Study: iPhone Too Darned Expensive - InformationWeek

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2/23/2007
03:28 PM
Eric Ogren
Eric Ogren
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Study: iPhone Too Darned Expensive

The results of an online survey conducted by market research firm Compete show that only 1% of people interested in the iPhone would pony up $500 for it. Drop the price, though, and 60% of respondents said they'd leave their current wireless carriers to get it.

The results of an online survey conducted by market research firm Compete show that only 1% of people interested in the iPhone would pony up $500 for it. Drop the price, though, and 60% of respondents said they'd leave their current wireless carriers to get it.I don't know what market studies and focus groups Apple looked at when it decided to slap $499 and $599 price tags on its yet-to-be-released iPhone, but only 1% of recent survey respondents said they'd pay $500 (the lower figure) for the phone. That doesn't bode well for the more expensive version.

Dropping the price, of course, will have a large impact on sales. Forty-two percent who said they're likely to buy the iPhone would pay between $200 and $299. Good luck, though. Apple knows its product will sustain a higher street price than that. Early adopters may not hesitate to drop $500 or $600 on the device, but that price range is far above what most people in the United States are willing to pay for a phone, music-enabled or not.

One surprising figure came from the study. Sixty percent of survey respondents who said they were likely to buy the phone said they would switch their wireless carrier to get it. That's a big step. As PCMagazine's cell phone analyst Sascha Segan will tell you, people rarely, if ever, switch carriers for a specific device. If there was ever a product that would be an exception to this, it's the iPhone.

This appears to play into Cingular's strategy. During a press conference held at CES the day after the iPhone was announced, the Cingular spokesperson said it hopes to sell 1 million iPhones in the first year and 10 million in the next two years. When asked where those customers are going to come from, he said they expect to steal customers from other carriers. Nice plan. Now let's see if it works with the $500 and $600 price tags.

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