Consumers not willing to pay $500 iPhone price?

Alex Zaharov-Reutt
Saturday, 24 February 2007 21:28

Your IT - Mobility

A new report by Compete Inc. has surveyed 379 shoppers and has discovered people are willing to pay from US $200 to $299 for the phone Apple wants to charge you $500 for. Will Apple have to drop their prices?

There are plenty of arguments over whether or not the iPhone is good value at US $499 for a 4Gb iPhone, and US $599 for an 8Gb iPhone, with comparisons made against the cost of a cell phone and an iPod nano showing the price point seems about right.

But a survey from Compete Inc. has survey 379 customers in the week after the iPhone was released, and they came up with a pretty predicable result: naturally, people want to pay less than the recommended retail price.

To quote from Compete Inc.’s PDF release on the report, they say that:

In the week after Apple announced the iPhone, Compete surveyed 379 shoppers who researched an iPod online to understand the iPhone’s impact on their music player and cell phone buying decisions. Seventy-five percent of iPod shoppers had heard of the iPhone, and 20% said they would postpone their next cell phone purchase to wait for it. Separately, 20% said they would postpone their next music player purchase, even though the device will not be available for six months.

Among these iPod shoppers there was strong interest in the device, but the expected price discouraged many. Of those surveyed, 26% said they were very likely to buy the device, but only 1.8% of respondents were willing to pay more than $400 for it. Even among those who said they were very likely to buy, only 6% were willing to pay more than $400.

The sweet spot for the iPhone appears to be closer to $200, comparable to the current price of the smaller memory Video iPods and higher end iPod Nanos. Of those who said they would be very likely to purchase an iPhone, 38% said they would be willing to spend over $200 on the product. The $200 price point has proven to be powerful lure for consumers to higher-end devices such as the spate of consumer-oriented smartphones released in the second half of 2006.

The report predicts that the news is good for Cingular and their new owners, AT&T.

For Cingular the news is even better: 58% of non-Cingular customers who were very likely to purchase an iPhone said they would switch from their current carrier in order to purchase the device.

So, will prices fall, or not? Please read onto page 2 for the conclusion...