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Monday, December 17, 2012, 06:17 am PT (09:17 am ET)

Premium iPhone share growing as consumers choose iPhone 5 over Apple's legacy models

More iPhone buyers this year are opting for Apple's latest model, the iPhone 5, than in previous years, suggesting more customers than ever are willing to pay for the best device available.

A new survey of more than 1,000 U.S. smartphone buyers by Morgan Stanley and AlphaWise found that 86 percent of respondents planning to buy an iPhone said they would choose the iPhone 5, which starts at $199 with a two-year service contract. In comparison, the same poll a year ago found that 82 percent said they would purchase the iPhone 4S, which at the time was Apple's latest model sold at that same price.

Morgan Stanley


In the December 2012 survey, 10 percent of customers who plan to buy an iPhone said they would choose the iPhone 4S, which sells for $99 with a new two-year service contract, while 4 percent said they would choose the iPhone 4, available for free with a contract.

In the same survey a year ago, 15 percent of customers said they would choose the iPhone 4, which was then sold for $99, while 3 percent opted for the iPhone 3GS, which was late 2011's free-on-contract handset from Apple.

Analyst Katy Huberty noted that the improvement in customers opting for the latest model is likely due to the fact that this year's model is a major upgrade with a redesigned exterior, larger 4-inch display, and high-speed 4G LTE connectivity. In comparison, last year's iPhone 4S model looked largely the same as its predecessor, the iPhone 4.

The survey from Morgan Stanley and AlphaWise also found that Apple leads the smartphone industry in customer retention. Among those surveyed, 83 percent of iPhone users said they plan to buy another iPhone, a 10-point improvement from a year ago.

Morgan Stanley


Apple's first-place finish was well ahead of Samsung, which has a 63 percent retention rate among users. However, customers' preference for Samsung grew significantly, surging 26 points from the 37 percent retention it had in the 2011 survey.

The poll also found that 64 percent of U.S. iPhone buyers had previously owned an iPhone. That's up 23 points from the 41 percent who were previous iPhone purchasers in 2011.