iPhone Buyers Hit Redial - Smartmoney.com (blog)

By Sarah Morgan

The record quarterly sales Apple announced Tuesday night were boosted in a big way by repeat customers â€" existing iPhone owners accounted for 43% of all sales of the new iPhone 4S, according to new research. And many recouped much of the cost by selling their older models.

Only 36% of iPhone 4S buyers switched from a rival smartphone operating system, while 43% upgraded from an older iPhone, according to Consumer Intelligence Research Partners. Among those who bought in the first few weeks after the launch, about 70% were iPhone upgraders, says Michael Levin, a co-founder of the firm. In fact, in October and November, Apple claimed the top three spots among the top 10 smartphone models sold with the 4S, iPhone 4, and 3GS, according to research by the NPD Group, a market research firm. And consumers are clearly willing to play along with the upgrade cycle: About half of new smartphone buyers had owned their previous phone for two years or less, according to NPD Group.

And a large number of consumers managed to make the upgrade by reselling their older iPhones on sites such as eBay and Gazelle.com â€" often for as much as the full price of a new model. More than half of new iPhone buyers have sold their old phones, according to Consumer Intelligence Research Partners. “Especially now that there’s a market for used phones, you’re more willing to buy the 4S because you know there’s a market for it,” Levin says. See our earlier stories for more on how these resale sites work and how much prices for older models fall when the latest upgrade is announced.

When the iPhone 4S was unveiled last year, many lamented it was a “relatively incremental” upgrade compared to the iPhone 4, says Tim Bajarin, the president of Creative Strategies, Inc. “Even though it was a marginal upgrade, it was a spectacular hit,” he says. “And we expect Apple to significantly update that phone this year.”

The 37.04 million iPhones during the quarter represent a a 128% increase from sales over the year-ago quarter. Apple set other records too: According to its earnings report, it made a net profit of $13.06 billion and sold 5.2 million Macs, and 15.43 million iPads.

Apple is certainly winning market share from competitors, chiefly Research in Motion. The BlackBerry maker’s operating system saw its market share fall nearly 60% in the first three quarters of 2011, according to the NPD Group. Apple’s iOS saw its market share grow 38% during that time. In October and November, iOS and Android between them accounted for 90% of smartphone sales in the U.S., making the market “a two-horse race,” says Ross Rubin, the executive director of the Connected Intelligence division of the NPD Group.).