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Why the Apple iPhone 5 Could Be the Best-Selling Smartphone Ever


The latest version of the popular device will attract millions of new smartphone buyers and keep current users loyal.

Apple (AAPL) unveiled the latest iteration of the iPhone Wednesday. The Apple iPhone 5 (actually the sixth version counting the current device, the iPhone 4S), is taller, thinner, and lighter than its predecessors. It also boasts a larger screen and a faster processor.

The Apple iPhone 5 will also be able to run on the latest 4G LTE networks. Most analysts saw that as a must, as many competing devices, such as Samsung's new Galaxy S III, already have this capability. 4G networks, which telecom providers are quickly rolling out across the US, are up to five times faster than the current standard.

Otherwise, the changes amount to enhancements on what has been a winning formula for the company so far. They include a faster processor, an enhanced camera, and longer battery life. One change likely to irk Apple fans is a new connector to dock the device to computers, chargers, and sound systems. Until now, the iPhone had been using the same connector as its iPod music player. The company says it will now sell an adapter to hook the new phone up to older accessories.

Apple iPhone 5 Launches Into a "Notoriously Fickle" Market.

It's hard to underestimate how much the iPhone means to Apple. According to, the device accounted for 53% of the company's total revenue in the first nine months of its current fiscal year. Apple shipped over 98 million iPhones in that period, up 77% from a year ago. The company doesn't break out its earnings by product, but it likely also gets the majority of its profits from the iPhone.

At the same time, the smartphone market is becoming more crowded as other manufacturers - including Samsung - crank out devices powered by Google's (GOOG) Android operating system.

All this had many wondering if the company had gone far enough with its iPhone redesign, including Ovum analyst Adam Leach.

"Whilst the company is still reaping the rewards of the brand equity of the iPhone, consumers are notoriously fickle when it comes to buying handsets," he said in a article. "Without the continued innovation that we are accustomed to with Apple, the company risks losing consumer appeal."

Brand Loyalty, Pent-Up Demand Will Spur Apple iPhone 5 Sales.

Even though the device boasts few new features, the enhancements that the company made to the Apple iPhone 5 are still likely to be a hit with consumers. (JPMorgan even estimated that the device has the potential to boost America's GDP by an annualized rate of 0.25% to 0.5% in the fourth quarter.)

That's partly because of pent-up demand. In Apple's 2012 third quarter, which ended June 30, it sold 26.0 million iPhones, up 28% a year ago. Any company would be happy with that type of jump, but the figure fell short of the 28.4 million that analysts expected and was down sharply from the 35.1 million the company sold in the previous quarter.

The reason: Owners of previous iterations of the iPhone were waiting to get their hands on the new device. Now they can, starting September 21, and Apple's iPhone sales will likely spike as a result. That will help it build on its 16.9% share of the global smartphone market and better compete with Android devices, which combined have 68.1% share.
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