Apple Inc. (NASDAQ:AAPL) created an ideal electronic solution with the 2007 release of the iPhone. Is it possible, however, that for Apple Inc. (NASDAQ:AAPL) the product's greatest value is in the smart phone's camera? A report from Barclays PLC (LON:BARC) (NYSE:BCS) studies the power of the company's most iconic device in the imaging market, and the effects that might have on pricing.
The theory is that the more devices the iPhone 5 can replace, the higher the utility of the device to consumers is, and the higher price they will pay. The iPhone 5 currently works as a phone, and for most customers as an mp3 player. It also serves to delay some of the time spent on personal computers for certain segments of the market.
Apple Inc. (NASDAQ:AAPL) has seen its share plummet in recent days after a poorly received earnings report. The company deserves another look according to the report from Barclays PLC (LON:BARC) (NYSE:BCS), which deals with more than just the digital camera part of iPhone 5 appeal.
A second benefit of the all-in-one model is that when consumers seek to update one function of their device, i.e. their camera, they have to replace the entire product, at full cost. The market model is a great one for Apple Inc. (NASDAQ:AAPL), but the iPhone 5 has yet to replace cameras.
For a certain segment of the market, the iPhone 5 has managed to replace point-and-shoot digital cameras, but it hasn't made enough headway into the market to be considered a stalwart force in the segment. A Barclays report studies usage patterns on the social networking site Flickr, which is owned by Yahoo! Inc. (NASDAQ:YHOO).
The study finds that the iPhone 5 is being increasingly used as a digital camera, and is taking market share from traditional point and shoots. The iPhone 4s is the most valuable camera on Flickr currently, with more than 5200 daily users as of January 28th, the iPhone 4 is in second place with a shade over 4000 average daily users.
The iPhone 5 meanwhile, maintain more than 2300 average users, a good number for a device which is less than 6 months old. The iPhone 5 trounces usage by Samsung users. The Galaxy S II and S III have 676 and 620 users respectively. The usage of the iPhone 5 on photo sharing services like Flickr means more than cannibalization of point and shoots, it also means higher data usage.
A device, like the iPhone 5, is more valuable to wireless carriers if it causes them to use more wireless data, making up for the subsidies the carriers have to pay to put the smart phones on the market. The massive advantage of the iPhone 5 over the models offered by Samsung Electronics Co., Ltd. (LON:BC94) means that carriers may be more willing to continue offering subsidies to Apple, even if they choose to limit them to other carriers.
According to the Barclays PLC (LON:BARC) (NYSE:BCS) the iPhone, and the iPhone 5, are becoming the digital camera for the younger market. That, along with the enhanced data usage from iPhone 5 users, means that Apple Inc. (NASDAQ:AAPL) has an advantage over its competitors, and still has room to grow, despite the current impressions of the markets.