Now that the German Constitutional Court has approved Germany’s participation in the European Central Bank’s bond-buying program, we can turn our attention to the really big news for today — the expected introduction of the iPhone 5 by Apple Inc. (NASDAQ: AAPL). One analyst expects Apple to sell 10 million units of the new smartphone by the end of the month, and another has said that the device could add half a percentage point to U.S. gross domestic product.

Research firm The NPD Group Inc. said this morning that global smartphone shipments will reach 572 million units by the end of this year and surpass 1 billion units shipped by 2016. An NPD executive said:

Apple’s iPhone 5 will be a key product for the smartphone market in 2H’12. Apple shipped more than 140 million phones in 2010 and 2011, so we can expect smartphone shipments to continue flourishing as users upgrade to the new iPhone.

But the not-so-good news is that most of the phones are replacing older phones, not new phones for new users. NPD has lowered its estimate of new smartphone shipments from 220 to 230 million units to 177 million units in 2012. The ratio of new phones to replacement phones continues to decline dramatically through 2016. See the NPD chart at the end of this article.

That should not be too surprising, given the rapid adoption of smartphones from Apple and from vendors like Samsung Electronics and HTC that use the Android operating system from Google Inc. (NASDAQ: GOOG). There just are so few people left to buy expensive new smartphones, whether from Apple or any other maker.

And as for the GDP bump from the new iPhone? New York Times columnist and Nobel Prize-winning economist Paul Krugman notes on his blog:

The key point is that the optimism about the iPhone’s effects has nothing (or at any rate not much) to do with the presumed quality of the phone, and the ways in which it might make us happier or more productive. Instead, the immediate gains would come from the way the new phone would get people to junk their old phones and replace them.

That is, just spending the money is good enough. Topping up Apple’s cash hoard is good for the company and its shareholders, perhaps, but as long as consumers spend money on anything that helps the economy.

The moral of the story: Do your bit and sign up for an iPhone 5.

Paul Ausick

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