If the data around iPhone 4S is to be believed, the indications are that its sales is all set to surprise during the upcoming Apple’s (NASDAQ:AAPL) earnings release scheduled for next week. According to a recent finding from Nielsen’s December survey of the U.S. mobile phone market, among recent smartphone buyers, 44.5% of those surveyed in December bought an iPhone, up from 25.1% in October. Around 57% of new iPhone buyers said they chose the iPhone 4S over the less expensive iPhone 4 or iPhone 3GS. 
Due to this trend, the gap between Google’s (NASDAQ:GOOG) Android and Apple that was quite large a few months back, has narrowed. About 47% of the people surveyed said they purchased a phone running Android, down from 62% before the iPhone 4S launch. If Apple surprises on iPhone 4S sales during earnings, investors could lap up Apple’s stock as the iPhone is the most valuable business for Apple and accounts for over 50% of our $500 price estimate for Apple stock. Our price estimate for Apple stock is about 20% above market price.
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Solid Evidence of Bumper iPhone 4S Sales
Apple investors were naturally disappointed with the company’s September quarter results as Apple lost market share to Samsung in the global smartphone market.  However, after releasing iPhone 4S in October, Apple’s market share recovered quickly underscoring the pent up demand for the iPhone.
According to a report from research firm NPD, Apple’s iOS market share jumped from 26% in Q3 2011 to 43% by October and November. Meanwhile, Android share dropped from a high of 60% to 47% during the same period. 
Finally, according to another survey conducted by ChangeWave Research for the month of December 2011, 54% of buyers planning to purchase a smartphone in the next three months said they’ll buy the iPhone. The research firm stated that “Apple has never dominated smart phone planned buying to this extent more than two months after a major new release,” referring to the introduction of iPhone 4S. The report also suggested that Apple leads the smartphone satisfaction rating with 75% of the current iPhone owners saying they are “Very Satisfied” with their iPhone. Notes:
- More US Consumers Choosing Smartphones as Apple Closes the Gap on Android, Nielsen. January 18th, 2012 [↩]
- Strategy Analytics: Samsung Becomes World’s Number One Smartphone Vendor in Q3 2011, October 27th, 2011 [↩]
- iOS Market Share Up From 26% In Q3 To 43% In Oct/Nov 2011, TechCrunch quoting NPD as the source, January 9th, 2012 [↩]
- Samsung and Apple Begin New Year With Explosive Momentum, ChangeWave Research, January 9th, 2012 [↩]