Apple's iPhone Conundrum

By Stuart J. Johnston

June 20, 2007

The imminent rollout of Apple's iPhone has lots of consumers interested, but many are not yet willing to commit, an IDC survey finds.

A large percentage of U.S. mobile phone users are waiting for the roll-out next week of Apple's iPhone, but according to a new mini-survey conducted for research firm IDC, most of them will continue to wait well past the iPhone's June 29 ship date.

Among the survey's findings, only 10 percent of the respondents indicated an interest in acquiring an iPhone if it meant paying full price for the phone and signing a two-year service contract with the recently renamed AT&T.

The problem? Firstly, unlike with other mobile phones, AT&T, the exclusive carrier for the iPhone's voice and data plans, will not subsidize iPhone sales. Instead, customers will need to pay full price which, depending on whether the user buys the 4GB or 8GB flash memory model, will set them back either $499 or $599, the report states.

Secondly, consumers who responded to the survey are put off by the potential costs of switching carriers if they aren't already AT&T subscribers. Mobile phone contracts typically run for two years and are expensive to cancel prior to their expiration dates. The uncertainty among potential buyers isn't helped by the fact that AT&T still hasn't revealed what its voice and data plans for the iPhone will cost, the report adds.

"This lack of clarity could adversely impact consumers' purchase decisions," Shiv K. Bakhshi, director of mobility research at IDC, said in an accompanying statement.

Asked what would loosen their pocketbooks, "17.7 percent of respondents said they were not interested in buying the iPhone unless it was priced under $299," IDC's report states.

Limiting the iPhone to one carrier may also be a limiting factor for many consumers. "Almost one in five [17.2 percent] respondents said they would buy the iPhone if it were offered by their current mobile carrier," the report continues.

IDC and Market Insight Corp. conducted the brief survey of online shoppers to determine consumer interest in the iPhone by embedding it on consumer advisory Web site MyProductAdvisor.com. A total of 456 mobile phone shoppers voluntarily answered the survey's questions in March and April.

It's not all bad news for the Apple/AT&T alliance, however. The U.S. is the world's third-largest mobile phone market, for one thing, the report notes. And for another, neither Nokia nor Sony Ericsson, have the dominance here that they enjoy in foreign markets.

Additionally, consumers are largely very familiar with Apple's products, particularly its MP3 players. Overall, 52.3 percent of respondents reported they owned iPods. However, only 6.1 percent said they would use the iPhone to replace both their phone and portable music player.

Spokespersons for AT&T and Apple were not immediately available to comment.



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