iPhone: why $499 is not an issue (surveys and predictions)
iPhone is to be released in less than 2 days (Gigaom: thanks for the countdown). Many discuss the iPhone’s price issue. According to a recent online survey (graph 1) conducted on US internet users by Parks Associates, only 3% have a strong interest in purchasing the iPhone at its $499.99 price point and two-year contract (sample size: 2,000 US internet households).
Updates: Compete reports a survey conducted on 680 iPod potential shoppers (assumptions: those who search for iPod, might be potential iPhone consumers): 13% reported they are “very likely” to purchase an iPhone, 2% reported they are “extremely likely” to purchase one.
Kurt Scherf, vice president and principal analyst with Parks Associates claims that “the high price point may prevent the iPhone from achieving greater adoption over the short term. It may be an early-adopter product that appeals to technophiles but initially leaves other interested users on the outside looking in.”
I think differently. The iPhone is headed to the early adopters (3% or more). They will be the ones to shape the brand identity. From what we know – they have the right profile to set the trend. Others will follow to be perceived as those who can buy an iPhone. The iPhone brand is not about pricing as it is about perceptions and social needs. When it comes to perceptions and recognition, here is the voice of the blogsphere around “iPhone”, in comparison with the “ïPod” (see blogpulse graph 2).
As I see it: status symbols have no price: $499 will be a good start for apple.
graph 1: US internet users survey
graph 2: iPhone versus iPod in blog posts
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June 28th, 2007 at 7:32 am
Judging by yesterday’s selloff, I think potential customers are starting to realize how expensive the iPhone will be. If you sign the mid-range $99.99/mo service plan after purchasing the 8GB iPhone model, that alone will set you back $3000 during the two-year contract (without any accessories)!
Other potential hurdles:
* You must be an AT&T customer to use the iPhone. With a market share of 20%, that means 80% of wireless customers must cancel their current contracts to sign with AT&T. Being a Sprint customer, I would have to pay a $175 cancellation on top of the $3000 price tag for the iPhone. AT&T’s exclusive contract runs through 2009.
* Only 4 & 8GB of hard drive space? My tiny video iPod holds 30 GB for less than $200.
* Recent surveys have shown that the majority of IT departments will not even consider the iPhone due to its PC incompatibilities & exclusive AT&T contract. That will dampen business spending & all but eliminate demand for the higher-tier contracts.
This is the ultimate “sell the news” scenario. On Jan 9th 2007, Steve Jobs announced the iPhone at the Macworld Conference & Expo. The stock has since been on fire rising 50% to $125, adding $30 billion to the company’s market capitalization. Will the iPhone really hold that much value for Apple? This huge runup comes after a fantastic finish to 2006 after Apple’s stock bottomed out at $50 in October. Thus, nearly everyone holding Apple is sitting on huge gains.
July 3rd, 2007 at 8:00 am
The up-front cost isn’t as big of a deal as the monthly costs. After all, how many people are paying $40.00-50.00 a month for cell phone service, and now because the iPhone is out they are switching to $60 or more a month for no reason other than to have a flashy phone – the features of which they probably will never take full advantage of. Not to say I don’t want an iPhone at some point.
BTW, here is some other market research results regarding the iPhone: http://www.gmi-mr.com/gmipoll/release.php?p=20070702
December 29th, 2007 at 1:06 am
[…] Can you believe when the initial survey indicated that only 3% were highly interested in purchasing iPhone for the price of $499 , Apple had to cut it down to $399, just 68 days after product launch? ? […]