iPhone 4S still means trouble for rival handset makers

(Credit:Apple )

TheiPhone 4S may not be wowing the blogosphere, butAndroid handset manufacturers probably should start to worry.

“It’ll be able to eat into share of other (original equipment manufacturers),” said Matthew Thornton, an analyst at Avian Securities.

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While Apple didn’t blow anyone away with new hardware, it may not matter. Analysts say the company’s software and services–including iOS and iCloud–still give Apple a significant edge.

“It’s definitely the highest quality, highest feature smartphone that’s out there,” said Janney Capital Markets analyst Bill Choi.

Sprint is where most of the share will be lost. with a reported $20 billion investment in Apple’s devices, Sprint will be doing its most to push iPhones, likely to the detriment of other handsets manufacturers.

Thornton predicts Apple could take 30 percent to 40 percent of the share of new phone activations there and that HTC and Samsung, which supply a disproportionately large amount of phones to Sprint, could each lose half their share.

“That’s a lot to digest,” Thornton said. “They’ll end up getting hit the hardest.”

Samsung sent a statement touting its Galaxy S II smartphone, pointing out the advantage in screen size, network speeds, a thinner design, and the ability to buy music from multiple services.

“The Samsung Galaxy S II is not limited to a single manufacturer’s storefront or app store,” the company said.

Representatives from HTC wasn’t immediately available for comment.

While Apple is the leader in the global smartphone market, Samsung wasn’t far behind in the second quarter, according to research firm Strategy Analytics. Apple had 18.5 percent of the market to Samsung’s 17.5 percent.

HTC and Samsung have led the charge in building 4G WiMax phones for Sprint. HTC has a successful franchise in the Evo name. Samsung recently released a WiMax version of its Galaxy S II phone. But that might be moot as Apple floods Sprint’s stores with iPhones for every price range.

The availability of the cheaper iPhone 3GS, which dropped to $49 earlier this year, was a boon to sales for AT&T. with the iPhone 4 dropping to $100, it’s expected to see a pick-up in adoption at Verizon Wireless and Sprint. The free iPhone 3GS, meanwhile, may appeal to even more budget-conscious customers at AT&T, although as I said, the 3GS isn’t worth the purchase now.

(The pitfalls of buying an iPhone 3GS)

To be sure, the lack of new hardware means the iPhone 4S is no longer a slam dunk when stacked up against newer devices such as AT&T’s Samsung Galaxy S II, Sprint’s HTC Evo 3D, or Verizon’s Motorola Droid Bionic. these devices offer larger screens, and in some cases, a 4G connection that can surpass anything the new iPhone can offer.

But where there were no hardware changes, there were plenty of software upgrades, Choi noted.

“You had exciting stuff on the software, and less exciting stuff from the hardware side,” he said.

That said, he expects the phone to continue to sell well. He previously estimated that Apple will sell 84 million units this year and 107 million units in 2012. He stuck by those estimates today.

“It doesn’t change the game too much,” Choi said.

Updated at 5:05 p.m. PT: to include a statement from Samsung.