A new report from Kantar Worldpanel found that during the three months ending in October, the Apple (AAPL -1.22%) iPhone 5s was the second-best-selling iPhone model in the United States, making up 26% of iOS devices sold within that period. This is surprisingly close to the 33% of iOS device sales delivered by the new iPhone 6 in that period.
While one data point doesn't necessarily constitute a trend, I do think the iPhone 5s' strong performance following the iPhone 6 launch has some very interesting implications.
Big phones aren't for everybody
While Apple was pressured to make the iPhone 6 and iPhone 6 Plus larger than their predecessors, it's clear that not all of Apple's iPhone customers are particularly interested in buying a larger device. In fact, according to that report, the iPhone 6 Plus made up just 10% of U.S. iPhone sales during that time frame, indicating it's not as popular domestically as the 5s.
Now, one could reasonably argue that the iPhone 6 Plus suffered from supply constraints, which would understate the popularity of that handset. One could also argue that the iPhone 5s is much cheaper than the 6 Plus ($99 for the 16GB configuration of the former on contract; $299 for the latter), which leads to higher sales.
Those are both reasonable arguments, and I'm sure they are factors here. However, I distinctly remember that customers were more than willing to "buy up" to the iPhone 5s last year relative to the cheaper iPhone 5c.
I think the iPhone 5s' pop ularity might derive from its small size,not necessarily because it's the "cheap" option.
What does this mean for future products?
If the iPhone 5s really is this popular because buyers simply prefer the smaller size, then I would expect Apple to introduce a "mini" iPhone each year going forward, as fellow Fool Evan Niu suggested in his article on the subject. As I suggested in a prior piece, Apple could use the iPad mini playbook and keep the smaller iPhones always a step behind the larger ones in terms of performance and features in order to drive upsell and keep its cost structure down.
However Apple decides to pursue this, though, I think the company should continue to cater to the market for premium "small" iPhones even once the iPhone 5s has been phased out. This could add additional complexity to inventory management, and there would also likely be additional research and development costs associated with yet-another iPhone model. But, if the market is there, and if it is significant, the additional complexity would probably be worth the trouble.
