iPhone 4S: The "S" Stands for Scale

There's been a lot of online weeping and gnashing of teeth over the iPhone 4S announcement.  Some people seem disappointed that there is not a new form factor, or other dramatic new features for the iPhone.  Expectations were high for a radical iPhone 5.  Instead, Apple made solid, incremental improvements to the iPhone 4.  Why?

It's interesting to note that sales of the iPhone 4 increased across the product's entire life as Apple's flagship phone.  It's also interesting that AT&T's second best selling phone is the iPhone 3Gs.  For all the talk of the rise of Android, Apple isn't losing sales to Google's platform.  Apple's primary limit on growth is not demand; they sell every phone they have the capacity to manufacture.

It seems that with the current iPhone lineup (iPhone 3Gs, iPhone 4 and iPhone 4S), Apple is primarily concerned with devices that can make in high volumes quickly.  The 3GS becomes a value device free with a contract, and available in volume.  The iPhone 4 at $99 puts considerable pressure on RIM and value Android phones, and van be built in high volumes.  The 4S still matches and exceeds any other phone on the market in terms of hardware–but goes with tech proven in the iPad 2 and iPhone 4.  Apple should be able to build a lot of iPhone 4s units, and production should ramp up fast.

I've read that a great number of Android's activations come from low-end feature phones that use Android simply because it's free.  These phones never use apps, or surf the web, or do anything more than simple messaging.  For all the hand-wringing on Wall Street, it's clear to me that the 4S will lead the iPhone onto it's most dominant year ever.  Android may have impressive unit numbers, but iOS will remain in the lead across all devices–and when you factor in revenue and profits for the entire ecosystem, it's not going to be close.

It's going to be a big year.  Tim Cook's first product introduction is going to be Apple's best selling product in its history.

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