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Analyst: 77 percent of early iPhone 4 sales were to iPhone upgraders

Friday, June 25, 2010 · 9:35 am · 19 Comments

“Apple’s new iPhone 4 is proving to be one hell of a brand loyalty generator. According to Piper Jaffray analyst Gene Munster, 77 percent of iPhone 4 sales Thursday were upgrades purchases by existing iPhone owners,” John Paczkowski reports for AllThingsD. “Compare that to 56 percent in 2009 and 38 percent in 2008 and you’ve got quite the trend.”

“‘Apple is effectively building a recurring revenue stream, where iPhone users pay on average $200 year to stay current with the latest phone,’ Munster wrote in a note to clients this morning,” Paczkowski reports. “[Munster continues], ‘While its true that iPhone 4 is a more significant feature upgrade compared to the 3GS, and we expect this upgrade rate to decline next year, Apple has in three years built brand loyalty in the phone market that compels users to upgrade to the latest version and wait in line for one to six hours to pick up their iPhone.’”

Full article, with details’ of Munster’s iPhone launch survey, here.

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Comment Feed

19 Comments

ken1w

Friday, June 25, 2010 - 9:36 am · Reply

Recurring revenue and profit from loyal customers…
MaLvado

Friday, June 25, 2010 - 9:40 am · Reply

“where iPhone users pay on average $200 year to stay current with the latest phone”

I wish! My contract is for two years, not one.
fisherbln

Friday, June 25, 2010 - 9:44 am · Reply

The writer/analyst didn’t get it quite right. Just because you were upgrading, didn’t mean you were upgrading from last year’s 3GS model. All 3 members of my family upgraded from the 3G.
FutureMedia

Friday, June 25, 2010 - 9:47 am · Reply

The upgrade will NOT decline next year. It will continue to increase as owners increasingly learn how to resell their previous year’s model for the same or more than the cost uf upgrading annually. Apple will continue to deliver more value each year that will continue to compell more and more of the installed base to upgrade annually. Next year it will probably be 64GB Ram, a dual core processor, an 8MPixel camera and more.
Randy

Friday, June 25, 2010 - 9:51 am · Reply

The same people who could afford it in the current economy
lurker

Friday, June 25, 2010 - 9:52 am · Reply

@FutureMedia – The sale of the previous model is the key. If you can get as much as $140 of the $200 upgrade cost back, that brings the cost of always have the latest iPhone down to $5 a month. Sorry, Starbucks, I’ll be skipping one morning a month.
Dirty Pierre le Punk

Friday, June 25, 2010 - 9:59 am · Reply

I would have been one of the upgraders if it wasn’t for the antenna signal loss issue. It’s alright Steve saying that we must hold the phone in a certain way but I don’t have to do that with my 3GS. That means, to me, that the ease of use of an iPhone has taken a step backward due to an obvious design flaw.

I suspect that Apple only discovered this problem when production was in full swing and will now try to ride the problem out. But the thing is, if enough people kick up a stink, Apple may well make a revision to the phone meaning that those early adopters will be left with a model that’s regarded as a flawed product. And that’ll make it hard to sell the phone on when you want to upgrade next time.

I’ve thought long and hard about this and, as much as I’d like to run out and buy one, the antenna issue makes it a deal breaker.

Best to hang on and see how this one plays out.
jaundiced

Friday, June 25, 2010 - 10:03 am · Reply

It was stated yesterday that the antenna “problem” is a software bug, involving the bars not actual reception. We’ll see.
David

Friday, June 25, 2010 - 10:05 am · Reply

iPhone 3GS has the same (non) issue. Try it. Hold it in firmly in your left hand and watch the bars.

Then think about how often you actually hold the phone like that for long.
acid

Friday, June 25, 2010 - 10:15 am · Reply

Duh, all businesses are the same. If you can build about 70% regulars, you can stay in business. Just like blogs too.
Macanatic

Friday, June 25, 2010 - 10:18 am · Reply

Wow.. this Munster dude is better than Gizmodo!!!

I wish I had his clairvoyant vision to be able to see what features next years model is going to have. He has already established that the upgrade rate won’t be as high… so I’m depressed now to see that Apple won’t be adding anything worthwhile.
Kaboom

Friday, June 25, 2010 - 10:20 am · Reply

Great for Apple… Not so good for ATT – hahahahahaha. Die ATT!
Toonces

Friday, June 25, 2010 - 10:25 am · Reply

@Pierre

Please read this

http://www.antennasys.com/antennasys-blog/2010/6/24/apple-iphone-4-antennas.html

Then stfu and quit whining
singidunum

Friday, June 25, 2010 - 10:47 am · Reply

I would venture a guess that at least half of those 77% upgraders’ 3GSs and 3Gs went to new AT&T customers (on eBay or Craig’s list), and I have no doubt that the other half is still on AT&T in some form (hand-me-downs added to the family plan). For Apple, new sales are new sales, regardless of who buys them (i.e. new customers or upgraders). For AT&T, most, if not all of these new sales will result in new activations, one way or another.
Dirty Pierre le Punk

Friday, June 25, 2010 - 10:58 am · Reply

Toonces,

It’s not whining, more like a genuine concern (which MDN also showed in an article that had a go at Apple over the iPhone 4 just yesterday). I wouldn’t expect a drone like yourself to understand that though although the article you highlighted was interesting.
RL

Friday, June 25, 2010 - 11:01 am · Reply

The other thing they don’t mention is app lock-in. Those that have had iPhones for years aren’t just going to drop them and go to a Droid when they would also be throwing out their entire investment in the App Store.
Big Al

Friday, June 25, 2010 - 11:06 am · Reply

So much for AT&T being a big problem.
Jason

Friday, June 25, 2010 - 11:27 am · Reply

As was already pointed out, I like that the article assumed that everyone who upgraded just got their phone last June. I mean that is cool to think and all, and is widely true with At&t;moving all the early upgrades from 18-12 months, but it stinks if you couldn’t get in to pre-order a replacement for you iPhone 1G b/c 400,000+ people haven’t bought a new iphone in like 11 months. Oh well, eventually my new phone will arrive and then I will be able to use it more than 5 minutes a day…
ZNorm

Friday, June 25, 2010 - 11:58 pm · Reply

The survey did not ask which iPhone was being replaced. I think there are many of us with first generation models which don’t hold a charge very long any more and sport a variety of dings and scratches and (like mine) the cracked screen app. I was also pleasantly surprised to see that AT&T;let us keep our unlimited data plans for the same price (except without the 200 text messages included). AT&T;isn’t nearly as bad as its critics profess. I don’t know the engineered lifespan of a cell phone these days but I’d guess 3 years is at the outer edge.