Analysts cool on iPhone 4S as device fails to excite

Lack of iPhone 5 could play into the hands of rival manufacturers

Analysts have given a mixed reaction to the launch of Apple's iPhone 4S, noting that, although much of what was announced makes sense for the company, there is an underlying sense of disappointment with the device.

The iPhone 4S boasts a number of hardware upgrades, including improved processor, camera and battery life, as well as new voice assistant called Siri that can help schedule meetings, compose texts and carry out internet searches.

Charles Murray, from Analysys Mason, told V3 that, while the keynote was underwhelming, Apple's decision to focus on upgrading the internal hardware before any major design changes is a sensible move.

"The risk of a major upgrade to the hardware and a fundamental change in the OS was considered too much for Apple. They are mimicking Intel's hugely successful tick-tock strategy (major platform upgrade, followed by an incremental performance improvement)," he said.

"Thus the external hardware cycle is twice that of the internals, which is good for accessories. Also there is something about contract duration. A major new device every six months with people on 12- to 18-month contracts would start to annoy."

However, Murray said that Apple will have to ensure that the iPhone 5 is "something special" when it does arrive, as other competitors will continue to attack the firm's market share.

"By then Nokia/Windows Phone 7 may be a credible alternative, Motorola/Google will have hooked up, HTC and Samsung clearly aren't standing still and even Research in Motion (RIM) may have QNX-based devices. The competition is relentless," he said.

Apple also confirmed that pricing for the iPhone 4 will be reduced to $99 on two-year contracts, while the iPhone 3GS will now be free on contract, in a move that Francisco Jeronimo from IDC said could tempt people considering their first smartphone purchase.

"The new prices announced for the iPhone 4S and previous iPhone versions allow Apple to compete in the price segments where Android is fiercely growing: the mid-range," he said.

"Nokia and RIM should be the most threatened phone makers with Apple's announcements today. If price was an inhibitor for consumers to move from their Symbian or BlackBerry-based devices to the iPhone, now they have the change."

Analysts cool on iPhone 4S as device fails to excite

Lack of iPhone 5 could play into the hands of rival manufacturers

However, Jeronimo suggested that the iPhone 4S is unlikely to tempt existing iPhone customers or high-end Android users, and will give Android manufacturers the chance to continue their attack on Apple's market position.

David McQueen, principal analyst at Informa Telecoms & Media, also sensed "a little disappointment in the air" as Apple unveiled the new model, and said it could hurt the firm as consumers will be tempted by offerings from other manufacturers.

"Whilst Apple announced improvements in the hardware and on the service layer, it has been let down somewhat by having almost no change in the user experience and in the industrial design," he said.

"Unfortunately for Apple, this is happening at a time when competitors are aggressively bringing new products to market with superior user experience in the form of wider and better screens, intuitive UIs, and more integrated apps."

However, McQueen noted that lowering the prices of the 3GS and iPhone 4 allows Apple to challenge companies in the mid-market without having to produce a new device.

"By keeping the iPhone 3GS and iPhone 4 in market at significantly reduced prices - free and $99 respectively on contracts - the company has created opportunities in the mass market without actually having to resort to a lower-cost new product," he said.

While analysts see the logic in Apple's announcements, the markets were less impressed. The firm's share price fell by as much as 20 points during trading on the Nasdaq, although it recovered towards the end of the day.

The iPhone 4S is set to be available for pre-order from 7 October and on sale from 14 October in key markets across the world, including the US and the UK.

Vodafone, O2, Three, Orange and T-Mobile all confirmed plans to stock the device, although no pricing information is yet available.