18.8m iPhone 3GS Users Expected to Upgrade to Apple’s iPhone 4S

Last week, Apple  announced  a brand new version of its iPhone iPhone 4S.    The iPhone 4S features the new A5 processor, a redesigned antenna, an 8-megapixel camera that can shoot 1080p high-definition video, and supports AirPlay mirroring. People were expecting it to be the iPhone 5″ and folks weren’t expecting it to sell well. Since then, it has been a massive hit.  Reuters  reported  that AT&T is seeing an  extraordinary demandfor the new iPhone 4S, which became available for preorder at 12:01 am Pacific time on Friday, October 7th. AT&T revealed that  they have seen over 200,000 preorders for the iPhone 4S in the first 12 hours of sale. In addition, Apple announced  that the iPhone 4S sold one million preorders in its first 24 hours of availability (because they weren’t selling).

Piper iPhone 3GS 2011

Yesterday, it was reported by an analyst that Apple achieves a bill-of-materials cost of $170 for the 16GB iPhone 4S and $220 for the 32GB model. This means that Apple is making more per handset than any other smartphone manufacturer. Today,  Gene Munster with Piper Jaffray believes that most users who bought an iPhone 3GS before the iPhone 4 went on sale will make the upgrade in the next year. He estimates that  there are 27.6 million iPhone 3GS users who are ready to upgrade their smartphone. These numbers are based on of what he says  “several conservative assumptions” regarding sales and upgrades.

According to the report,  if 25 percent of those users upgraded early to the iPhone 4 and 15 percent switched platforms to Android, that would leave 18.8 million who would buy an iPhone 4S. This August,  Munster revealed the results of a small poll of 216 mobile phone users, in which he found a  near-perfect retention rate  among iPhone customers. Also, the survey found that  94 percent of current iPhone customers said that they expect to replace their iPhone with a better model in the future vs. switching to another platform like Android. This goes to show that iOS exists so that people can own a great smartphone, while Android exists so that anyone can make a smartphone. Guess, which one worries me?

Jaffray sees Apple selling  104.4 million iPhones in its 2012 fiscal year — that would be a 35 percent increase from 2011. He has also suggested a price target of $607 for Apple’s share price.

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Parth Dhebar

Parth Dhebar is a 18 year-old entrepreneur. He is the founder of Simple Reviews, a blog focused on reviewing iPhone and iPad applications. Parth is a recognized name in the industry, known for covering Apple news. He is an editor at Techie-Buzz covering news on Apple. You can follow him on Twitter @pdparticle.