The iPhone at four; growing up or just growing?
Ever since the iPhone launched four years ago (to the day), the question on everyone's mind has been: When will Apple expand the portfolio to reach into all market segments? I remember thinking in 2007 whether it would be in six months …
Context & Ripple Effects
Four years to the day after the iPhones iPlenty launch-window story asked whether demand would hold, the question has flipped: not whether the iPhone sells, but whether one phone can keep selling to everyone. The iPhone 4 kept Apple top of its class in 2010, and owner-satisfaction data from ChangeWave showed unusually loyal users, so the pressure on Apple is about market coverage, not product quality.
That is why the portfolio question dominates: a Deutsche Bank analyst expects both an iPhone 5 and a cheaper iPhone 4S for September (a rumor, not a confirmed plan), which would be Apple's first real move down-market. The backdrop is a confirmed Mac business selling at a $1,323 average selling price — Apple has always run a premium-price house — and a rumored strain in the Samsung supplier relationship over ARM chip production.
First-order effects
- A two-device September launch — iPhone 5 plus a mid-range iPhone 4S, per the Deutsche Bank analyst's expectation — would for the first time give carriers a sub-flagship Apple option to place against Android's mid-tier phones.
- Apple's rumored plan to move ARM SoC production off Samsung to another contract fab in 2012 directly touches its most critical component supply chain while Samsung is simultaneously a rival handset maker.
Second-order effects
- Mid-tier handset makers who currently compete against Android peers at $100–200 price points would face Apple entering their segment, forcing differentiation on features Apple does not yet offer at those prices.
- Reduced dependence on Samsung for processors would loosen a supplier relationship where Apple's biggest component vendor is also its most direct smartphone competitor.
Third-order effects
- If Apple extends its premium-brand playbook down the price curve — the way its Mac line already spans price points around a high average selling price — the smartphone market shifts from a single-hero-product race to a segmentation contest decided by portfolio breadth.
- As smartphone adoption spreads beyond early adopters, the growth battleground moves from flagship specs to carrier distribution and financing across tiers, rewarding whoever covers the full range of buyer budgets.
The trend: Smartphones are moving from one flagship per vendor to segmented multi-tier portfolios as adoption broadens past early adopters.