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A man talks on a mobile phone in front of an Apple logo outside an Apple store in downtown Shanghai in this September 3, 2012 file photo. Although Apple makes billions from new phones, a significant portion of its sales in recent years have come from dropping the price on older models once a new phone or tablet hits stores (ALY SONG/REUTERS)
A man talks on a mobile phone in front of an Apple logo outside an Apple store in downtown Shanghai in this September 3, 2012 file photo. Although Apple makes billions from new phones, a significant portion of its sales in recent years have come from dropping the price on older models once a new phone or tablet hits stores (ALY SONG/REUTERS)

iPhone 5 could fuel year-long Apple sales boom: analysts Add to ...

Months of anticipation finally come to an end on Wednesday, when Apple unveils the latest iPhone.

The world's most profitable technology company will reveal the iPhone 5 at a media event in San Francisco. For Apple, the new phone is a chance to boost sales of its most profitable product after months of lacklustre numbers. For Apple competitors, it's a chance to see what they'll be up against for the next year or so.

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Much of Apple's announcement will undoubtedly be filtered through the prism of its intense competition with chief rival Samsung. In August, perhaps for the first time since Apple entered the business, a Samsung smartphone outsold the iPhone. Many of the changes expected in the latest iPhone, such as a bigger screen, are a direct response to the popularity of the Galaxy line and other Samsung smartphones.

Apple and Samsung are currently embroiled in about 50 patent infringement lawsuits around the globe, and the courtroom drama will likely only intensify with the launch of the iPhone 5. Samsung is already reportedly planning to sue Apple over patents related to the use of next-generation, high-speed wireless networks – a capability the new Apple device is expected to feature.

Whatever new technology Apple builds into its latest phone will likely have a significant effect on the mobile industry as a whole. Analysts at Frost & Sullivan expect that, if the new iPhone features NFC – a wireless communication standard that could enable features such as phone-based payment systems – it could be a breakthrough moment for the technology, which would otherwise take another year or so to become mainstream. In North America, some BlackBerrys and other phones already have NFC, but the technology has yet to catch on in a big way.

As with previous iPhone announcements, Apple's latest reveal comes with a massive wave of hype. One analyst described the iPhone 5 – which Apple has not technically confirmed it will even actually announce on Wednesday – as “the biggest upgrade in the history of consumer electronics.” Another analyst with J.P. Morgan said iPhone 5 sales have the potential to materially impact the entire U.S. economy's growth rate, adding as much as half a per cent to the country's gross domestic product in the fourth quarter.

Despite all the hype, however, Apple's sales could be driven as much by the iPhone's natural upgrade cycle as by any new features in the phone. Many customers never bothered to upgrade to the iPhone 4S, the latest iteration, in part because its external design looked so similar to the previous model. With the iPhone 5, which is expected to look significantly different, many of those customers may finally make the leap.

Although Apple makes billions from new phones, a significant portion of its sales in recent years have come from dropping the price on older models once a new phone or tablet hits stores. Combining new and old iPhone sales, and assuming an October launch date for the iPhone 5, Frost & Sullivan analysts estimate the new Apple device could drive a 75 per cent increase in the company's average quarterly sales, and that between the fourth quarter of this year and the third quarter of 2013, Apple could move roughly 227 million phones.

Follow on Twitter: @omarelakkad

 
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