Apple "scraped the surface" in Europe

More than half of Europe's loyal Apple customers are biding their time before purchasing new Intel-based Macs, according to a recent survey conducted by analyst firm Piper Jaffray. The firm attended Apple's Paris Expo last week, speaking with 50 European Apple customers about Intel Mac buying intentions, iPod purchase habits, and price sensitivity for Apple's anticipated 'iPhone.' More than half of those customers -- 56 percent -- said they have yet to upgrade to an Intel-based Mac, but half of those users said they expect to upgrade within the next six months. Several respondents mentioned waiting for Adobe's Intel-native Creative Suite before upgrading to the Intel architecture. "We had expected that a higher percentage of these loyal customers would have already made the move to an Intel Mac and we see this as a sign that Apple has so far just scraped the surface of the Mac transition opportunity," wrote Piper Jaffray senior analyst Gene Munster. The firm maintains its 'outperform' rating on Apple shares with a price target of $99.

When asked about iPod purchasing habits, Apple's loyal European customers indicated via survey results that the company's iPod and iTunes products are still in the early growth stage in Europe, similar to the U.S. iPod market 4-6 quarters ago, according to Munster. Those customers typically upgrade to a new iPod every 1.6 years, owned 1.6 iPods on average over the last five years, and most purchased their first iPod 2.5 years ago. Additionally, the analyst found that the average European Apple customer likely purchased their first iPod within the last 1-2 years.

Ideal iPhone pricing

The same survey found that European customers are interested in Apple's anticipated 'iPhone' mobile handset with audio playback capability, but only if the price is right. A whopping 74 percent of respondents said they would probably purchase a music phone, saying that, on average, they would pay $285 for such a device. Those results reinforce Piper Jaffray's thinking that Apple must price an iPhone in the $300 range to gain significant product traction in the mobile market.

"We asked European Apple customers if they would be interested in an iPhone that holds 1,000 songs and found that 74 percent would be highly likely to buy such a product," Munster wrote in a research note obtained by MacNN. "Price is clearly a consideration, however, and many customers indicated that they feel that an iPhone has the same value as Apple's high capacity iPods."

U.S. Music Phones pick up steam

In a separate research report, Munster speculates that Apple will introduce its iPhone within the next 3-6 months, in part because the U.S. music-enabled handset market shows signs that it is "becoming real." The analyst found around 25 phones with music playback capability are currently available from U.S. mobile operators at an average price of $317.

"We believe Apple will look to time its iPhone launch perfectly with the inflection point in this market and we believe that point will be within the next year."

The number of music-enabled phones currently available is higher than expected, according to the analyst, but the hype related to the music phone market "has yet to begin." Several phones -- such as the LG Chocolate and Motorola SLVR -- have created a buzz in the market, but most of the rest have not met with significant fanfare. However, because rivals are producing more music-enabled phones which are seeing increasing success, Munster believes Apple must enter the market fairly soon to avoid missing early adopters.

"We believe Apple will launch an iPhone in the next 3-6 months, which will likely draw more attention to this market and contribute the significant growth expectations implied in industry analyst market forecasts."

Multiple indications of Apple's rumored iPhone have already surfaced, including Apple's registration of the domain name 'iPhone.org' and its 'Mobile Me' trademark filed in January. A report also surfaced in May alleging that Japanese cellphone service provider Softbank and Apple had agreed to jointly develop mobile phones.

Filed under: Investor