Apple's iPhone Rocks the Cell Phone Industry
-
Font Size:
Our survey of 3,489 Alliance members – conducted April 4-10 – reveals exceptionally high levels of excitement surround the iPhone’s upcoming release. Nearly one-in-10 respondents (9%) say they are likely to buy the new iPhone once it becomes available in June.
Another 7% say they are likely to buy the iPhone as a gift for someone else.
These are big numbers, especially when you consider the worldwide market for cell phones is around 1 billion and Apple’s goal is to get to 1% of that market in year one – which would mean selling about 10 million phones.
Clearly the current results, while similar to our January survey findings, provide strong evidence that Apple should exceed its iPhone sales goals for 2008 – providing the device lives up to consumer expectations.
The iPhone’s overall integration of iPod, Phone, Camera and Email/Internet capability (28%) remains the top selling point among likely buyers. Importantly, the survey has also uncovered an additional surge in demand if the iPhone’s proposed price point is lowered.
To find out how far the price has to drop to attract additional customers, we asked the rest of our respondents who aren’t yet considering the iPhone the following question:
For those not considering buying an Apple iPhone, at what price point would you consider buying an iPhone?
A total of 10% say they’d consider buying a 4GB iPhone if the price falls to the $200-$299 range, while a total of 20% said they’d consider the 8GB model in this price range.
The Explosive Impact on Cell Phone Manufacturers
To gain a full sense of the iPhone’s looming impact on manufacturers, we compared their current market share in our survey with planned consumer purchases for the next six months.
Currently, Motorola (MOT) (33%) remains the leading manufacturer among Alliance cell phone owners, with LG (LPL) (15%) second and Nokia (NOK) (14%) third. But when you look at planned future buying the iPhone’s impact becomes clear.
For the second-consecutive survey, Motorola’s future share among consumers has seen a dramatic decline – falling from 33% last October to just 17% currently. Nokia has also fallen from 11% to 9% during this period.
“As more and more consumers switch to the iPhone, we are going to see a huge migration from cell phone manufacturers like Motorola to the hipper, cooler iPhone,” says Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing.
The Effect on Cellular Service Providers
We see the same pattern among service providers. Currently, Verizon (VZ) (30%) holds the market share lead among our respondents while AT&T’s (T) Cingular (27%) – which is Apple’s exclusive service provider for the United States – is in second. We note that third place Sprint/Nextel (S) (12%) has fallen 1-point to a new low.
But going forward we find a dramatic turn of events. Cingular (28%; up 6 points) has surged ahead of Verizon in terms of future planned buying among consumers, and is now the top choice among those likely to switch service providers.
Verizon (22%; down 3 points) has continued to trend downward among this critically important group – falling to second place for the first time since we began asking this question in a ChangeWave survey.
Thanks to our early adopters of the ChangeWave Alliance we are able to see with stark clarity how the Apple iPhone is set to rock the cell phone industry.
Ultimately the real issue for Apple isn’t meeting its first year iPhone sales goals. The survey shows that’s very doable. The real issue is whether they can keep up with consumer demand – including having enough parts to fulfill orders – while maintaining product integrity.
Its competitors had better hope the iPhone can’t get a dial tone – because if it does, the rest of the industry’s in for a big shakeup.
Jim Woods co-wrote this article.
----------------------------------------------------------------------------------------------------------------
This article summarizes the results of a recent ChangeWave Alliance survey. The Alliance is a research network of 10,000 business, technology and medical professionals who spend their everyday lives working on the front line of technological change. For more info on the ChangeWave Alliance, or if you are interested in joining, please click here.
Get Free Stock Alerts by Email!
-
Editor's Picks
-
Most Popular
- Choosing Your Portfolio Risk Tolerance
- Measuring SaaS's Profitability
- Diving Into the Water ETF
- Can Steel Stocks Continue to Climb?
- Leading Hedge Funds' Best Ideas and Consensus Picks
- ETF Watch: New Listings (May 7-14)
- Full list of Editor's Picks »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- AutoZone Earnings: Is It Time To Be Bullish in Automotive?
- ReneSola: Hot Stock in a Hot Sector
- Frontline's a Buy Heading into Earnings
- Yahoo's Raw Deal - Fast Money (5/19/08)
- Two Cheap Retailers Worth Owning
- Potential for Huge Profits Awaits Big Pharma Companies
- Xinyuan Real Estate: An Investment in Chinese Growth
- Enhanced Oil Returns
- Snuggling up to a New Position in Build a Bear Workshops
- Lumber Liquidators Solid as Hardwood While Housing is Weak
- Full list of Long Ideas »
- Yahoo's Raw Deal - Fast Money (5/19/08)
- The Short Case on Home Inns & Hotels Management
- Doug Kass's Killer Shorts - Barron's
- PNC Financial Services: Facing the Heat
- Clearwire: Burning Cash by the Billions
- Why I'm Short Nextwave Wireless
- Fast Money Recap - Talking Turkey (5/14/08)
- Get Ready to Short Homebuilders
- Red Flags at American Superconductor: Don't Get Burned
- Disclosures: The Long / Short Dual Standard
- Full list of Short Ideas »
- Dynamic Dynegy - Cramer's Lightning Round (5/19/08)
- Get on Board Nordic American - Cramer's Mad Money (5/19/08)
- Yahoo's Raw Deal - Fast Money (5/19/08)
- Cramer: How An Obama Win Would Impact Healthcare Stocks
- Windy City Trades - Fast Money Recap (5/16/08)
- POT of Gold - Cramer's Lightning Round (5/16/08)
- Market Bottom? Who Cares - Cramer's Mad Money (5/16/08)
- Agriculture Is Still Growing - Fast Money Recap (5/15/08)
- Going with the Wind - Cramer's Stop Trading! (5/15/08)
- Cramer, the TIN Man - Cramer's Lightning Round (5/15/08)
- Full list of Cramers Picks »
Most Popular Feeds
-
ETFs
-
US Market
-
Long Ideas
-
Alt. Energy
- Full list of feeds »
This article has 48 comments:
These are big numbers, especially when you consider the worldwide market for cell phones is around 1 billion and Apple’s goal is to get to 1% of that market in year one – which would mean selling about 10 million phones.
Thanks to our early adopters of the ChangeWave Alliance we are able to see with stark clarity how the Apple iPhone is set to rock the cell phone industry.
This article summarizes the results of a recent ChangeWave Alliance survey. The Alliance is a research network of 10,000 business, technology and medical professionals who spend their everyday lives working on the front line of technological change."
Doesn't the survey base - which sounds like well-to-do professionals naturally inclined to buy an expensive product like the iPhone - imply a huge bias in your numbers that doesn't seem to be accounted for? I have a feeling that global market of 1 billion includes very few people who are like your apparent sample base... I think you are too aggressive in extrapolating a data point that seems inherently biased, but I would love to hear evidence to the contrary.
LADYFROM COLORADO
On the Treo, I like that I an create or open a small Excel spreadsheet or that I can open up a Word document. BUT!!! Unfortunately, the quality of the phone is bad. I often can't answer a call when I am looking at email or in a document. Calls come in and push on buttons and it just doesn't respond. The bottom line.... if you're looking for a reliable phone, a Treo 700w is a phone you CAN'T count on.
So the Treo is a lousy phone, ok, so why would I consider an Apple iphone? Simple... Apple quality, ingenuity, and simplicity. Let's go back several years...I started using Windows when it first came out (remember Windows 286 and Windows 386) and over many many years I got to the point where I was just accepting of the blue error screens, other error windows, and poor performance from spyware and virus infections. I "learned" that one has to reinstall Windows every 6 months and all applications to get good performance. I "learned" that you need to spend time fighting spyware every day, and that it was normal for Windows to eventually start to run S-L-O-W-L-Y. I found solutions and patches and provided support to my clients over the years to fix these problems.
Then one day, Apple announced that they would be releasing an Intel-based Mac. No one knew if it would be able to run Windows, but on the day it was announced, I ordered one. Later, before my new Macbook arrived, Microsoft announced that it would not support EFI (more modern BIOS) that the Mac used. I figured, however, that someone would figure it out a way to make Windows work on an Intel-based Mac and I took the leap. You might ask, why was I so concerned about running Windows? ...well, like I said, I provide support on Windows and also write code in Windows, so I couldn't completely abandon it. But I figured that for email and internet and to create documents I might be able to work in Mac OS X instead of Windows. I hadn't spent much time on a Mac, and didn't know how easy or hard it would be to swtich, but I was so willing to just try anything else, because I was already sick of spending more time fixing my computer than actually using it! I thought...if the quality of Apple's computer were anything like the iPOD, I had nothing to lose. As it turns out, It was the best decision I ever made in years, and I've been suggesting to all my clients that they make the switch.
I received my Macbook in early 2006 and I absolutely LOVE IT. I am in the business of supporting computers so I have to expose myself to everything and learn all I can, so I bit the bullet and reluctantly bought Microsoft Vista (the Ultimate version) for a Core Duo 2.4 Shuttle computer. I am soooooo disappointed in this OS. I am running 2gb of RAM which should be plenty by any standard. My Mac with 1gb, blows away this computer, and my Mac has a slower processor! Internet Explorer crashes, this new Vista OS hangs up, and I have webcams and scanners that are no longer compatible with my OS. What's up with that???
Last weekend I bought a Mac Pro 2.66. The quality of the machine is like nothing I've ever seen. The design is like nothing I've ever seen. The materials used, are like nothing I've ever seen. How can I not buy a phone from a company that cares so much about design, quality, and user experience! I love my Macbook and my Mac Pro, and I know I will love my iphone.
ANOTHER WINDOWS TO APPLE CONVERT
Long version- Sprint has royaly been skrewing me for the past 5 or so years. A few years back I saw a HUGE increase in my phone bills (some being nearly $400 dollars). I never go over my minutes, rarely text, or call long distance. I usualy call one other number and that phone is on my plan. Why the huge jump in my bill?? NO ONE at Sprint has been able to tell me. They contradict each other, hem and haw, but not one time in the past 3 years has any of them been able to tell me WHY my phone bill is so expensive. I cut back on calling, rarely even used the phone and still it was $300 per billing period.
Finally after I lost my phone (and you should hear the lies they told to avoid giving me a replacement phone so they could lock me into another 2 years subscription!!!) I learned from a Sprint representative that I had been paying for an expensive Sprint Vision Pack- for 3 years this is something I repeatedly told them I did not want and was repeatedly told I did not have this service on my plan. THAT is why the bills were so expensive. Each time I called to ask Sprint, I was lied to time and time again- for over 3 years!!
My contract with them is over!!!! Come June I will HAPPILY bum-rush Sprint to the door! Good riddance Sprint.
If 7-9% of professionals intend to buy an iPhone, thats a LOT of sales lost to manufacturers of other smartphones in this niche sector. That's the story here.
And good riddance! As a Verizon customer, I'd love to see them driven out of business, as well, but that could take a few years.
I find the "beachhead" remark interesting because the iPod was supposed to allow Apple to expand into the PC area, and they still have a single digit market share there. Granted, they have seen good growth, but single digits is still single digits. I think everything (and then some) is already reflected in Apple's stock price, and the overly bullish sentiment that surrounds the stock would worry me if I was long.
Big single digits are better than small single digits. Technological revolutions, contrary to what you may have heard, don't happen overnight.
The fact that Vista is shipping-- and is pretty pathetic-- ought to further help the Mac. MSFT had to accrue 4 months sales into their 3 month quarterly report to make Vista adoption look better.
Apple will likely play the iPhone like it did the iPod. It first introduces the top of the line model. When it has satisfied the demand of this market, it 1) increases the capabilities of the top of the line model, and 2) brings out less expensive alternatives. Apple has a very loyal following, which I would be very suprized if that alone does not give Apple the 10 million iPhones sold it needs to claim success, and justify bringing out other cheaper models.
Apple clearly already has the big cell phone players nervous, if it didn't you wouldn't hear them ridiculing a product that has not even shipped. The President of Sony is the only credible company to acknowledge Apple's chances of success saying it would be foolish to under estimate Apple.
Finally, ATT has publically stated that its exclusivity agreement with Apple merely covers the iPhone, not other models of phones Apple may release. Accordingly, it is likley Apple will eventually make deals with other carriers if it thinks it needs to.
I expect a full line of medium to high end iPhones, including G3 iPhones, marketed in other first world countries following the initial success in America.
Unfortunately, I live in an area that does not have a Cingular signal so the iPhone is not an option for me. I would assume that Apple would like to "take over the world", so I'm wondering if there are plans to expand their coverage areas.
If this iPhone thing does this well............... I'm just glad I own some Apple shares. :-)
By the time the iPhone comes out in Europe every other manufacturer of mobile phones will have already realeased a phone of similar spec but at 20% of the price.
I just don't see how you guys think that this is going to replace your laptop, your blackberry, your mobile phone, your mp3 player and everything else in your home. It does all of the above but not nearly as well because it's battery life won't be as good as stand alone products, it's screen is smaller than your laptop and mp3 player, the memory is smaller than you ipod.
Yet it's still bigger and heavier than all other mobile phones out there.
This is not going to kill any mobile phone companies. In fact I doubt they are that worried.
Carl-- specs mean nothing. The iPhone will have the advantage that the features will be "friendly" enough that people might actually want to use them. Besides, the iTunes connection is unique. NO other phone maker will have this adavntage.All they'll have is some lame MP3 player built in, tied to some lame subscription service.
The iPhone will not destroy other cell phone companies, nor do I think anyone is really saying that. What they are saying is that they've been one-upped by Apple and are now scrambling to figure out how to compete. Again, the playing field is broadening as much as the game is changing. If mobiles are becoming computers, who's going to make a better mobile? A cell phone company or a computer company?
I guess we'll find out in a few months, but the overall point here is that Apple is challenging the market and has a head start. I would agree with that summation, but to quote Robert Frost, "we have miles to go before we sleep."
aloha
joe
I don't understand the comments about the iPhone being big and bulky. Did that person ever try carrying around a blackberry, palm treo, or kyocera smart phone? It can't be any bulkier than than those. The price issue is overblown as well. Look at what Apple sells the video iPods for. Look at what palm sold the treo 700w for. I paid nearly $600 for a phone that is sitting in my closet. You are crazy if you don't think I, and others like me, will pay $600 for a phone that actually does everything it says and is easy to use. My only question is why did Apple wait so long to jump in to the market?
It will not take over the world, but Apple has succeeded in getting the drop on an industry it did not create and entered into very late in the game. The iPhone will be very successful and Cingular was smart to get in on it.
Matt Williams
iPhone collapses these segments. Yes, the iPhone technically belongs in the smart phone category, but people who wouldn't in a million years buy a Treo will buy an iPhone, because it will be easy to use, it doesn't have a big honking keyboard, and when they just want to make a call, it gives them an easy, simple, familiar interface to do it. Apple's found a way to make smartphones accessible to nongeek users. This will disrupt the market like no one's ever seen a market disrupted.
So I'm here to spread the news: Palm is dead. Palm users will migrate to the iPhone. Windows Mobile will survive as a cheap, inferior, Zune-branded knockoff of the iPhone (to the extent that it can do so without infringing patents) for the bitter masochists who refuse to use anything associated with Apple (and who are not sophisticated enough to use Linux). The smartphone category as such will die; all phones will be "smart" within five years. A large percentage of the cellphone market will be Apple-based. Ballmer will throw a few more chairs.
joe
Any way, the thing that intrigues me about the iPhone is what I heard mentioned during the conference call when financials were released.....which is that there will be continued upgrades and software offerings free of charge to iPhone purchasers. This, alone, will be a bigger deal than most think.
I apologize to the rest of you for my outburst, but he is definitely annoying because he refuses to think!
Note from SA Editors: Please remember the ground rules for participating in Seeking Alpha as a commenter: the goal of Seeking Alpha is to provide a forum for helpful discussion of stocks, industries and trends. Comments may dispute viewpoints and claims in articles and other comments, but may not attack the authors of articles or other commenters. This is enforced to maintain the quality of the community and to prevent discussion descending to useless mud-slinging.
"The Alliance is a research network of 10,000 business, technology and medical professionals who spend their everyday lives working on the front line of technological change."
I think the terms "research" and "technological change" are important to consider. I think this is a group who is looking at technology and what it can do. I don't think this is a group of bleeding edge early adopters. I just don't see that in this group of people.
Regardless, there seems to be a belief in some circles that the iPhone won't appeal to the business community because it lacks "so many important applications". (because how many time have I seen someone doing their company's annual report on a Blackberry!!) The point is, I believe the last group to want an iPhone is "business professionals".
So if Paul's research says nearly 1 in 10 of the Alliance will buy an iPhone, then that's great news, because they aren't the group that is going to push iPhone sales. It's the "young crowd" who wants the latest, greatest, hippest devices; not John Starchly, CPA.
If the pricing is the best argument that people can come up with, then they have forgotten all too quickly our history. The first iPods, giant bricks by today's standards, were $499!! And all they did was play music. My first Treo, $650!! And it is a piece of dung. So the price argument is really some lame attempt at attacking an innovative device. The iPhone is just the beginning. It's not the end all be all device... yet.
And finally, there is a group of consumers, myself included, who could care less about the iPod feature of the iPhone. We could care less about the "Phone" in iPhone. It's all about a mobile device that works seamlessly with our Macs. Now I can take my calendar, contacts, email, favorite websites, etc., and sync them with my phone. Period. No special middleware, no palm desktop, no weird syncing behavior. Just two OS X devices communicating freely.
**Mac zealot or not, I'm glad I bought AAPL back in 2003. With the split, that's almost a 15 bagger!! I can afford several iPhones. Sorry if you own MSFT.
phone or service agreement with Sprint. I use a Sprint broadband card with my laptop and get excellent service from that and am sorry
that Sprint will not be carrying the Mac iPhone.
This is why the iPhone will do well:
Full browser, not that handicapped piece of dung.
An actual OS that'll sync my contacts, calendars, email prefs...SEAMLESSLY.
Forget the phone part, the iPod part, selective voicemail, whatever. Those are some nifty bonuses as far as I'm concerned. I own a Palm LifeDrive. I didn't really need a phone, I just wanted something that I could organize my information and, if I'm in a hotspot, access my email and browse the web a bit. The LifeDrive also sports a 4 GB drive. Whoopee, 4 GB. Whatever, I didn't need much more for an organizer.
The Palm software...is horrible. It's absolutely painful to use. Half the time it didn't work. Bluetooth syncing, USB cable syncing, whatever, half the time it didn't work. Guess how much the LifeDrive costs. $399. And it's not even a phone! A Palm that has phone options? At least $499. If they're cheaper than that, they were so limited that it wasn't worth my time. Limited...for ME. For someone that only does the very basics on a handheld.
It's the user-friendly interface that will captivate people. Not the few dozen nifty utilities. It will be managed like iTunes (and I don't care if you're a die-hard Mac hater, you can't deny the iTunes' ease of use) which will also strike a chord with a lot of people. So kudos to mitchell for pointing that out.
Verizon is definitely going to be losing me as a customer. And to be quite honest, the Cingular reception in my area is shaky and unstable. I don't even care at this point. It'll be like my LifeDrive with moments of internet access, phone capabilities, and an OS that is known for its ease of use. I don't EVER want to look at that PalmOS ever again.
Motorola and Nokia can look up restaurants all it wants. I don't care if it can locate the Black Market or Osama bin Laden. It's just dull, drab, and not streamlined enough for consumers to consider in comparison to the iPhone.
www.apple.com/server/macosx/leopard/ical...
LADY FROM COLORADO
Would like to think that it would be 3 Services otherwise known as 3 in Australia.Telstra i think dont just have the goods.
Trev from Australia
Now <strong>that</strong> a reason for me to invest in an iPhone. Sure lifespan of the hardware will be maybe three or 4 years, but my features will not stay behind with deciding to make a purchase from Apple. That is what I like about Apple and is the reason for being 3 years in a row "most innovative company" of the year.
You don't get to play that fiddle if it wasn't the case. It is because the "enlighted" souls out there that use Apple products, use it for one reason and one reason only: Productivity. All the so-called "geeks" that wish to look under the "hood" and thus like Windows and Linux, have nothing better to do with their lives than being a geek.
Personally, running a company with over 150 Macs (all upgraded to intel based over the last 9 months) for more than 10 years and only having to have 2 network assistants to keep all of us productive, I can only contribute to ease of use, top quality hardware and software integration that seamlessly works. In 10 years we had only one powerbook ever giving us a problem (the on-button was stuck) and never a network breakdown.
Now, will I recommend that all my employees will switch to iPhones once service will become available in our Area (the Caribbean): Well, the decision has already been made and approved by the board before even knowing when we will have service.
Outcome of the vote is: All employees that require cell phone communication are mandatory to switch to iPhones (about 70)
Reason: Being productive without having to spend gazillion hours of reading through booklets, setting up blue tooth connections and as on "commenter remarked i-Cal server!!"
Many people may think that Macs are "playtoys" for fun and nice to make a movie on and having your iTunes play on your stereo in the den, but they are actually the most productive "toys" around where seamless integration, direct communication and ease of implementation are the keywords for successful productivity.
One remark: Our "competitor" who is also a friend runs a similar operation on wintel boxes. His annual breakdown (either network breakdown, servers crashing, individual machines crashing, almost daily "fighting" with spyware and virusses, having 7 network specialists employed and still only half of my productivity) has finally broken down and is switching his whole operation over to Macs. Coincidence? I think not.
iPhones: No-one will be able to keep up with Apple on its integration and will only run behind for the next 5 years to come to get to the same level (if ever) of service using an "out of the box" flawed system software called Windows or even Linux (too many flavors to create consistency).
Bottom line: the introduction of the "i" did not start a trend but a revolution built on a vision whereas the "i" did not stand for something personal but for "integration through innovation".
p.s. I do not work for Apple Inc. nor do I even own stock.
What's really funny is there was a time when my income came from having an affinity with pc's and their software--from DOS all the way up. In order for me to work successfully, I had to know the hardware and Windows. And consequently I became quite good at what I did. Also having friends in the industry, you just wind up becoming quite good at fixing them. Well even before I jumped in to this industry, I owned a Mac (the 7200). Ironically enough, occaisionally I would wonder how I might fix similar problems on the Mac and I could never answer it-and this made me a little nervous. Without giving it more thought I said to myself I would just have to get one of those expensive Mac techs. That's when it dawned on me, I don't know how to work it because it never breaks downs. I never had to go under the hood or replace autoexec.bat files because the Macs I owned did not freak out like the PCs i worked on - on a daily basis.
Now I can go on and on about the design of the software and their products and the ease of use, but we're a little too familiar with that song. What I will say however, is although I have not heavily anticipated a phone from Apple, I have been counting the days since that Macworld announcement. Since I've been somewhat of a techno-buff (sorry, but you won't catch me referring to myself as a geek) since my commodore 64, I've been an afficionado of good software design--and I've yet to find a company that rivals Apple. It's one of the reasons that I get excited when they come out with a new product or a new version of the software. The average person is not abreast of the many OS-es that exist but for me, not only have they created the world's most advanced OS, but that OS is now running on a moble phone. That's reason enough for me to drop my Palm Treo. Not that my Treo is a bad phone, because I honestly like it. but the Palm OS compared to OS X is like boys among men. I'm excited!
I, like the above writer, don't work for Apple or own its stock. But god, I wish I did buy some when I considered it around 97 or 98.
keys2000@mac.com
contact us for further information via Email.
ORDER INFORMATION :
Minimum Order : 3units
Shipping Method : FedEx ,EMS and UPS.
Delivery Time : 2 -3 Days.
Presently we OFFER BUY BUY 3 GET ONE FREE.
Sales Department Email :
DO CONTACT us by...........
jaybliss_usa@hotmail.com
This has far more capacity, video capabilities (Widescreen at that), is touch-sensitive, runs OS X, etc...
www.mp4-converter.net/iphone-converter /