06/26/2007, 2:40pm, EDT
Tuesday, June 26thiPhone showing only 3 percent demand?
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."
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It's a real shame, but not unexpected, that AT&T is as good at crushing expectations as Apple is at building them.
Cell phone companies have an exaggerated sense of their own value that needs to be deflated, post haste. $60/mo. is more than I pay for my landline phone + Internet service and I would be getting less for my money with AT&T.
How's that? Unless you're not using broadband and/or taking advantage of some VERY good short-term promo (even Comcast's three-fer deal would be $66 for phone and Internet components).
Like it or not, $60 is reasonable. Would I have liked it to be cheaper... of course, but that's not realistic. I am still disappointed at the lack of subsidization of the phone price, but this is new ground for all parties involved and pushing limits on all sides.
The initial launch is not meant nor expected to achieve massive mainstream market penetration, this is just the beginning. If you can't afford to ride the bleeding edge, so be it... wait for future revisions.
For the record, as much as I'd like to, I can't justify $500-600 + $720/year either... as much as I'd love to.
Once people experience the ground-breaking UI and the number of functions that it just tackles seamlessly and elegantly, they will have no hesitations about what they are paying for and they'll just go for it! Desire knows no reason. This is where all 'analysts' will fail - trying to 'quantify' the iPhone's 'value'. Also, let's face it, Apple does know 'cool'.
That's my opinion anyways.