and cheaper iPad mini grew slightly, from 30 percent to 32 percent of sales.

It’s not really a mystery that cheaper Apple devices, even when the devices are not the latest model, are attractive to buyers when viewed against the competition. What is a mystery (until tomorrow anyway) is how this affects Apple’s balance sheet.

11 Responses to “Older model iPhones are more popular than ever”

  1. Well, that’s not the whole story, is it? An iPhone 5 also means you’ll likely have to replace a bunch of charging cables — you’ll have one for your home, but what about your car and office? What if you’ve got, say, a clock radio or (worse yet) a vehicle with an iPhone dock? Yes, you get to buy adapters for those.

    It was, at best, odd for Apple to refuse to use the USB cable standard when the company came up with its proprietary cable. It’s odder still for Apple to abandon that proprietary cable for another one that is incompatible with the rest of the world.

    Add the weird cable to the fact the iPhone 5 isn’t much of an improvement over even the iPhone 4 (I’ll not address the 4S — I’ve had one of those for over a year and it was a step down from my 4 in terms of reliability) and it makes sense that fewer people are buying the 5 than expected.

  2. trip1ex

    In the US it makes little sense to buy a old model under contract. I mean what so you will spend $1800 instead of $1900 or something like that? Big whoop. You will get a lesser phone to use for that effort and your phone will have $100 less resale value when you go to switch phones in 2 years. Total savings $0 for the privilege of using an older model.


    Here in Brazil, the iPhone 4 cost $330 (unlocked) and the iPhone 5 cost $1300 (unlocked). Maybe it’s explains why the old models are so popular ;)

  4. winstuff

    My iPhone 4s and iPod Touch 5 give me a look at both sizings. The larger display on the Touch makes it a significantly more productive tool for reading and writing. So the iP5 hit the sweet spot for me.

    OTOH, Horace Dedui talks about devices “over serving” their market, and the iPhones are nearing that moment, when the 4 does more or less the same job as the 5 for most folks at which point pricing becomes the primary consideration.

    I’m sure Apple is looking for ways to antiquate its older phones … tough security with fingerprinting and such … and other ways to replace my need for a wallet might do that.

  5. hamburguesa no queso

    It’s about margins…Older phones are further down the cost curve (eg manufacturing processes are more efficient, economies of scale, fixed memory allocation – 16gb for 4s, 8gb for 4, etc). So lower asp but commensurately lower inputs…5 prob costs a lot more to make, given that it was supply constrained…so asp high but cogs much higher.

  6. Get it, Apple? It’s because we don’t all want to go out and buy new power cables, new docks, and new everything else just because you decided you could pad the profits by changing the connectors on the iPhone5. We outsmarted you this time, didn’t we?

  7. Chad Jones

    Also, as a previous Android user, I like my iPhone 4s size. I’m sick of phones getting too big to fit comfortably in a pocket. I’ve held off upgrading to the iPhone 5 because I like the smaller size of my 4s.

    It looks like I’m not alone in preferring a smaller size phone. After all, I already have a laptop and a tablet.

  8. While selling more iPhone 5s means that the “average selling price” is higher, this says nothing about revenue, which is what really matters. Considering that the iPhone 4 and 4S use older technology they are most likely much cheaper to produce than the iPhone 5 and therefore their lower selling price does not necessary mean a large drop in revenue.

  9. The missing context here involves the iPhone 4’s (probably much overblown) reception problems. The 4S added a handful of new features, including Siri, while addressing the 4’s relatively iffy reputation. It’s not surprising, then, to see a much sharper break between those two models when the 4S was the latest gadget.

    The iPhone 5’s edge is mostly about its A6 processor’s speed, which doesn’t give consumers as compelling an argument for spending the extra $100.

    • gruberg

      I concur with @WRSI. Further, let’s not forget that the lowest end phone at the time (and the one that most people were dying to upgrade from) was the iPhone 3GS which was VERY challenged to run the latest iOS version at that point in time.