updated 02:40 pm EDT, Tue June 26, 2007
iPhone Demand at 3 Percent
Apple's pricing for the iPhone may have pushed the limits of US tech buyers too far, says a new paper by Parks Associates. The research group claims that a representative study in May of US buyers pegs high interest in the iPhone at just 3 percent of American buyers for those aware of the iPhone's cost and contract requirements. This problem has been recognized before but may be more significant than thought, according to the new research. Parks uses its results to estimate that most would only accept a smartphone-class device at $199 with a two-year contract, and just $99 for regular phones; both are well above Apple's $499 asking price.
This cost may also reflect a serious misreading of the market by Apple, Parks adds. Despite a gradual shift towards multi-purpose phones that looks to be spearheaded by the iPhone, many cellphone users are interested primarily in call quality (at 68 percent of responses) and range (72 percent) over the actual device itself (10 percent) and aren't swayed by media-focused models, especially those priced above most others.
Many potential buyers are actively leery of multi-role phones, the study shows. Nearly half of the entire group at 49 percent is worried that adding the extra functions will raise the price, while 32 percent is also concerned that the battery will suffer from the added strain. Just a subset of US homes, 22 percent, is interested in a music-capable handset similar to the Apple model that will reach stores on Friday; only a slightly higher number of iPod and other jukebox owners (26 percent) are interested in the extra functions.
Apple's main comfort is said to take root in the habits of buyers, who may prematurely rule out their own purchases or who ignore peer pressure. Just 15 percent of homes planned to buy a phone during 2006 -- but 38 percent of them did, Parks says. Similar figures have also applied to portable music players, the company notes, and it may be the case that early adopters will help push some of the reluctant buyers towards a sale.
"Perhaps Apple's key to success is to win the technophiles who will pay a premium price and so evangelize their love for the product," says Parks Associates' president, Stuart Sikes. It may become "desirable to replace one's corporate BlackBerry with an iPhone, which may at first be considered an expensive teen toy."