Three reasons why iPhone 5 will have little market impact

One of the biggest new features from the new Apple iPhone 5 was the LTE capability.

The principal analyst, Mobile Content and Applications and Mobile Broadband and Devices research for Boston area research firm Analysys Mason, said the new iPhone 5 feature will have less than expected impact on the 4G market. Here are his three reasons:

1. LTE or not?

The iPhone 5 LTE capability will have less than expected impact on the 4G market, especially in Europe. It is not compatible with 800MHz and 2.6GHz LTE bands used by many operators across Europe. The LTE mobile tariff mark-up will be a deterrent for many user and non-LTE operators will price the iPhone 5 more competitively. Our research indicates that 46 per cent of iPhone 4 users believe that they already have 4G. The question is how do you convince those customers to buy an LTE contract.

2. iOS 6 launch is more disruptive than new iPhone 5 features

Google Maps will lose up to a third of its mobile users in Western markets because of Apple’s alternative map service. According to our recent study in partnership with Arbitron Mobile Trends Panels, 28 per cent of Google Maps users in France, Germany, Spain, UK and the US are on iOS. Three out of four iOS users used Google Maps at least once over two months. Location information and mapping are at the forefront of application innovation. By offering its own map service, Apple will not only gain control over one of the most popular applications on its devices but it will also offer developers better and more integrated location-based tools for iOS. Apple’s Passbook will take mobile couponing to the next level. We estimate that 1/3 of smartphone owners use mobile coupons. With 435 million iTunes accounts, Apple could easily extend Passbook into a mobile payment application. This is something Google Wallet lacks.

3. Cheap iPhone 4 will make a serious dent in the mid-end smartphone segment, despite still being rated as a high-end smartphone

Apple iPhone 4 will come free on a two year contract in the U.S. and in Canada, making it much more affordable for the mid-end segment.

According to our forecast, there will be more prepay than contract customers converting to a smartphone in 2013 in Europe. This means that most of the smartphone sales growth will come from low/mid end customer segments. The iPhone 4 now retails at 400 Euros which is a similar price point as Samsung’s Galaxy S2.

Ronan de Renesse, Principal Analyst, Mobile Content and Applications and Mobile Broadband and Devices research programmes, Analysys Mason.

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