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Users unwilling to pay Apple's iPhone price

updated 03:20 pm EST, Fri February 23, 2007

iPhone priced too high

Apple's decision to announce premium pricing for the iPhone will likely play a significant role in the adoption of the consumer device, but if the Cupertino-based company keeps its current pricing scheme -- which starts at $499 -- it may face significant challenges in attracting large numbers of customers. A new study released Thursday found that consumers are not willing to pay either $599 for the 8GB or $499 for the 4GB model; however, if pricing is cut significantly, the device may attract new customers to AT&T. Market research firm Compete found that about 25 percent respondents were likely to buy an iPhone, but that only one percent would pay $500. The report also indicates the pricing will likely change, either at launch -- as Apple has done with product introductions in the past -- or soon after to target the mass market.

The company found, however, that a much larger number of consumers are willing to pay between $200 and $300, according to a report published by PC World. The online market research firm Compete surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod.

Among the 26 percent of respondents who said they're likely to buy an iPhone, more than 40 percent said they'd pay $200 to $299.

The survey indicated that AT&T's compromises to achieve an exclusive deal with Apple may pay off. Nearly 60 percent of those in the survey who said they were likely to buy Apple's iPhone also said they'd switch their mobile operator in order to get it, the report said.

Not for corporate use, despite price drop

Although it has been compared to other corporate data devices, Apple's iPhone will likely face significant challenges in the enterprise market, but should garner greater adoption as the company begins to lower pricing.

Bear Stearns analyst Andy Neff said that products such as Research In Motion's Blackberry cater to the enterprise and that the iPhone is not well positioned for this market.

"Even though there's talk about this as an alternative to RIM, it's not a corporate product," Neff said in a conference call to discuss the results of the study. Apple's iPhone heralds a paradigm shift in consumers purchases toward smartphones and signals the the emergence of niches within the category, he said.

The report notes that Apple has been known to announce a product with one price, but sell it for less on launch. Apple TV, for example, was expected to cost $399 but sells for $299, the analyst said. Even if the phone is not discounted at launch, Neff believes that lower pricing will be Apple's goal in the months after its US launch in June.

"The phone may start out around $500 because early adopters will pay that," Neff told PC World. "But pricing will likely drop by $100 to $200 to target the mass market."




by MacNN Staff

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Comments

  1. ADeweyan

    Joined: Dec 1969

    0

    What I'd like to see...

    ...is an iPhone without the phone (just an "i?"). I couldn't care less about the cell phone features since I'm almost always reachable by landline.

    But the big screen...the touch-screen controls...the wifi browser...even wifi-only email features -- those are attractive to me.

    How about an iPhone without the phone (so without a required cell contract), and with a 30GB hard drive.

    That would get my $$.

  1. nat

    Joined: Dec 1969

    0

    huh?

    other "smart phones" are in this same price range and they don't come with a built in ipod, etc. what's the beef? until the others come down it is not overpriced, it's competitive with it's competitors.

  1. gambit23

    Joined: Dec 1969

    0

    Nat:

    Just more FUD, dude. Ignore it.

  1. David Esrati

    Joined: Dec 1969

    0

    "Research" by morons

    Early adopters will pay. The original iPod was $500 for 5gb.Current iPods with 80gb HD's are $349- but no widescreen- no touchscreen. The fact that this is a phone too- I'm sorry- it will sell like hotcakes. The only drawbacks are not 3g- and ATT.

  1. gambit23

    Joined: Dec 1969

    0

    adeweyan:

    Agreed on that device. An iPhone without iPhone.app, without the cellular radio, keeping everything else and adding a 80GB+ hard drive, selling that as the new iPod... I'd buy that. I'd buy that and the iPhone. :)

  1. testudo

    Joined: Dec 1969

    0

    Re: huh?

    other "smart phones" are in this same price range and they don't come with a built in ipod, etc. what's the beef? until the others come down it is not overpriced, it's competitive with it's competitors.

    Well, that's all nice and all. But the report doesn't seem to mention whether its competitively priced or not, nor was the poll about comparing it to competitors on price or the like.

    Consumers are saying its not worth the price to them, not "Oh, well, its too expensive! Give me a Sony Treo instead because its way cheaper" (or whatever phones you want to call a competitor). For what it is, $500 is too much money for 99% of consumers.

    But, as is pointed out, keep in mind that the iPhone is a consumer device, not a business device, which is to whom most of the smartphones are sold to. This device just doesn't have what the business market needs (h***, the only push mail it does is Yahoo? Can't put custom apps on it to support your desktop machine? no thanks).

    If you asked your standard consumer the same questions about any $500+ smart phone, you'd probably get the same basic response. Real people don't want to spend $500 on phone, regardless of what it can do or how cool it is (sure, you probably get a little more people who'd say they'd buy the iphone, just because there's enough apple-worshippers who'll buy anything from apple, sight unseen).

  1. testudo

    Joined: Dec 1969

    0

    Re: by morons

    Early adopters will pay. The original iPod was $500 for 5gb.Current iPods with 80gb HD's are $349- but no widescreen- no touchscreen. The fact that this is a phone too- I'm sorry- it will sell like hotcakes. The only drawbacks are not 3g- and ATT.

    And they say early adopters will pay (gee, RTFA people!). But keep in mind the first iPod was NOT a barn-burner in sales. It started slowly and built up (esp. after they released windows support).

    And comparing this to the current iPods is wrong. You need to compare the $500 model to the $150 nano more then the $350 ipod, since the iPhone only has 4GB of storage, and that's limited even more by the software to run the phone and OS.

    BTW, I'm still waiting for some real-world tests to see how well this thing holds up. Sure it "looks" nice. But how well will the interface really work with people's fat fingers? How durable will it be (can it be dropped and not have the screen crack on you)? How soon before people start complaining that the screen scratches? And how soon after that before people start complaining about the idiots who buy a $500 phone and think they can just put it in their pocket without any type of protection/case/covering over the entire thing?

  1. machead

    Joined: Dec 1969

    0

    hmm

    I wonder how these research firms can make statements like this without considering the effect of the marketing. There are plenty of products at this price range that people are willing to buy in large amounts(GPS units, camcorders, digital cameras, etc) given the proper marketing. But if you just go out and randomly ask someone.. "Hey would you buy a $599 phone with an iPod built in" they are not likely to say yes.

  1. elroth

    Joined: Dec 1969

    0

    re: re: huh?

    "For what it is, $500 is too much money for 99% of consumers."

    Good thing Apple's goal is get 1% marketshare in 2008. Maybe the author should have remembered that before making it such a big deal.

    It looks like Apple may be right on target.

  1. msuper69

    Joined: Dec 1969

    0

    Missing a key word.....

    ....in the headline: "pay"

    I'm assuming that's what the headline was supposed to say.

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