Study claims 'huge potential' for Apple iPod phone
If Apple Computer were to release an iPod-based cell phone device with features in line with recent rumors, it would hold the potential to increase the company's customer footprint substantially, a new study has revealed.
According to market research results released by Solutions Research Group on Tuesday, 16 percent of Americans over the age of 12 -- an approximate 40 million people -- responded to a survey saying they thought an iPod phone would be a "great idea" for them personally.
The study, which polled over 2,600 people between June and October 2006, also found that just over 20 percent of Americans currently own an Apple product. However, it implies that Apple's footprint could grow to over 30 percent of Americans within 18 months of an iPod phone release.
Based on the study's findings, 53 percent of likely iPhone buyers would be female and 47 percent male. The average buyer would be 35 years of age and pull an income 10 percent higher than the national average.
In a summary of the results, Solutions said the Sprint/Nextel and T-mobile customers responded most enthusiastically to the idea of an iPod phone. Meanwhile, African-Americans and Hispanics were the two ethnicities that expressed "above average interest" in the device.
"Potential buyers are above average music and movie downloaders, suggesting significant incremental revenue opportunities -- for example, 29 percent of likely iPod phone buyers paid for music in the past month from a site such as iTunes or Napster compared to an average of 12 percent of the US online population," the firm said.
iPhone Appeal Study Results | Source: Solutions Research Group.
Apple's iPod image and user experience were reportedly significant appeal drivers in the cell phone study. Overall, participants waged as their primary concern the impact on battery life entertainment capabilities would have on such a device.
"Clearly, the rumored two-battery design would go a long way in addressing this significant perceived limitation," Solutions said.
The firm noted that it funds its own syndicated research in order to maintain an unbiased perspective.
According to market research results released by Solutions Research Group on Tuesday, 16 percent of Americans over the age of 12 -- an approximate 40 million people -- responded to a survey saying they thought an iPod phone would be a "great idea" for them personally.
The study, which polled over 2,600 people between June and October 2006, also found that just over 20 percent of Americans currently own an Apple product. However, it implies that Apple's footprint could grow to over 30 percent of Americans within 18 months of an iPod phone release.
Based on the study's findings, 53 percent of likely iPhone buyers would be female and 47 percent male. The average buyer would be 35 years of age and pull an income 10 percent higher than the national average.
In a summary of the results, Solutions said the Sprint/Nextel and T-mobile customers responded most enthusiastically to the idea of an iPod phone. Meanwhile, African-Americans and Hispanics were the two ethnicities that expressed "above average interest" in the device.
"Potential buyers are above average music and movie downloaders, suggesting significant incremental revenue opportunities -- for example, 29 percent of likely iPod phone buyers paid for music in the past month from a site such as iTunes or Napster compared to an average of 12 percent of the US online population," the firm said.
iPhone Appeal Study Results | Source: Solutions Research Group.
Apple's iPod image and user experience were reportedly significant appeal drivers in the cell phone study. Overall, participants waged as their primary concern the impact on battery life entertainment capabilities would have on such a device.
"Clearly, the rumored two-battery design would go a long way in addressing this significant perceived limitation," Solutions said.
The firm noted that it funds its own syndicated research in order to maintain an unbiased perspective.
Comments
These studies always bother me because how can we tell who is actually funding them? For all we know Solutions Research Group received a huge financial backing from Apple to produce this study. I think that they would be slightly motivated to push it towards Apple's side.
That's an ad hominem. All that matters is that the sample size was large enough and fairly evenly distributed. It's not like the participants magically change their answers because Apple is funding the study.
About SRG
Lots of companies hire outfits like this to do product research and focus groups in an effort to gauge consumer reaction.
40 million people x $400 per phone = $1.6B gross profit - 35% = 560M net profit
That's not taking into account the songs people buy as a result of them buying an iPod Phone, the halo-effect (the one that made me switch), the possibly of the service being provided by Apple. That 560Million could be worth a heck of a lot more in the long run.
We don't need a research group, a market research firm, or any study for that matter, to tell us people would like an iPod Phone made by Apple. Common sense prevails!
The question is: Does the phone complement, or substitute for, the iPod. The effect of cannibalization on the "non-phone" iPod has to be considered.
The question is: Does the phone complement, or substitute for, the iPod. The effect of cannibalization on the "non-phone" iPod has to be considered.
Well not exactly, if you used your powers of deduction, you would work out that not only will both products be made by the same company, but the phone will cost more, which means more money for them, not less.
Well not exactly, it you used your powers of deduction, you would work out that not only will both products be made by the same company, but the phone will cost more, which means more money for them, not less.
You're right. Everyone forgets that Apple is a company trying to make money...it just turns out that to make money you have to make the consumers like your products. Not all companies have realized this, or they just suck at accomplishing it
That's not taking into account the songs people buy as a result of them buying an iPod Phone, the halo-effect (the one that made me switch), the possibly of the service being provided by Apple. That 560Million could be worth a heck of a lot more in the long run.
Though the profits from songs aren't large enough to make much of a dent I do agree that the "halo effect" will certainly be in full effect. I can think of many people who have NOT used a Mac, don't have much need for an iPod, but would be willing to get an iPhone if it's truly that much easier than the typical cell phone. It's easy to imagine the iPhone doing for Mac sales what the iPod did for Mac sales.
The question is: Does the phone complement, or substitute for, the iPod. The effect of cannibalization on the "non-phone" iPod has to be considered.
Is a camera phone a substitute for a digital camera? Not to most people. There will surely be some cannibalizing, the same way there was whenever Apple released a new product to it's line up, but these numbers pale in comparison to additional market reach.
Is a camera phone a substitute for a digital camera? Not to most people.
Sadly, I think that's probably a yes.
Well not exactly, it you used your powers of deduction, you would work out that not only will both products be made by the same company, but the phone will cost more, which means more money for them, not less.
I am not quite sure what you mean by "powers of deduction" (I think I was, indeed, using the said powers).
Anyhoo..... the fact that something "costs more" does not necessarily imply "more money for them." That is a bit simplistic.
It depends on a number of factors such as the cost of production, costs of distribution, costs of marketing deals with service providers, the stage in the product life cycle, and on and on, of one type of product versus another. (Recall for instance that MSFT chose to lose $50 on each Zune sold -- that is negative margin).
The mobile handset market is waaaaaaaaaay more competitive than the iPod market, and it won't be very long before prices start to get close to marginal costs for a new entrant such as Apple. Companies such as Nokia and Samsung aren't exactly a bunch of wall-flowers.
The question is: Does the phone complement, or substitute for, the iPod. The effect of cannibalization on the "non-phone" iPod has to be considered.
Consumers may also pay for an additional revenue stream for Apple using Apple-branded services made available through the phone service provider. Is this making sense? This would cannibalize, but also build out additional revenue for AAPL.
.... additional revenue stream for Apple using Apple-branded services made available through the phone service provider.....
Such as...?
I don't know what that would be right now, but let's hear it from the peanut gallery.
participants understood that an "iPod phone" was ... an Apple product, or ... the term "iPod phone" to simply refer to any phone that plays music
Bingo!
The firm noted that it funds its own syndicated research in order to maintain an unbiased perspective.
Unbiased perspective, sure.
Why not tell us how of many of those surveyed who expressed interest in an "iPod phone" can also afford to purchase one (with service)?
My main question is whether the participants understood that an "iPod phone" was specifically referring to an Apple product, or whether many of them simply interpreted the term "iPod phone" to simply refer to any phone that plays music (i.e., do they just interpret iPod as referring to an MP3 player, similar to how "Google" has become a verb). Obviously the former would have even stronger implications for Apple than the latter.
If people think the term "iPod phone" refers to any phone that plays music, Apple could eventually find itself in the "Kleenex" or "Xerox" dilemma, whereas the top brand in their market segment has a name which eventually becomes generic for all products in that segment. I can see this happening since retailers will be more than happy to sell iPod-like product to unwitting consumers.