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Survey: Consumers not willing to pay $500 for iPhone

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By LC Angell

Contributing Editor
Published: Friday, February 23, 2007
News Categories: iPhone

Only 1 percent of consumers are willing to pay $500 for Apple’s iPhone, according to results of a survey released this week. Nearly half of consumers surveyed, however, would buy the device if it was priced from $200 to $299. “Online market research firm Compete Inc. surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report,” reports InfoWorld. “Among the 26 percent of respondents who said they’re likely to buy an iPhone, only 1 percent said they’d pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end. 42 percent of those who said they’re likely to buy the phone said they’d pay $200 to $299.”

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Comments

1

Yay! Shorter lines at the Apple Store checkout counter!

Posted by thelottery on February 23, 2007 at 11:58 AM (PDT)

2

95% of all statistics are wrong. Come on, how many people were willing to buy a 400 dollar iPod when it first came out? No one. (well except for me) the same will go with the iPhone, the early adopters will buy it - they will love it, and will spread the gosspil. SURVEY SAYS: Surveys suck.

Posted by Brandon on February 23, 2007 at 12:19 PM (PDT)

3

I’m not exactly sure how much the original iPod was, but asking people how much they’d pay for the iPhone could be similar to asking people how much they’d pay for an iPod before it was ever released.  How many people said “yes” to a $400 or $500 price tag on an iPod?  I know people have a basic understanding of what the iPhone will do, but until I can pick one up and “play” with it I think it’s difficult to say how much I’d pay.

Posted by mc123 on February 23, 2007 at 12:22 PM (PDT)

4

Check your math Mr. Angell.

Not 1 percent are willing to pay $500 - rather 1 percent of the 26 percent that thought they’d buy one - that’s .26 percent. 

And 11 percent (42 percent of that same 26 percent that thought they’d buy) is a far cry from “nearly half”.

Posted by WhoCares on February 23, 2007 at 12:24 PM (PDT)

5

82% of arguments that quote statistical data employ numbers that are made up on the spot.

It took 379 people only to realize people would rather pay less? And what kind of a sample is that? Pathetic! I cannot believe anyone is really paying Compete Inc. for that and still allows them to boast the sample size. Ridiculous. Also, mc123 is right. The device will likely depend on hands-on impressions. As did the iPod. When the original iPod came out, I thought the price was a little on the steep side too. Then I got to play with one at a local Apple dealer. And although “play” is an overstatement as the unit was already spoken for and I therefore could only “play” though the protective plastic, I was sold on the spot. It was plain worth it. This was before the hype, before everyone had one. Today is much different. Once it drops, iPhones will be all over the place, bought by people who can afford the latest gadget for the fun of it, and all the people around them will get plenty of hands-on opportunities.

Posted by Bad Beaver on February 23, 2007 at 12:46 PM (PDT)

6

It funny, there are so many points against the iphone other than price, but it will still sell like crazy.  Smart for jobs not to release the $350 widescreen ipod yet.  I’m on the fence.  my biggest problem with it is the standard apple closed system.  I’m a palm/treo user and love the third party apps and without that stuff I’m unsure, but you never know.  The sttatistic will totally change once it’s actaully available.  If the release wasn’t delayed I’d have one already becuase now we all have time to study it and make a rational other than impulsive buy.

Posted by bmann on February 23, 2007 at 1:03 PM (PDT)

7

bmann…i’ve also got a treo…but how nice will it be that you never have to worry about installing something that’s going to put you in a reset loop?

welcome change, to me….assuming there’s a ready enough supply of ‘sanctioned’ apps available eventually.

Posted by OnlyShawn on February 23, 2007 at 1:24 PM (PDT)

8

I would pay $400 for an iPhone if I could pop a Cingular (sorry,AT&T) PrePay SIM into it and use it contract free.

For having to chain myself to AT&T for 2 years they should pay me for such torture.

What I really want is a CDMA iPhone run through Sprint or US Cellular. I would pay $400 for that. But when you are talking $450-500+ for a phone,no matter what it does…no.

Posted by WIPod on February 23, 2007 at 1:47 PM (PDT)

9

Look, if anyone thinks there won’t be incentives to buy iPhone then they’re not being realistic. Cingular and Apple are bound to come up with something, probably a huge discount on the service contract. You buy the phone, you get the service for free, or close to free. For as much as Apple touts the fact that they “changed the industry” to bring out iPhone the fact of the matter is that people are accustomed to getting the hardware at a dramatically discounted price. No amount of Apple rhetoric will change that basic fact. Therefore it only follows that some kind of discount program will be offered.

Posted by Surf Monkey on February 23, 2007 at 2:52 PM (PDT)

10

“You buy the phone, you get the service for free, or close to free.”

Cingular already said that is never going to happen.

Posted by stark23x on February 23, 2007 at 3:07 PM (PDT)

11

Cingular and other companies say lots of things. I think you all remember that Apple itself said that they’d never make a video iPod too. Guess what? They did. I think the ods are VERY good that incentives will be available. No one is going to buy an iPhone when there are dozens of servicable smart phones available for $100 or less from Cingular and other providers. iPhone is cool but it’s not that cool.

Posted by Chris Hughes on February 23, 2007 at 3:16 PM (PDT)

12

Onlyshawn,
sure it would be nice to have solid apps, but my ipod freezes all the time, what to stop the iphone from freezing too.  And i could do without all the extra programs on the palm, but they are handy.

Posted by bmann on February 23, 2007 at 3:38 PM (PDT)

13

It is hard for me to put any faith in statistics that are generated from such a small sample size.

(“Online market research firm Compete Inc. surveyed 379 people”)

Posted by wot_fan on February 23, 2007 at 4:23 PM (PDT)

14

I think Apple has a real marketing challenge in “Selling” the idea that this is the ultimate all-in-one device…and you aren’t paying $499 for a smartphone: you are paying $200 for an Ipod Nano, and $299 for a sleek new phone that the Nano comes built into it.

I think selling a $200+$299 product like this is easier then selling a $499 product.  Obviously Apple knows this as Jobs tried to present it that way in his intro to the iPhone presentation…but they need to do a much better job of convincing people that is true.

I originally thought the price was absurd…but then when I think about the fact that in my pocket I have a $200 cell phone, $200 iPod and $200 PDA….an all-in-one device for $499 doesn’t quite seem so bad.

With that said, I will wait at least a generation or two before even considering purchasing the phone…#1 for the cost to come down, but #2 for the phone to have more memory to truly function as a full screen video capable ipod.

Posted by blockhead25 on February 23, 2007 at 4:28 PM (PDT)

15

Brandon said:

“95% of all statistics are wrong. Come on, how many people were willing to buy a 400 dollar iPod when it first came out? No one. (well except for me)”

Well, as I am a HUGE supporter of survey research and representative statistical samples…I will assure you that surveys of this type are not 95% wrong…and with a niche target, a sample size of 397 can be a good enough size with a limited margin of error.

Bottom line is, the survey is right…AND you are right.  It is likely true that only 1% of the market (+/-5% margin of error) will pay $499 for the iPhone at this juncture.  That 1% makes up the early adopters you speak of.  Just as the iPod took a couple years to become such a mainstream product, the iPhone likely will take time too…and I think that is Apple’s model…They want to build a cache and make it buzz worthy with early adopters feeling “Special”...then word of mouth will spread, prices will come down, memory and quality will improve, and walla…the iPhone will be a mass market device.

But that’s not happening in June 2007 at the $499 price, and that’s all this survey is asking.

Posted by blockhead25 on February 23, 2007 at 4:35 PM (PDT)

16

Do Cingular phones accept SIM cards? If I remember correctly, there was another carrier that accepted SIM cards. (besides T-Mobile)

Posted by Jenn on February 23, 2007 at 5:10 PM (PDT)

17

Guys,

don’t forget that the iPod didn’t take off in popularity until iTunes came out.  Look at sales in the first year and you’ll see.

Until the price came down and people saw it as a good product, the numbers won’t be overwhelming, although I do agree early adopters will always buy anything new and good.

Hopefully, when the word gets out and sales ramp up, the price will drop from $499 to $399.  Then it will start ramping up the volume.

Posted by Mike on February 23, 2007 at 5:32 PM (PDT)

18

People already have cell phones and iPods, I’m not sure they know why they need to get an iPhone or what it would do that is new or worth the extra money. A phone that plays music or movies? Is that it? Is there more to it?  If people figure that out they might be willing to pay extra for it.

Posted by binkie on February 23, 2007 at 6:10 PM (PDT)

19

Mike!! iTunes came out in Jan. 2001 and then the iPod came out Dec. 2001… For us Mac users :-p

I have a Treo phone and I don’t do business and yes I paid a ridiculous price but it’s a PDA so you have to expect to pay a high ticket price. The iPhone is just as much as PDA’s on the market cept they offer more

Posted by AZ on February 23, 2007 at 7:19 PM (PDT)

20

I agree with MC. Nobody wanted to buy the iPod when it first came out because it was “too expensive”...6 years later, the iPod is the most popular media player on the market, taking more than 75% of MP3 Player market share.

Posted by The Soup Nazi on February 23, 2007 at 7:28 PM (PDT)

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