The Apple iPhone

THE APPLE iPHONE

6% of Cell Phone Owners Say They Will Purchase it in the Next Year –
Market Leader or Below Expectations?

Apple will be entering the cellular phone handset market for the first time, with the launching of their new iPhone in June in the United States, and by the start of 2008 in Europe. There have been many proclamations on how successful the iPhone will be; from capturing a huge percentage of the cell phone market (“The next iPod!”) to an overpriced product with too many functions (“Who is going to pay $500 for a cell phone?”). Analysts from Bank of America and Morgan Stanley predict that the iPhone will capture a large percentage of the forecasted 250MM “smartphone market” projected to be sold by the end of 2008. However, little research has been done with the people who matter the
most – the likely purchasers of the product. Is the $499 price too high? Will they switch carriers? Or is the iPhone the combination phone/MP3/camera dream product they’ve been waiting years for?

THE MARKITECTURE SURVEY METHODOLOGY

Markitecture conducted an online survey of a national sample of 1,300 people who both own their own cell phone currently, as well as make all of the monthly payments on it; this ensures that respondents were actually potential “in the market” purchasers. The sample was provided by
e-Rewards Market Research. Participants were a representative mix of:

Respondents were initially asked how familiar they were with the iPhone; if they were not at all familiar with the product, they were eliminated from the rest of the survey. Among those that had heard of the iPhone, we went on to ask their overall impression of the iPhone, based on everything they have seen or heard to date. Next, they were then asked how likely they were to purchase the iPhone in the next 12 months. Depending on purchase likelihood, they were asked to select from a set of reasons as to why or why not they were planning to purchase the iPhone. Finally, for profile and analysis purposes, we asked them to name their primary cell phone carrier, with the hypothesis that those cell phone owners not on AT&T’s (formerly Cingular) network were less likely to purchase the product initially, given the exclusive 2 year contract Apple has signed with that carrier.

SURVEY FINDINGS

We initially learned that 77% of respondents were at least slightly familiar with the iPhone – impressive for a product that will not be launching for another two months. Among those familiar with the iPhone, overall impressions were positive, though not over whelming; 41% thought the phone was excellent or very good, based on everything they had seen or heard. On the flip side, 21% thought it was only fair or poor. But, with the iPhone it seems, “to know it is to love it”; strength of impression increases dramatically with increased exposure – 83% of those very familiar with the iPhone had an excellent or very good impression of the product.

Despite the relatively strong impression over all, our estimate of trial or adoption of the iPhone among consumers is 6%; that is, 6 in 100 consumers will purchase the iPhone in the next year given awareness of the product and availability of the product. 89% of the respondents said there was less than a 50/50 chance they would purchase the phone; two-thirds said there was a 0% chance they would purchase it.

While 6% may appear low for a high-profile product launch, it actually would be very strong for the cell phone market. The highly successful Motorola RAZR, the #1 phone in the world for some time after its launch in 2004, achieved a 6% market share at its peak.

As for reasons for not purchasing the iPhone, cost was cited as the top reason; it was an issue for three-quarters of respondents. Other issues cited were:

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About e-Rewards Market Research
e-Rewards Market Research, the online sample quality leader, provides the highest level of service through its 2,000,000+ member Consumer Panel and 1,000,000+ member Business Panel, while maintaining over 300 profiling segments. Response rates are among the highest in the industry, 15-35%. “By invitation only” enrollment methodology reduces self-selection bias and blocks “professional survey takers.”

About Markitecture
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