What if They'd Just Called it the iPhone 5?

Unless you’re living under a rock, you’re probably aware that Apple unveiled a new iPhone yesterday. At what turned out to be a relatively muted Apple product launch, it was new CEO Tim Cook‘s first chance at replacing Steve Jobs as product pitchman. It seems he did just fine.

The new iPhone is loaded with cool new features that the market was anticipating, with one exception: it’s not called the iPhone 5, it’s called the iPhone 4S.

By the time it became obvious that Cook wasn’t going to introduce anything called an iPhone 5, (about 1:50 pm EST yesterday), the stock price began to plummet pretty quickly, as you can see in the chart below. From 12:15 pm to 3:15 pm, the price dropped more than 6%. Also, note the spike in volume at the bottom.

So the question is: what if they’d just named it the iPhone 5? Would the stock have dropped so much, if at all? My guess is no, especially when you look at the recovery the price had late in the day, and the gains it’s made today. Once people actually had a chance to see all the new stuff the phone had, and stopped simply trading off the name itself, they realized that Apple had in fact introduced a new product. So, Apple marketing fail? Or knee-jerk market fail?


Think about the volume of people that are trading AAPL. There are way too many irrational people that are trading in and out of that a day.

Fritz Mills

I suspect they're holding the "5" moniker back until they can release a 4G-LTE phone with good battery life (good enough for Apple that is, which prides itself on battery life). The 4S is more like a super-improved "4," whereas a 4G-LTE phone would be a genuine "5."


Or knee-jerk analysis fail?

The iPhone 4S has some hardware upgrades over the iPhone 4, but it's not a revolutionary new phone. Most of the new features are related to the soon-to-be-released iOS 5, which will run on both models.

Calling it the iPhone 4S instead of the iPhone 5 is, I think, a remarkably honest description of a product that, while an upgrade over the current model, is hardly a great leap forward.


This is market fail, with investors expecting something that was not promised and being disappointed when unrealistic expectations go unfulfilled. c.f. every other iPhone announcement. Ever.

While I agree that the 4S moniker is an honest description, I don't agree that the 4S isn't a great leap forward: Hardware-wise, it *is* a significant upgrade in that it has 2x processors and, if marketing specs are to be believed, 7x graphics performance as well as 2x cellular data speed of the previous model. These are non-trivial upgrades, especially considering that these will directly affect end-user experience.

Also, it ought to be noted that not all of iOS 5's new features will run on both the 4S and previous models. e.g. Siri, arguably a flagship feature, will not run on older hardware. 4S users will have access to more of iOS 5's features and a better UI experience than users with older phones, plain and simple.



Knee-jerk fail. Even if you're only going off the name, you should realize that the 3GS was (and still is) a huge success. Apple doesn't need to change form factors to offer a greatly improved product.


Doesn't Apple's stock price normally take a tumble after every announcement?


OK, lets say they launch the iPhone 5 which people see as 'just an upgraded iPhone 4': whats the Market/media response? That Tim Cook is a fail and the company is doomed without Jobs. (Which I believe is not true btw). However, they called it as it is (iPhone 4S), and whats the Market/media response?Yes, mild disappointment, but general agreement that Cook did well under the circumstances. Next year, the new iP5 will be epic, and by then questions will be muted about Cook vs. Jobs. And all the while AAPL continue to sell MILLIONS of handsets around the globe.

Martin Bishop

I think it was the right decision not to over-hype the new phone--better and more honest to position it as an improved iPhone4 vs. a new generation iPhone5.

It's a shame that the first announcement of the Tim Cook era happened to be one where there wasn't as much news as people have come to expect from Apple. But good for them that they didn't try to compensate by making too a big a deal of what they had, even if it meant a short-term dip in share price.

David Starkweather

Apple marketing win and market fail. Apple was just testing the waters and when they do launch the iPhone 5 everyone will go nuts.


The rally in Apple at the end of the day had nothing to do with investors realizing the 4S is in fact a new product. With 45 minutes left in the trading day, "Europe is saved" news (with no real details which has happened at various times during the last few months) came out just in time for a big reversal in stocks... about a 350 point move to end the day. Today's move up has more to do with the product itself, but yesterdays was the market rallying in unison with the macro.

Imad Qureshi

Without changes in form factor, stock would have taken a dip regardless of what they call it. iPhone 5 or iPhone Cook. Name doesn't matter. Market was hoping for an iPhone with new look and feel and that didn't happen, hence the stock decline. That being said if rumors about Chinese iPhone launch are true, I think its a good decision as it would more than offset the sales lost in US and iPhone 5 will take care of the rest next year.


Apple is using the 4S as an opportunity to keep getting people into the iPhone family, for lack of a better term, at a decent price. Sprint is now going to carry the iPhone. Also, 3GS is now free with a 2 year contract at some carriers. The original 4 has been reduced for new subscribers.

When a product is actually put out with enough enhancements to call it a completely different version, such as "5", people will go nuts for it and stock will shoot up. Right now, they are getting people in with a decent price at a variety of carriers... Like they did me when Verizon offered the 4 at $200 for a new subscription.

Remarkable patience and marketing genius by Apple.


When you compare Apple Stock with Google stock at the same time you can see that it dropped together with Google and the recovery of both companies is the same today. I doubt today´s recovery can be connected to I4S.


It has to /look/ substantially different to pull off the number bump.

People were expecting the curved screen or something else that makes them go ooooooo, and more importantly lets everyone around you see you have the NEW iPhone and not last year's model.


At this point, I have to lean towards, "Apple might knows what they're doing when it comes to marketing." It's not different enough from the 4 to call it 5. This is pretty typical "analysts" reaction and if they had called it a 5, there would be a post about what would have happened if they had called it the 4s. Pretty lame way to frame a blog post around a question that is impossible to answer.


The number one feature people were looking for was a larger screen. Android has options with larger screens, Apple does not.

The second feature people were looking for was LTE. Android has options with LTE, apple does not.

Both items were rumored; neither materialized. That is why people were disappointed. The name Iphone4s reflects that there were not significant changes to the product geometry - especially the screen.

People's reaction was appropriate to not receiving the features that they wanted.

John K.

http://www.marco.org/2011/10/04/iphone-4s-by-any-other-name asked the same question yesterday.


Steve Jobs, and by extension Apple, doesn't care what may or may not happen to the stock price on a given day. It's all about the products (and the reception by the press and customers). I can't think of one example when Apple has specifically cared about Wall Street.


For that matter, as a marketing strategy, why not label everything with a new whole number? It gives it that sleek, new, Better-Get-This-One-Cuz-My-Lower-Number-Must-Be-Obsolete-kinda feeling that we love to waste our money on.

I love my Kindle 3. And I doubt I would ever give two seconds of thought to purchasing a "Kindle 3S". But a "Kindle 4"? Now you’re talking- I’ll take two.


A bit of both, more the knee-jerk market fail given the rebound the next day, but there may have been some expectations that came with an iPhone 5 that weren't met.