Slimmer iPhone5
arriving soon…

Over 80m sales in the bag

17 Jul’12

The Apple phenomenon is accelerating with huge orders in place for the new thinner and wider screen iPhone5 due in October

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Piper Jaffray’s survey

Today Piper Jaffray's Gene Munster reported the results of his annual cell phone survey. The key takeaways:

• Asked what phone they were going to buy next, 65% said an Apple iPhone, 19% said a Google Android, 6.5% said "not a smartphone," 6% said "I don't know," and 2.5% said a Research in Motion Blackberry.
• 51% of respondents who planned on making the iPhone their next smartphone (whether current iPhone users or not) said they were waiting for the iPhone 5.
• 94.2% of iPhone users plan to buy an iPhone for their next phone, improving upon last year's rate of 93%. If you throw in half of the 2.9% of iPhone owners who were still unsure, the re-buy rate rises to nearly 95.7%.
• Android phones were measured at a re-buy rate of 60%, up from 47% last year. "While the improvement is a positive sign," Munster writes, "Android is still losing 33% of current users to the iPhone. We also note that 38% of Blackberry users expect to switch to iPhone."
• Asked to put a dollar value on their current phone, iPhone owners' answers averaged $313, more than $100 higher than the device's subsidized price. Android and Blackberry phones had value averages of $220 and $219, respectively.
• Shown unlabeled scale drawings of an iPhone and a Droid Razr Maxx, 56% preferred the phone with the smaller screen, which makes one wonder why Apple would want to increase the iPhone 5's screen size, as rumored.

"The iPhone represents 50%+ of Apple's revenue," Muster points out, "making Apple future largely reliant on the success of the iPhone."

But he's not worried. Given the better than 94% re-buy rate and the 51% of all phone owners waiting for the iPhone 5, Munster estimates that more than half of his projected 170 million iPhone sales for fiscal 2013 are already, as he puts it, "in the bag."

The survey gathered responses from 400 people in the U.S. (Minnesota, New York, California) and Asia (China, South Korea). Among them, 348 owned smartphones, 51 owned feature phones, and one didn't own a cell phone of any sort.

The iPhone5’s new features

Apple next iPhone, currently being manufactured by Asian component makers, will use a new technology that makes the smartphone's screen thinner, people familiar with the matter said, as the U.S. technology giant strives to improve technological features amid intensifying competition from Samsung ElectronicsCo. and other rivals.

Japanese liquid-crystal-display makers Sharp Corp. and Japan Display —a new company that combined three Japanese electronics makers' display units—as well as South Korea's LG Display Co. are currently mass producing panels for the next iPhone using so-called in-cell technology, the people said.

The technology integrates touch sensors into the LCD, making it unnecessary to have a separate touch-screen layer. The absence of the layer, usually about half a millimeter thick, not only makes the whole screen thinner, but the quality of displayed images would improve, said DisplaySearch analyst Hiroshi Hayase.

The current iPhone 4S is 9.3 millimeters thick, according to Apple's official web site. It was previously reported that the new iPhone will likely come with a screen larger than the current iPhone's 3.5-inch display. A thinner screen could help offset an increase in weight due to the larger size.

Technological progress at LCD makers such as Sharp, Japan Display and LG Display is crucial for Apple, given that Samsung has been pushing its organic light-emitting displays as one of the unique features of its Galaxy phones. Samsung's flagship smartphone, the Galaxy S III, comes with a 4.8-inch OLED screen and is thinner than the current iPhone.

The vast majority of OLED screens used in mobile devices today are supplied by Samsung. OLED screens, which don't require backlighting, tend to be thinner than conventional LCD panels.

While Apple and Samsung together dominate the lucrative market for high-end smartphones, the companies are under constant pressure to meet high expectations for more-powerful, capable devices that are easier to carry.

The Apple Evolution

For more than three decades, Apple's much-hyped product launches have brought plenty of smash hits—and one or two disappointments. Take a look back.

The G4 was a small cube-shaped personal computer sold without a monitor.

A thinner screen in the next iPhone could make the whole device slimmer, or make extra room available for other components such as batteries. But in-cell touch screens are harder to manufacture than conventional LCD screens. The people familiar with the situation said that LCD makers are finding the manufacturing process challenging and time-consuming as they scramble to achieve high yield rates.

Analysts have said that the new iPhone is expected sometime in the fall. In May, people familiar with the matter said that the new iPhone will likely come with a screen larger than the current iPhone's 3.5-inch display. A thinner screen could help offset an increase in weight due to the larger size.

The LCD industry has been working on the in-cell touch technology for several years. For LCD panel makers like Sharp, Japan Display and LG Display, Apple's iPhone provides the environment where they can demonstrate their latest technological progress to show that LCD screens can continue to evolve and stay competitive against OLED displays. In the meantime, Sharp, Japan Display and LG Display have also been developing OLED displays.

At the same time, the adoption of in-cell technology is bad news for makers of conventional touch panels used in many smartphone screens now. Taiwan's WintekCorp. and TPK Holding Co., which supplied the touch-panel layer of the iPhone 4S screen, didn't get orders for the next iPhone, people familiar with the situation said.