Study: iPhone already nibbling away at Motorola's market lead

[AppleInsider]

Although it's been on the shelf for just three months, the impact of iPhone is clearly being felt by rival phone manufacturers, according to a new study which claims that Apple's cell phone market share is already on the rise at the expense of Motorola.

Cell Phone Manufacturers

Completed earlier this month, ChangeWave's latest consumer cell phone survey of 3,654 of its alliance members focused primarily on key market share changes among the major U.S. cell phone manufacturers and service providers.

The study found that while Motorola still manages to maintain the top spot in terms of current market share (30 percent), it has fallen 1-point since the firm's July survey to its lowest level in more than a year. For its part, Samsung (15 percent) remains in second, unchanged from previously.

Customer Satisfaction

"One of the most striking findings for Apple is the iPhone’s outstanding customer satisfaction rating," ChangeWave reported. "An impressive 82 percent of iPhone owners reported being Very Satisfied with their purchase, up 5-points since our previous survey in July -- by far the highest rating of any manufacturer."



The only other company with a rating above 50 percent was Research-in-Motion (RIM). And at the other end of the spectrum, Motorola was next to last among cellular manufacturers when it came to customer satisfaction, with Sony/Ericsson at rock bottom.

Future Share

"Most importantly, it’s when we asked respondents about their planned future cell phone purchases that the iPhone marketplace transformation becomes fully apparent," ChangeWave said.

Again, an significant 16 percent of respondents who plan to purchase a cell phone in the next 6 months say they’ll buy an iPhone, placing Apple at the top among all manufacturers. Moreover, while the number of European and Canadian respondents wasn’t large enough to draw final conclusions, the iPhone appears set for a stellar debut when it launches in the coming months in Europe and Canada, the firm added.

Meanwhile, Motorola planned purchases (15 percent; up 1-pt) -- after a long and horrendous slide -- appear to be bottoming for the first time in a year. Indeed, ChangeWave surveys throughout 2007 have shown Motorola to be the manufacturer hurt most by the iPhone.

"Tough times still lie ahead for the company," the firm wrote in its report.

The chart below illustrates Motorola’s dramatic rise and fall over the last 2+ years in terms of planned purchases.* Tellingly, the decline first became apparent in ChangeWave's January 2007 survey conducted immediately after Apple's original iPhone announcement.



At the same time, Nokia (13 percent) has jumped 3-points since the July survey and, conversely, LG (4 percent) and Palm (2 percent) have each fallen 2-points.

Cellular Service Providers

Concurrently, the tug-of-war between Verizon and AT&T continues in the cellular service providers market, ChangeWave said.

In terms of actual market share, both Verizon (30 percent) and AT&T (29 percent) have each gained 1-point since the firm's previous survey in July.* For AT&T, this is the third survey in a row that they’ve racked up a 1-pt gain.

Mired far behind in third place, Sprint/Nextel (12 percent) showed no signs of a turnaround from its downward slide.

After the initial wave of excitement for the iPhone, future demand for AT&T -- while still historically high -- is returning to more normal levels, according to the report.

Among respondents who plan to switch carriers over the next six months, a total of 23 percent said they’ll go with AT&T -- a full 7-points lower than in the July survey.

Verizon, on the other hand, appears to have halted the downward slide in planned purchases that began immediately after Apple's iPhone announcement back in January. All told, they have increased their share of planned purchases 2-points to 21 percent, and significantly narrowed their gap with chief competitor AT&T, according to the latest survey.

Here’s another look at the roller-coaster slugfest in planned purchases between Verizon and AT&T over the last 2+ years:



Importantly, ChangeWave said, Verizon customers continue to give their company the highest satisfaction rankings in the industry -- even as lower satisfaction ratings continue to be a problem for AT&T. The firm also note that previous surveys have identified the speed of AT&T’s network as the top complaint among iPhone users.

Going forward, Sprint barely registers in planned purchases, garnering a minuscule 3 percent.

Fiber Optic Services – Verizon vs. AT&T

In somewhat related findings by the study, a total of 34 percent of respondents said they’re likely to sign up for Verizon’s FiOS internet service if it becomes available in their area -- including 12 percent who say they are Very Likely. Another 39 percent said they’re likely to sign up for Verizon FiOS TV.

Regarding AT&T’s U-verse Internet and TV service, one-in-three respondents (32 percent) said they’re likely to sign up if it becomes available in their area -- including 8 percent who said they are Very Likely.

Triple-Play Penetration – Current Market

Meanwhile, Comcast (24 percent) remains the industry leader among respondents who currently pay for a “triple-play” service -- but it has lost 3-points since ChangeWave's previous survey on the subject in April. Both AT&T (16 percent; up 3-pts) and Verizon (15 percent; up 6-pts) have experienced big gains during this time period.

AT&T (28 percent; up 6-pts) is also looking strong among those who plan to sign up for a “triple-play” subscription in the next 90 days. Verizon (26 percent; down 3-pts) and Comcast (23 percent; down 2-pts) have fallen to second and third respectively.

"We note that Time Warner (4 percent; down 5-pts) remains on a steep decline in terms of planned triple play purchases," ChangeWave said.

[ View this article at AppleInsider.com ]

[JeffDM]

I think the headline is a bit much. I think that Motorola was fading away anyway, they haven't had anything fresh lately anyway, their high profile stuff was just rehashes. I think it's hard to prove causality when it is may very well be just a coincidence.

[Kasper]

Originally Posted by JeffDM

I think the headline is a bit much. I think that Motorola was fading away anyway, they haven't had anything fresh lately anyway, their high profile stuff was just rehashes. I think it's hard to prove causality when it is may very well be just a coincidence.

You're the second person to mention this, so I tweaked it a bit. But it is still inline with what ChangeWave claims their study reveals. We're still attributing the notion to the study.

Thanks a bunch for your feedback,

K

[Stashman]

I've had 2 Sony Ericsson phones the T610 and now the M600i. I must say they are both truly crap phones. They were so bad to use that I felt like harming myself. Lucky the iPhone comes out in the UK in the next few weeks and I'll be getting rid of this rubbish phone!

Here's a message to Sony Ericsson, if you actually spent more than 2 months developing a phone and then 'dumping' into the market then maybe they might be a bit more 'usable'.

[walshbj]

In my case, I blame Verizon for my phone's problems. My LG has a big orange button that says email. Verizon disables it.

Like computers, I think we all do better with phones when we can buy the hardware and software from the same vendor. As long as the platform is open to third party apps!

[crees!]

I just had FiOS TV and internet installed. Having Comcast before, FiOS beats the crap out of Comcast, hands down. First, for internet I got the 15 meg service. The wireless router came already WEP enabled and the admin interface for the router was custom made for/by Verizon. By FAR the most easiest to setup (none) and manage. Now to TV. The interface is amazing. When you search for movies they are shown by cover art like Front Row. You can pick a movie, see the actors in the movie, and then see all the shows currently available with that actor. The regular TV guide is so much more nice too. You can obviously tell Verizon spent a lot of time designing this whole package. After having both I will never go back to Comcast for either service if I have a choice.

[JeffDM]

Originally Posted by Kasper

You're the second person to mention this, so I tweaked it a bit. But it is still inline with what ChangeWave claims their study reveals. We're still attributing the notion to the study.

Thanks a bunch for your feedback,

Fair enough, I suppose. But the last indication is that iPhone is like a single digit portion of the US phone market, like 1%, so I think it's implausible to say that iPhone is responsible for any more than half a point of Moto's 15-point loss. The iPhone is a mosquito bite in comparison to what the other phone makers are taking off Moto's soon-to-be carcass unless Moto pulls another rabbit out of the hat.

[Kasper]

Originally Posted by JeffDM

Fair enough, I suppose. But the last indication is that iPhone is like a single digit portion of the US phone market, like 1%, so I think it's implausible to say that iPhone is responsible for Moto's 15-point loss. The iPhone is a mosquito bite.

It attributes a 1 percent gain for iPhone to a 1 percent decline to Mot...

Best,

K

[SpamSandwich]

OMG... ChangeWave...

[kim kap sol]

Interesting how companies that have been in the mobile phone biz for years or even a decade are getting crushed by a company that had zero prior experience.

[Gizmo-xl]

Originally Posted by kim kap sol

Interesting how companies that have been in the mobile phone biz for years or even a decade are getting crushed by a company that had zero prior experience.

Like the iPod that changed the Music biz the iPhone is going to change the Phone Biz it is just a matter of time.

[pmjoe]

Well, I'll just say it ... Comcast sucks. There's a company who knows how to maximize profits by running a company "in the cheap", entirely at its customers' expense. Unfortunately for most people in the US, you have little choice as to who your cable provider is, which often determines where you get broadband from as well. I'd switch to Verizon FiOS in a second if it was available in my area.

As far as the "iPhone already nibbling away" after being "on the shelf for just three months", I hate to say it but most of the hype (except for more international introductions) is already out the door. Apple will likely continue to gain some marketshare, but if, as some of these stories seem to imply, you're looking for these other manufacturers Motorola, Nokia, etc. to suddenly implode because of Apple, that moment has just about set (baring some radically new device introduction from Apple).

[TBaggins]

Originally Posted by kim kap sol

Interesting how companies that have been in the mobile phone biz for years or even a decade are getting crushed by a company that had zero prior experience.

Apple isn't crushing anybody... Motorola sells in the ballpark of 200 million handsets worldwide each year, Apple is just trying to sell 10 million in 2008. Put it in perspective.

What is true is that Motorola is in deep trouble, and most of it is self-inflicted. They have truly lousy quality control, especially in software, and their build quality is often suspect as well. Motorola's name has become synonymous with 'garbage' among a lot of cellular sales reps, who will actively steer customers away from Moto products, simply 'cuz they don't want to have to hear said customer yell at them when they have to bring their malfunctioning Moto handset in for a repair or exchange a couple of weeks later. And you really can't blame 'em.

Moto should have faced its Judgement Day a long time ago, and either changed its ways or died/got bought out, but they got lucky back in '04 with the RAZR, a huge hit that masked many deep-seated problems with the company.

But the RAZR franchise has been milked nearly dry by now, and their new RAZR2 is not going to be anything like the game-changer the original RAZR was, simply 'cuz it brings very little that's new or uncopied to the table. It'll sell decently, but not enough to rescue Moto from its internal issues.

The iPhone helps highlight Moto's weaknesses, but it did not cause them.

.

[JeffDM]

Originally Posted by Kasper

It attributes a 1 percent gain for iPhone to a 1 percent decline to Mot...

If that's what they are saying, I think that's a suspect conclusion on their part. MOTO had a third of the market by volume a year ago, or a sixth now, and Apple only mostly away sales from MOTO and almost none from anyone else?

[jawporta]

It's a funny thing, Motorola had the first shot at the iTunes/iPod phone and they blew it. They should have went all out and worked with Apple to create the ultimate phone, they didn't and Blackberry's, Windows Mobile and Treo's are all a bitch to sync with the Mac, so the iPhone was born.

You have to stay sharp in business.

[TenoBell]

"An impressive 82 percent of iPhone owners reported being Very Satisfied with their purchase, up 5-points since our previous survey in July -- by far the highest rating of any manufacturer."

Can we save this for those who think there are a significant number of iPhone users who are angry that the iPhone cannot do this or that.

[kim kap sol]

Originally Posted by TBaggins

Apple isn't crushing anybody... Motorola sells in the ballpark of 200 million handsets worldwide each year, Apple is just trying to sell 10 million in 2008. Put it in perspective.

I terms of user satisfaction is what I meant. The context of my reply was clear before the article got updated to include other statistics. The original AI article showed a graph of user satisfaction where Apple was dominating with 80+% and the next up was RIM 'berries at 50% without any other graphs.

In that context, Apple is crushing *everyone*!

[Kenneth]

I don't trust the first graph at all.

Sony/Ericsson used to make good phones. I had the S/E T630 for 2 years, love it. However, I picked up an unlocked Motorola RAZR V3 and returned it right way, the UI was horrible and the whole experience was pretty bad as well.

[TBaggins]

Originally Posted by TenoBell

Can we save this for those who think there are a significant number of iPhone users who are angry that the iPhone cannot do this or that.

What about ppl who would buy the iPhone, but don't because it cannot do this or that (meaning, 3G, GPS, MMS, voice-dialing, etc.)? Those folks wouldn't be counted in the stats.

.

[MuncyWeb]

Now, if we can just fix all the problems with AT&T and their crappy little network, we'll be in good shape. We'll have a super nice cellphone and a good network to match. Don't believe their ads -- AT&T has a crappy network. Lots to be improved upon there.

[Taskiss]

Originally Posted by TBaggins

What about ppl who would buy the iPhone, but don't because it cannot do this or that (meaning, 3G, GPS, MMS, voice-dialing, etc.)? Those folks wouldn't be counted in the stats.

That would explain why they aren't considered "customers" and why their opinion doesn't count. People that can't justify canceling their present cellular plans, people that can't afford the device, etc., they're all perfectly valid people but their opinion about the device is meaningless, sort of how my opinion about Mossberg shotguns or a 1990 "Vino-thèque" - I don't own a gun, I drink beer, not wine, and so, I am not in the demographic those products are positioned to attract.

For those products, I don't count. If I were to go off on the shot pattern sucking for the shotgun or how it was too expensive, if I were to describe the bouquet of the wine as "intolerable" and "pretensious" it would all be irrelevant. People that ARE in that demographic would rightfully view my criticism of those products as the behavior of a boor.

Same as the people who would buy the iPhone except for this or that. They don't count. The iPhone isn't for everybody, it was never designed to be for everybody, and Apple has already stated that they will consider the product a success if they can garner 1% of the market with the iPhone product line.

[TenoBell]

What about ppl who would buy the iPhone, but don't because it cannot do this or that (meaning, 3G, GPS, MMS, voice-dialing, etc.)? Those folks wouldn't be counted in the stats.

The people you mention would not be counted because the survey polled people who own and use the iPhone.

Nearly all of the phones that do have 3G, GPS, MMS, and voice dialing received less than 50% satisfactory rating.

[anantksundaram]

Originally Posted by TenoBell

Can we save this for those who think there are a significant number of iPhone users who are angry that the iPhone cannot do this or that.

[anantksundaram]

Originally Posted by TBaggins

What about ppl who would buy the iPhone, but don't because it cannot do this or that (meaning, 3G, GPS, MMS, voice-dialing, etc.)? Those folks wouldn't be counted in the stats.

.

Ummm...... the story is not about wanna-be, could-be, may-be, ifthisthenImight-be folks, but actual "users?"

(Add: Oops... just saw that Taskiss and TenoBell made a similar point.... oh well, I'll leave it in.)

[anantksundaram]

Originally Posted by crees!

I just had FiOS TV and internet installed. Having Comcast before, FiOS beats the crap out of Comcast, hands down. First, for internet I got the 15 meg service. The wireless router came already WEP enabled and the admin interface for the router was custom made for/by Verizon. By FAR the most easiest to setup (none) and manage. Now to TV. The interface is amazing. When you search for movies they are shown by cover art like Front Row. You can pick a movie, see the actors in the movie, and then see all the shows currently available with that actor. The regular TV guide is so much more nice too. You can obviously tell Verizon spent a lot of time designing this whole package. After having both I will never go back to Comcast for either service if I have a choice.

Very curious: how much does it cost?

[mark2005]

If those people who don't have iPhones were thinking of buying a new phone, then their responses are captured in the future buying question.

Out of the future buying pool, 16% are thinking of iPhone (#1 answer). That might be not be "crushing", but it certainly shows Apple has equaled all their competitors.

Also, from Business Wire, “The iPhone has become AT&T’s top selling device, commanding some 13 percent of AT&T’s overall handset sales, and the 4th top selling handset in the US market,” according to Barry Gilbert, VP of the Strategy Analytics BuyerTRAX programs. “Although the iPhone hasn’t had an expansionary impact in the market, the iPhone has quickly assumed a leading market share position and raised the ante for smart devices,” according to Mr. Gilbert. “The sales trajectory we are observing with the iPhone could make it the top selling device in the US over the next 1-2 quarters.”

More at http://home.businesswire.com/portal/...ews_view_popup

[TBaggins]

Originally Posted by Taskiss

That would explain why they aren't considered "customers" and why their opinion doesn't count .

People that can't justify canceling their present cellular plans, people that can't afford the device, etc., they're all perfectly valid people but their opinion about the device is meaningless,

Yeahhhh... that really ain't the way to gain marketshare.

I guess if Apple really felt as you stated, they would've gone, "Hey, gotta problem with the $600 price tag? Tough. We're not into 'woulda/coulda/shoulda" customers." But they didn't do that... they dropped that price hard, and they dropped it fast.

Trust me, Apple will eventually have a lot of the features whose lack are commonly cited as deal-breakers by many ppl, 'cuz they don't wanna be confined to just the hardcore "Appleista" corner of the market. 10 million in '08 is just the beginning.


.

[TBaggins]

Originally Posted by anantksundaram

Ummm...... the story is not about wanna-be, could-be, may-be, ifthisthenImight-be folks, but actual "users?"

It actually may be partly about such folks, if Mark2005 is correct:

If those people who don't have iPhones were thinking of buying a new phone, then their responses are captured in the future buying question.


I don't see why such folks' opinions would not be valuable... surely Apple wants to sell to more ppl than just people who have already bought an iPhone?


.

[TBaggins]

Originally Posted by TenoBell

Nearly all of the phones that do have 3G, GPS, MMS, and voice dialing received less than 50% satisfactory rating.

Sure, but I very much doubt they received a less than 50% satisfactory rating because they had 3G, GPS, MMS, and/or voice-dialing.

That's kind of like saying a particular diesel pickup truck sucks because it has a diesel engine. Is it the engine that sucks, or is it the build quality, the reliability, the handling, the crashworthiness, etc. etc.? You get the point.


.

[Taskiss]

Originally Posted by TBaggins

I don't see why such folks' opinions would not be valuable... surely Apple wants to sell to more ppl than just people who have already bought an iPhone?

The survey was aimed at customers.

I guess if Apple really felt as you stated, they would've gone, "Hey, gotta problem with the $600 price tag? Tough. We're not into 'woulda/coulda/shoulda" customers." But they didn't do that... they dropped that price hard, and they dropped it fast.

Sure did, dropped it all he way to $400... 4 times the price I paid for my kid's phone - the #1 best seller.

Originally Posted by mark2005's link

“The typical iPhone buyer is upwardly mobile, college educated with a six-figure household income,” according to David Kerr, Vice President of the Strategy Analytics Global Wireless Practice. “While the largest percentage of iPhone buyers is between 20-30 years old, the fact that nearly 25 percent were between 50-60 years old demonstrates that the device attracts buyers across a broad age spectrum.” Thus far, iPhone users are quite satisfied with phone design and features, however, they are slightly less enamored of actual iPhone reliability, battery life, documentation and customer support.

[TenoBell]

Sure, but I very much doubt they received a less than 50% satisfactory rating because they had 3G, GPS, MMS, and/or voice-dialing.

I didn't say (or imply) their satisfactory rating was that low because of those features. Their satisfactory level was that low because the phones are difficult to use.

My point is that you don't automatically receive a high satisfactory rating for simply having a long feature list.

[iPeon]

Originally Posted by MuncyWeb

Now, if we can just fix all the problems with AT&T and their crappy little network, we'll be in good shape. We'll have a super nice cellphone and a good network to match. Don't believe their ads -- AT&T has a crappy network. Lots to be improved upon there.

Can you be more specific?

[TBaggins]

Originally Posted by Taskiss

The survey was aimed at customers.

Yup... as was the planned future cell phone purchase question in said survey. The ppl responding to that one are customers as well... just future customers, that's all.

Sure did, dropped it all he way to $400... 4 times the price I paid for my kid's phone - the #1 best seller.

Well, your kid's phone being the #1 seller at $100* does seem to confirm that lower prices = bigger sales (in # of units, anyway). But even if it didn't, it wouldn't change the fact that Apple felt that the iPhone would sell better at $400 than $600. And all else being equal, there's no doubt it will.

It's a shrewd move by Apple, really. They obviously took account of what the fence-sitters were saying, and did what they could to move them over to the 'buy' column. No need to disparage the 'coulda, woulda, shoulda' customer... the smart play is to do what it takes, within reason, to turn them into buyers.


* your kid's phone prolly doesn't really cost $100 retail, there's likely a good-sized carrier subsidy involved

.

[TBaggins]

Originally Posted by TenoBell

I didn't say (or imply) their satisfactory rating was that low because of those features. Their satisfactory level was that low because the phones are difficult to use.

My point is that you don't automatically receive a high satisfactory rating for simply having a long feature list.

And I would agree with that. But, imagine if you had a phone that was easy to use and had 3G, GPS, MMS, and voice-dialing... would that not rock greatly?

Apple will likely get there eventually... it's just gonna take some time. It should happen for the Asian launch and 'iPhone 2.0'.

.

[Taskiss]

Originally Posted by TBaggins

Yup... as was the planned future cell phone purchase question in said survey. The ppl responding to that one are customers as well... just future customers, that's all.



Well, your kid's phone being the #1 seller at $100* does seem to confirm that lower prices = bigger sales (in # of units, anyway). But even if it didn't, it wouldn't change the fact that Apple felt that the iPhone would sell better at $400 than $600. And all else being equal, there's no doubt it will.

It's a shrewd move by Apple, really. They obviously took account of what the fence-sitters were saying, and did what they could to move them over to the 'buy' column. No need to disparage the 'coulda, woulda, shoulda' customer... the smart play is to do what it takes, within reason, to turn them into buyers.


* your kid's phone prolly doesn't really cost $100 retail, there's likely a good-sized carrier subsidy involved

.

Sure there's a carrier subsidy - the carrier is paying the phone manufacturer, same as AT&T is paying Apple. Factor that in and I think the iPhone might just be the most costly communications device offered to consumers. It's obvious that there's a target demographic for the device and it's NOT targeted at everyone at this time. When the iPhone shuttle comes along, well, then I'd agree with you. 'Till then, the iPhone product line is specifically marketed at a particular demographic and within that demographic those who bought the device are enjoying a 82% customer satisfaction rating - the highest in the industry by a very wide margin. Other opinions need not apply.

[vinea]

Originally Posted by anantksundaram

Very curious: how much does it cost?

$5 less than Comcast for just FiOS. TV packages are close but I dropped comcast in favor of FiOS and Dish so I don't know what the FiOS TV packages cost. Needed some international packages for the in-laws that didn't exist outside of satellite.

Should be competitive. The triple play for both Comcast and Verizon is $99 or so.

[TenoBell]

And I would agree with that. But, imagine if you had a phone that was easy to use and had 3G, GPS, MMS, and voice-dialing... would that not rock greatly? Apple will likely get there eventually... it's just gonna take some time.

Now you are willing to show some patience? This is what many of us have been saying to people complaining about features.

No one has yet figured out how to make a phone with a long feature list and have all of those features easy to use. Usually some features are easy to access and use at the expense of other features being difficult to access and use.

Apple prioritized the features it felt were most important and that would allow one feature to not compromise the usability of another.

[Johnny Mozzarella]

I can't help but remember Palm's CEO talking about how Apple wasn't going to walk in and just "figure it out" because making a smartphone is a really complicated thing.

Well based on these satisfaction ratings, I'd say they've done just that. One of the keys to Apple's success is their laser sharp focus. Most cell phone manufacturers release 10-40 new models every year while Apple will release 1-3 new models per year. With other manufacturers you have a dizzying amount of choices but they are all quite mediocre. Apple takes it's time, studies the problem and slowly but steadily puts the pieces together to solve those problems and make a simple product family that is compelling.

The PC and cell phone manufacturers are all focusing on profits for the next quarter and are being very short sighted. Apple clearly has had a long term strategy that we are seeing slowly unfurling.

[TBaggins]

Originally Posted by Taskiss

Sure there's a carrier subsidy - the carrier is paying the phone manufacturer, same as AT&T is paying Apple.

Yep... but in the iPhone's case, its questionable whether that money is really defraying the cost to the customer much, as is usually the case. More likely its going towards Apple making very high margins, when all is taken into account, on the iPhone.

Getting back to your typical '$100 with a 2-yr contract' phone, those tend to retail for around $220 or so, with the carrier subsidizing the difference.

Factor that in and I think the iPhone might just be the most costly communications device offered to consumers.

Probably not. Even among reasonably high volume phones, the LG Prada retailed for $900, and there are also some very low volume, very high end phone makers like the Vertu* out there, who have models that have gone for as high as $300K(!).

Of course, no one's ever heard of Vertu, but ppl have heard of LG.

It's obvious that there's a target demographic for the device and it's NOT targeted at everyone at this time.

Sure, but with the big price drop, its certainly targeted at more ppl than it was initially.



* props to Vinea for alerting me to their existence

[TBaggins]

oops, sry dbl post

.