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.