The price isn’t right for iPhone, survey finds

20 Jun 2007

Adoption of Apple’s iPhone may be hindered by the price of the handset and the cost of switching carriers, according to research firm IDC.

A US survey of 456 online mobile phone shoppers conducted by IDC and Market Insight Corp found that while 60pc of respondents were interested in the iPhone they were unlikely to buy one anytime soon due to these costs.

The US launch date for the much-publicised device is 29 June and it will be launched exclusively on AT&T’s mobile network.

“While the allure of owning the next ‘cool’ device will undoubtedly have early adopters – and die-hard Apple fans – queuing up to get the iPhone regardless of the price, the associated costs of ownership will persuade many others into a ‘wait and see’ position,” said Shiv Bakhshi, director of mobility research at IDC.

“Despite all the hype, there is little clarity on Apple’s (and AT&T’s) service plans for the device. This lack of clarity could adversely impact consumers’ purchase decisions.”

Just 10pc of respondents to the survey expressed an interest in paying full price and signing a two-year contract with AT&T. AT&T has stated that it will not offer a subsidy for the iPhone, which will retail for US$499 (4MB flash memory) and US$599 (8MB flash memory). Reducing the price to under US$299 would see nearly 18pc of respondents consider buying the iPhone, the survey revealed.

Another 17pc indicated they would buy the phone if it was offered by their current mobile carrier. A big problem facing take-up in the US is the widespread use of two-year consumer-carrier agreements which sees customers incur stiff penalties if they break their contract.

“Beyond these important adoption issues, a number of questions remain about how consumers expect to use the iPhone,” said Chris Hazelton, senior analyst, Mobile Device Technology and Trends at IDC. “The capabilities of the device and its supporting network present the next set of potential barriers to widespread adoption. These issues may ultimately determine the success, or failure, of the iPhone.”

The iPhone will come with (2.5G) EDGE connectivity at launch. AT&T is yet to have a system-wide 3G network in the US, although its 3G HSDPA network is available in most metropolitan areas. EDGE is available system-wide.

“Apple loyalists alone can make the initial launch a ‘success’ but beyond that it will be interesting to see the extent to which the iPhone hype, and the curiosity it has generated, translates into actual purchasing intent,” noted Bakhshi.

The Apple iPhone is due for European release in Autumn. In Ireland no deals have exclusive deals with mobile networks have been reached.

By Niall Byrne