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Tuesday, 20 May 2008 3G iPhone will generate higher sales

Many iPhone customers delay purchase for 3G or on price

Gregg Keizer, Computerworld (US online)

Nearly one-in-four potential iPhone buyers said that they have been putting off their purchase until Apple rolls out a next-generation model that supports the faster 3G data network, a market researcher said today.

According to Paul Carton, the research director at ChangeWave Research, a quarter of the people polled in March who plan to buy an iPhone said that they were postponing the buy until Apple releases a new model (14 per cent) or were waiting for 3G compatibility (11 per cent).

"That's really the same thing," noted Carton.

Most analysts have agreed for months, predicting that the next version of the iPhone will sport support for 3G, a faster data standard than the current EDGE-based technology used by the smart phone since its late-June 2007 launch.

"Assuming Apple's next iPhone is 3G-compatible, it's good news for Apple," Carton said. "That is the key issue faced by Apple, according to our survey."

ChangeWave's poll, which was conducted March 17-24 and queried nearly 3,600 US consumers, also revealed that the number one complaint of current users was linked to the anticipated 3G iPhone. "There isn't any doubt among iPhone owners about their biggest dislike," said Carton. "It's the speed of AT&T's EDGE network."
Of iPhone owners, 21 per cent picked the EDGE network speed as their top grievance; coming in second with 17 per cent was the requirement to use AT&T.

Addressing those concerns by moving to 3G will also help Apple, said Carton. "There are several core issues users want to have resolved," he said. "3G capability is number one, even more than third-party software availability."

On the third-party software front, Apple is also expected to unveil its iPhone 2.0 upgrade next month, which will include the "App Store," an iTunes-esque download site for both free and for-a-fee iPhone software from independent developers.

Other than 3G support, the most popular reason consumers who eyeing an iPhone gave for delaying the purchase was its high price. Apple, which has run out of both 8GB and 16Gb models in the US, was selling them for $399 and $499, respectively.

"Our polls have found that as soon as Apple was willing to drop the price, there would be a huge leap in demand," said Carton, who cited the August 2007 $200 price cut for significant movement in the percentage of people who said that they were waiting for the cost to come down.

In July 2007, the month after the iPhone was introduced, 28 per cent gave that as their reason for not plunking down a credit card; by October, the number had dropped to 21 per cent. In March, 24 per cent selected "waiting for cost to go down" as their reason for not buying an iPhone.

"I don't think that has anything to do with the iPhone, but is all to do with the worsening economy," said Carton. "People are much more price conscious now than they were several months ago."

Speculation has also circulated that the iPhone's price will drop this summer when AT&T starts subsidizing the device to the tune of $200. Although the effective price cut has not been confirmed, one analyst thought it likely.

"AT&T may well be saying, 'Hey, it's worth it for us to pay Apple the full price for the iPhone, plus give a piece of change to the consumer," said Ezra Gottheil, an analyst with Technology Business Research, when the rumours were first reported last month.

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