Apple’s (NASDAQ:AAPL) iPhone 4S has beaten its predecessor with record launch sales of 4 million within three days of launch compared to 1.7 million iPhone 4 sales last year.^[1] Despite initial tepid reviews with many analysts feeling iPhone 4S didn’t offer much of a value-add compared to previous iPhones, consumers are thinking differently and there’s a ton of excitement around its new voice recognition software, Siri. Apple is also taking on its heightened competition from Microsoft’s (NASDAQ:MSFT) Windows Phone 7, Google’s (NASDAQ:GOOG) Android phones and Research in Motion (NASDAQ:RIMM) by expanding its carrier partners globally and also reducing prices of iPhone 4 and 3GS as a way to attract cost conscious buyers.^[2]

Meanwhile, the company reported lower-than-expected iPhone sales of 17 million for Q4 fiscal 2011 versus the Street expectation of 20 million.^[3] While Apple has attributed the delay in 4S launch to slower iPhone sales growth and expects the coming December quarter to be its best quarter ever, we are yet to see that. However, we expect strong demand for iPhone 4S with its attractive new features can push Apple’s global mobile phone market share higher.

See our complete analysis for Apple’s stock.

iPhone 4S has Better OS, More Features

The iPhone 4S has new features like a faster A5 dual core processor, better battery life and a 1,080 pixels resolution camera for HD video. Moreover, it works on both network standards, CDMA and GSM. But the most attractive feature is Siri, a voice recognition system called for dialing telephone calls and making web searches. 4S has version 5 of iOS that offers integration of Twitter and iMessage messenger service, and also offers Apple’s iCloud service. (Read: Forget the iPhone 5, the 4S Has Enough Excitement to Grow Market Share)

While iPhone sales in the recent quarterly results were lower than expected, Apple’s management is quite optimistic that the December quarter will be one of the best quarters for iPhone sales.^[2]

Global Expansion and Lowering iPhone Prices

As of June 2011, Apple has 200 iPhone carriers globally.^[4] This indicates it wants to expand faster with mounting competition from Google’s Android based phones and now Microsoft’s Windows Phone 7. The price reductions on iPhone 4 and 3GS also shows that Apple wants to reach more cost conscious customers — a significant drift from the “exclusive” image it has had for years. The company is becoming increasingly aware that it needs a wider user base and higher market share to remain competitive, even though that may mean some impact on its margins.

While we estimate iPhone’s market share in mobile phones will increase from 6.2% in 2012 to 14.5% by the end of our forecast period, Trefis members expect an increase from 7.2% to 15.5% during the same period. The member estimates imply an upside of 7% to the Trefis price estimate for Apple’s stock.

We currently have a Trefis price estimate of $502 for Apple’s stock, about 26% above the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

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