Why the iPhone 5 probably won't double Apple's market share

Why the iPhone 5 probably won't double Apple's market share
Gene Munster is an analyst with Piper Jaffray, and a reasonably good analyst too, depending on what he's trying to predict. He's quite good at having inside info as to when Apple will be releasing certain products, but his predictions for success or failure of products has had a spotty history. Once, he predicted that Apple would have $1.2 billion in app sales in 2009. Apple ended up with $4.2 billion in app sales for 2009. Predictions are difficult, we understand, and Munster has had a fair record of being right, or at least close. Now, Munster is claiming that the iPhone 5 will double Apple's market share in the smartphone world, and we're sorry to say that we can't really get behind that thinking. 

A reputable source doesn't guarantee a reputable study

Okay, first thing's first here, let's lay out one ground rule for anyone reading about statistics or studies: sample size is king. If your study doesn't poll enough people, your results mean nothing. You could poll a few hundred people in Japan and try to claim that 90% of the world doesn't speak English, but it's not the most reliable data. Piper Jaffray is a good company with reliable research, but what was the sample size for Munster's claims? 216 people. 

216 people isn't even a reliable sample size to find out if people like bacon or not, so it's really hard to trust this one. On top of that, of those 216 people polled 28% had a BlackBerry, 26% had another type of phone, 29% had an iPhone and a mere 17% owned an Android. So, right off the bat, even if we remove the feature phone users from the study, we're looking at a sample that doesn't represent the true market in which Android held 48% worldwide in Q2 of this year. Whereas, most estimates have Android around 35-40% of overall smartphone install base, with iOS around 20% and BlackBerry around 15%.

The claim that 74% of Verizon customers were waiting on the iPhone 5 came from this same study, although we don't know how many of the 216 polled were Verizon customers. Let's assume for arguments' sake that half of the people polled were Verizon customers, that's only a 108 person sample size, which is definitely difficult to take at face value. Of all respondents in Munster's poll, 64% planned to buy the iPhone 5, but we just can't see how that number can be extrapolated to cover the entire smartphone market. Apple has been staying very steady in market share at around 20-25% depending on the estimates, while Android has been gaining and BlackBerry losing share. The study also doesn't seem to specify whether the doubling of Apple's market share is US-only or world-wide. If we're talking about just the US, we're being asked to trust data from 216 people to scale to a country of over 300,000,000, which is nearly impossible as is, let alone trying to extend to the entire globe.

Other issues with the predictions

Aside from the very small sample size used to arrive at these numbers, there are two major issues that need to be considered when it comes to predicting the iPhone 5's success. First is competition. AT&T has been beefing up its Android selection and Windows Phone 7 selection, so the iPhone isn't the only option for AT&T customers. As the Q2 revenues showed for AT&T, Android is making a big push on the carrier, and iPhone 5 or not, this can only be a bad thing for Apple. Verizon has been the biggest seller of Android devices, and Android has continued to thrive even with the introduction of the iPhone 4 on Verizon. It's certainly likely that some Verizon customers will have skipped the iPhone 4 and Android to wait on the iPhone 5, but the competition is fierce out there and only getting tougher with more Androids on AT&T and WP7 Mango devices on the horizon.

Secondly are the troubles surrounding LTE. If the iPhone 5 doesn't have LTE, by the time the iPhone 5 launches in October (assuming those rumors are true), Verizon will be close to its goal of having LTE in 145 markets with more coming in 2012. Verizon has already changed its early-termination options and killed one-year contracts. So, if new users are going to be locked into a 2-year deal, will they really want a 3G-only iPhone?

Also, there is no guarantee that the iPhone 5 will have LTE, and if it does, the added cost could change forecasts. So far, LTE enabled devices on Verizon have been on average $50 more expensive than comparable non-LTE devices. $200 has been the sweet spot for smartphones, so it's unclear how well a $250 iPhone would sell. The HTC ThunderBolt was said to outsell the iPhone on Verizon early on (although this survey seems pretty unreliable as well), so maybe the extra cost won't make much of a difference, but we just don't know right now. 


Overall, it's very difficult to trust a study of just 216 people, but beyond that Apple certainly doesn't have an easy road ahead. Expectations and buzz around the iPhone 5 will be big, as they are with any Apple device these days, but just because there's buzz doesn't always mean much. The buzz has been big for every iPhone so far, and Android still took over the market just by sheer numbers. 

It is still possible that the iPhone 5 will in fact double Apple's market share simply because feature phones and BlackBerries are likely going to continue to lose their market share. As feature phones continue to become a smaller and smaller piece of the overall mobile spectrum, that leaves more room for smartphones, and RIM has yet to prove that BlackBerries can stay competitive. Many analysts still see Windows Phone grow in popularity, and that climb may begin to ramp up during this purchasing cycle, but likely won't be at full steam, so that leaves a lot of space for iPhone and Android to grow. But, as yet Apple hasn't been the company benefitting from the decline of BlackBerry and feature phones, and doubling market share is a big task. It's possible, but these numbers don't give enough to believe it will happen.

sources: Mashable, PCMag 

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1. beatlesfan

Posts: 150; Member since: Mar 03, 2011

Guarantee the comments section gets pretty heated here, but I agree 100% about sample size being king.

24. Fanboys Suck

Posts: 609; Member since: Dec 12, 2008

Why would anyone think that the new iPhone would DOUBLE their market share? That is an asinine assumption!

2. 530gemini

Posts: 2198; Member since: Sep 09, 2010

One thing for sure. The iphone5 will be another successful release. I don't think that it will ever topple android's total market share, but the iphone5 will definitely be the bestselling smartphone model based on individual smartphone sales figures.

14. box unregistered

A fair conclusion, especially based on how well the iphone4 sells, despite its flaws. What I'd like to see are buyers who stay away from the mainstream and select what single phone meets their taste best, not what their friend bought, or what the news says they should buy. With such great phones coming soon with the buyer's choice of Windows (Mango), Google (Ice Cream Sandwich), or apple (ios5), these next few months should be very interesting

22. snowgator

Posts: 3621; Member since: Jan 19, 2011

Gemini, except for the patent wars, I am finding less and less arguments with your posts. No one who has even a passing interest can argue that the iPhone 5 will be a runaway hit. So long as Apple continues to pour it's heart and soul into it, the iPhone is assured of a spot in the top devices for a long time. If feature phones keep decreasing in sales, than that is the market Apple, Google, and Microsoft are fighting for. RIM will fight to maintain, and HP will hope just to make a 5 - 7% splash. It WILL be interesting ...

57. jroc74

Posts: 6023; Member since: Dec 30, 2010

I'm speechless....but I agree 100% with ya. +1 to you ..

74. NeXoS

Posts: 292; Member since: May 03, 2011

Well, not if they make the entire front screen go edge to edge. On paper, that sounds cool but so did "an entire metal band around the body acting like an antenna." It's a multi touch screen, I can envision problems with an edge to edge screen.

3. Yeeee

Posts: 190; Member since: Aug 02, 2011

Less than Half of old iphone users will get it, Most of people with blackberries will get it, and feature phones will split too.

7. yeeeeee---your stupid unregistered

Most people with blackberries will get it? I don't see where you are coming up with that analysis.

8. yeeeeee---you're stupid unregistered


16. Yeeee

Posts: 190; Member since: Aug 02, 2011

If you have a blackberry you either are a business user or most got it instead of an iphone. Now the iphones and android phones are cheaper so more ppl will buy them now. 2 years ago no carrier had android phones except tmobile and the iphone is only on 2 carriers. Some People with iphones are willing to try something else and feature phones just want any smartphone thats free or high end

17. yeeeeee---you're stupid unregistered

I still do not understand your logic. You have confused me even more.

51. raffy unregistered

excuse me, you said, "Now the iphones and android phones are cheaper so more ppl will buy them now," how come iphone is cheap???? I dont think so. Its more expensive than other android phones and nokia phones.. if your talking about cheapness you should buy samsung, LG, nokia, and many other phones. i think you should wake up and come to reality of what your saying about. peace.

69. BobbyTaba

Posts: 316; Member since: Aug 11, 2010

you can buy a iphone 4 for 150 and a 3gs for 50 dumbass. You should wake up and come to reality of what your talking about. Asshole

4. quakan

Posts: 1419; Member since: Mar 02, 2011

I always forget that when you get your phone, the carrier locks you in for 2 years. Sure some people have no problem with buying an iPhone at contract price this year and then paying retail next year to stay current, but your average consumer would have a problem with that. By time you get your next update, if you buy this possibly 3g only iPhone, it would be late 2013 and by then who knows how far LTE will be by then. The 3g market could possibly be obsolete by then and no one likes being the last person to get with the times. That makes me think that if the iPhone launches in Sep. or Oct. it would at least have to be upgradable to LTE (possibly make it 3g/LTE phone and disable the LTE until they figure out the necessary software to make it have a great battery life since that's what apple prides themselves in).

13. applesauce unregistered

I'm suprised iphone buyers just don't pay full retail from the get-go, then sell the device they bought when the new one came out to help defray the cost of the follow-up model. Getting locked into a contract for an iphone is just asking for problems, moreso if something happened to it, like liquid/physical damage or if it got lost or stolen.

20. MichaelHeller

Posts: 2734; Member since: May 26, 2011

Verizon has promised to have the entire US covered with LTE by 2013, but of course there's no telling how LTE will look globally.

35. protozeloz

Posts: 5396; Member since: Sep 16, 2010

Well where I am right now i can confirm LTE will start rolling out on 2012 also friends from UK have told me LTE is going there so 2012 May be the year of LTE. Also there must be put to consideration that if the next gen iPhone will spot both cdma and gsm bands fitting lte may be even more troublesome on a dual core device with dual band and furthermore cause issues. Apple won't simply get on firing range specially when their sales are outstanding and they can get $$$$ from android too

31. protozeloz

Posts: 5396; Member since: Sep 16, 2010

That would be a bad move. It. Caused the xoom to loose. More than the numbers they could have gotten

5. Sniggly

Posts: 7305; Member since: Dec 05, 2009

Thank you for this op ed, Phonearena. It was a long time in coming. Though you may just make Taco's head explode, because this flies RIGHT in the face of what he was arguing the other night.

10. iwebdroidberry7

Posts: 230; Member since: Jan 17, 2011

It's always been clear to me that Apple can't stop Androids grown on it own. Only a loony fanboy would even argue that, it's nearly impossible for 3 phones to fight off an army of phones forever. But... iOS and Windows Phone together is another story. I think Android will remain on top for a while but in a few years the three may level off. Even still Google wants marketshare, the more phones the more their services and ads get shown off, and Apple wants revenue. They are both doing well. And I would cry if either died off.

23. taco50

Posts: 5506; Member since: Oct 08, 2009

Not really sure where you see that. I never said Apple would double market share. I said it makes sense that 74% of people ALREADY PLANNING of getting an iPhone are waiting for the 5. Also the guy quotes another unscientific survey about the thunderbolt so he's not really staying consistent. Anyway I've never claimed this survey was god. I said it wasn't ridiculous like some others claimed.

26. Sniggly

Posts: 7305; Member since: Dec 05, 2009

That last part was where you lost the plot. The survey was ridiculous.

30. taco50

Posts: 5506; Member since: Oct 08, 2009

And that's the difference fandroids say it's ridiculous because it's positive about Apple and try to discredit when there's plenty of proof people desire Apple products and are very happy with them. You never said it was ridiculous when they surveyed store reps and said the thunderbolt was outselling the iPhone. Like I said very biased.

33. Sniggly

Posts: 7305; Member since: Dec 05, 2009

That was before I found out about the nature of that survey, Taco. And even then, that one and this one are two different animals. The sample size was just too small. Furthermore, I would disavow the survey even if it was pro Android. Any bias I have Apple has earned, Taco. However, I still maintain a reasonable viewpoint considering my hatred for Apple's business ethics.

45. HTCiscool

Posts: 449; Member since: Jul 16, 2011

I agree fandroids diss the iphone and cry when it succeeds for no absolute reason. But ur being a stereotype. I chose the Ipad 2 over the Flyer because it was bigger and smoother and I dont regret it. Most current iPhone users are waiting for the next one regardless of whether it has LTE or not cuz most iDiots don't know anything about smartphones.

34. taco50

Posts: 5506; Member since: Oct 08, 2009

Just saw your response in the other article. What's ridiculous is that you agree T-Mobile is faster than VZW when ALL the evidence shows the opposite.

37. Sniggly

Posts: 7305; Member since: Dec 05, 2009

Except the article YOU posted said that on smartphones T-Mobile was faster, while Verizon was only faster on modem cards. Tee hee. Self pwnage is delicious, isn't it, Taco? And btw, I'm not saying Verizon isn't fast, but the article clearly stated the results. Would you like me to relink it here?

39. taco50

Posts: 5506; Member since: Oct 08, 2009

Yes do me a favor and link it again. Care to elaborate why T-Mobile had faster smartphones in the article?

40. Sniggly

Posts: 7305; Member since: Dec 05, 2009

http://www.intomobile.com/2011/03/15/has-fastest-4g-network-america-all-depends-if-youre-using-usb-modem-smartphone/ "Now when talking about smartphones the tables turn. T-Mobile hits 2.28 Mbps down on average and 0.95 Mbps up. Next is Sprint with 1.50/0.56 down/up, AT&T with 1.45/0.97 down/up, and in last place is Verizon with barely 1 Mbps download speeds and 0.67 Mbps uploads." Truth hurts, Taco. Now, in real world average usage, people may actually get better data speeds on Verizon. I'm not knocking Verizon's data network, and if I could afford it (and if Verizon actually got coverage in a couple of spots I needed it to) I would've stayed. Heck, I'm not with T-Mobile either. It was just too delicious to pass up when the article you posted as proof of you being right actually proved you partially wrong.

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