iPhone with 2.3% Market Share and Even Attracting Lower Income Households

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2008/10/30/iphone-with-2-3-market-share-and-even-attracting-lower-income-households/)

The Register reports (http://www.reghardware.co.uk/2008/10/30/q3_smartphone_shipments/) on iPhone marketshare numbers for Q3 2008 as reported by research firm Strategy Analytics.

According to the latest numbers, Apple ranks 6th amongst phone suppliers with 2.3% marketshare for Q3 2008. The numbers appear to be unit sales rather than revenue. In contrast, Steve Jobs pointed out that when ranked by revenue, Apple ranks #3 amongst phone suppliers. This, of course, reflects the higher average cost of the iPhone. Still, 2.3% brings them well above their initial plan to reach 1% of mobile phone sales.

In absolute numbers, Apple still falls well behind Nokia which is the present the leader in unit sales with 117.8 million phones sold in Q3. A direct comparison is difficult, of course, since Apple only has a single high-end phone currently available, as compared to a multitude of Nokia models which span many price points.

Apple, however, appears to be making inroads with even lower-income households according to a new study (http://online.wsj.com/article/SB122532966811882759.html). ComScore reports that the fastest growth in iPhone sales came from households that earn less than the median income. Despite its higher relative cost, the iPhone is said to help reduce costs by replacing a number of other devices:"We see that lower-income consumers are increasingly turning to mobile devices to access the Internet, to listen to music and for email," said Mark Donovan, senior analyst at comScore. "A 'Swiss-Army knife of a device' like the iPhone offers a phone, a music player, a camera and a way to connect to the Internet, which may appeal to consumers cutting back their spending on gadgets."Recent analyst speculation (http://blog.wired.com/gadgets/2008/10/analyst-says-ap.html) suggest that Apple could afford to drop the sales price of the iPhone even further to $99 to attract even more customers. Steve Jobs has suggested that Apple needs to be aware of a possible "price umbrella" below the iPhone that competitors may take advantage of.

Article Link: iPhone with 2.3% Market Share and Even Attracting Lower Income Households (http://www.macrumors.com/2008/10/30/iphone-with-2-3-market-share-and-even-attracting-lower-income-households/)

[kyto]

Dropping the price to 100 dollers is nice. Still the plan will be just as much.

[FF_productions]

Even if they offered the iPhone for free, the plan kicks you in the ass.

[nagromme]

So that's 2.3% of ALL phones? Not just smartphones/PDAs?

Re plans, I canceled my former land line and long distance card, and ended up paying $7 a month more for having an iPhone. Not bad, considering that $7 gets me unlimited mobile Internet AND subsidized my phone purchase!

In fact, I can talk long distance more than I did before: the AT&T plan has more minutes than I use, so I no longer even have to THINK about the cost of a long distance call. It's nice.

So the monthly plan isn't always hard to swallow, depending on what you switch from.

(Not to mention, free iPhone apps like Pandora and the like can replace satellite radio quite nicely for some people. If I'd been a Sirius customer I'd have canceled and saved even more. Pandora in the car is terrific.)

[Eidorian]

Even if they offered the iPhone for free, the plan kicks you in the ass.Which is why I don't have an iPhone.

Then again I only need a phone. :rolleyes:

[severe]

I'd been telling friends since the original iPhone, that they would own one too, before long. Most of the time they would look at me like I was crazy.

Nearly half of them now own the 3G.

I'm seeing more and more white headphone wires on the streets of my city, and more and more will be connected to an iPhone. :apple:

[jayducharme]

I don't buy the reasoning that the iPhone is replacing a broadband connection. Perhaps people are downgrading their service to DSL, but you still have to have a home internet connection to get the iPhone to function. So it doesn't save all that much money. I ditched my land line, but even so I'm paying far more now (with a family plan) than I ever thought I would for a "phone."

Unfortunately, I'm not sure I could do without my iPhone now. Maybe AT&T will show a little love and drop their price -- or at least allow tethering!

[neven]

I don't buy the reasoning that the iPhone is replacing a broadband connection. Perhaps people are downgrading their service to DSL, but you still have to have a home internet connection to get the iPhone to function.

To function as... what? I have friends who don't have Internet access. Their iPhones function ok.

[donlphi]

I'm not really shocked about the lower income home attraction. You get more bang for your buck. Right before I dumped Sprint, I was paying nearly 200 a month for phone service, "internet" service (not much of a service on a Samsung A900), unlimited texting, the media package (various lame video channels), and EV-DO tethering for my laptop (which I didn't use very often).

The cost of the phone was significantly higher, but my monthly cost is less. I have saved a fortune. On top of that, new apps are coming out, so my year and a half old phone is still doing innovative things I couldn't even dream of doing on my A900. Even without the 3G version of it, no flash, no cut and paste, I'm still very happy with it.

[Eidorian]

"We see that lower-income consumers are increasingly turning to mobile devices to access the Internet..."faceplam.jpg

Please tell this to all the people I see lining up at the libraries before opening to job hunt online or use free wi-fi. I've almost be in that situation myself.

[BornAgainMac]

It would be nice if total OS X marketshare can include Apple TV and iPhone devices.

[bretm]

Even if they offered the iPhone for free, the plan kicks you in the ass.

The plan is no differnent than any other AT&T plan with a smartphone. So there's really no reason to even mention it. I guess you could want one without the data plan, but then there'd really be no point in having an iphone.

I will note that the 3G additional plan costs kept me from upgrading. 99% of the time I'm using wifi at home on the couch or I'm somewhere else with wifi. Google maps works great with edge, and it even pinpoints my location most of the time without GPS. Apps like Google earth get it dead on as well. It even moves as I drive around just like the 3G, but it might be a couple blocks off. Still, why do I need 3G? I don't. Mines $15 a month cheaper for the same data plan. Edge is fine in an emergency situation if I need it.

You want to save money, get a edge only iphone somewhere. Better battery, cheaper plan.

[Tosser]

It would be nice if total OS X marketshare can include Apple TV and iPhone devices.

Are you sure you want that to happen? Think of how much penetration Windows Mobile has, or how many tellies or "tv boxes" sony make, or how many media servers run windows.

[ditzy]

I'm not surprised that people from lower incomes get the iPhone. It is a desirable object which while it is more expensive than a regular contract. It's not so much more that if you really wanted one you wouldn't get one.

[michaelflynn]

Geez I must be a lot worse off than I thought, because there is no way in hell that I could justify paying that much for a cell phone plan. The iPhone itself is at an okay price but the plan is ridiculous.

I will stick with my $30/month for 500 minutes, unlimited texting and unlimited data for now. Sprint SERO FTW.

[akm3]

Or, maybe people with lower incomes spend money frivolously on stuff they can't really afford...which is why they are probably lower income?

When I was working two jobs to save for a down payment on my house, I can't tell you how many times while I was delivering pizza that I'd be going to an absolute dump or trailer, with a nice Audi or 'pimped out' car in the driveway and a giant home theater in the inside...People have their priorities all wrong.

[kmcrawford]

The iPhone is a great device. I could see it being possibly a cheaper alternative to a laptop. Before my iPhone, I would bring my laptop to work to stream pandora, check my personal mail, and etc. Now my iPhone does it all!

[milo]

Well I definitely know at least one person with an iPhone who can't remotely afford it.

[brad.c]

It's even worse that the cheap printer/expensive ink scenario. Imagine if you were under contract to buy new cartridges every month, whether or not you used them.

Now imagine you are low-income, locked into a voice/data contract, and after a few hard months your choices are food or phone bill.

AT&T may become the sub-prime phone company.

[winterspan]

The plan is no differnent than any other AT&T plan with a smartphone... I guess you could want one without the data plan, but then there'd really be no point in having an iphone....
....I will note that the 3G additional plan costs kept me from upgrading. 99% of the time I'm using wifi at home on the couch or I'm somewhere else with wifi.

You just completely made my point (and contradicted yourself). Nearly every other smartphone available on any carrier doesn't *require* a data plan just for basic service. Now of course that wouldn't make much sense for corporate users wanting to access exchange email, but I'm sure there is a significant group of potential users who are only holding back for sake of not paying $70+ a month for mobile service. As you said, many of us are routinely in areas of WiFi coverage, which is not only faster, but uses less battery power than 3G. This is in addition to the fact that a large percentage of America lies outside AT&T's HSDPA coverage area.
Alas, I doubt this would ever change considering the ~$300+ subsidy AT&T is paying to Apple. I'm sure this data plan requirement is part of the contract between the two so AT&T is able to guarantee higher earnings per customer. However, I can only imagine how many iPhone 3Gs would be sold if you could use a standard $40/month contract with it and just use WiFi for data. The least AT&T could do is offer a reduced cost 100 or 250MB plan. This would allow one to check email on the go, and perhaps use GPS a bit.

[gutefahrt]

The only thing preventing me and many friends in Albuquerque from getting an iPhone is crappolAT&T. I just bought my wife an iTouch (yes, I still call it that), but we'd have two iPhones if it were available on Verizon's much better network.

[rhg84]

I'm not really shocked about the lower income home attraction. You get more bang for your buck. Right before I dumped Sprint, I was paying nearly 200 a month for phone service, "internet" service (not much of a service on a Samsung A900), unlimited texting, the media package (various lame video channels), and EV-DO tethering for my laptop (which I didn't use very often).

The cost of the phone was significantly higher, but my monthly cost is less. I have saved a fortune. On top of that, new apps are coming out, so my year and a half old phone is still doing innovative things I couldn't even dream of doing on my A900. Even without the 3G version of it, no flash, no cut and paste, I'm still very happy with it.

Well that was stupid of you for letting yourself get screwed over. I would so jump on the iphone if their plans didnt suck. Hell you can get unlimited everything from sprint(except tethering, which you can still do if you dont go crazy on it) for 99.99. And you cant compare an A900 to a iphone, they arent even in the same league. At least compare the iphone to the HTC Diamond or HTC Touch pro.

[sjo]

Recent analyst speculation (http://blog.wired.com/gadgets/2008/10/analyst-says-ap.html) suggest that Apple could afford to drop the sales price of the iPhone even further to $99 to attract even more customers. Steve Jobs has suggested that Apple needs to be aware of a possible "price umbrella" below the iPhone that competitors may take advantage of.


isn't that just a further evidence of how clueless analysts are:
it's not apple anymore who is setting the price of iphone, the carriers are. iphone is already sold for less than $99 by carriers. in fact, it's sold for $0 by some carriers.

there isn't much doubt that most of the carriers offering iphone now will offer it for free some time next year.

[chrisklapp]

Apple sells only 1 phone while its competitors are selling dozens at a time, not to mention phones that end up being free after carrier discounts for contracts.

not too shabby :apple:!

[twoodcc]

good news for the iphone and apple. too bad the iphone isn't saving me money, i seem to keep buying "gadgets"

[donlphi]

Well that was stupid of you for letting yourself get screwed over. I would so jump on the iphone if their plans didnt suck. Hell you can get unlimited everything from sprint(except tethering, which you can still do if you dont go crazy on it) for 99.99. And you cant compare an A900 to a iphone, they arent even in the same league. At least compare the iphone to the HTC Diamond or HTC Touch pro.

Well to be honest, I had been dealing with Sprint for a while. They originally charged me $483 for the first month because when I added tethering to my A900 they actually removed my voice plan and charged me for every minute I spoke on the phone. It was insane. They said they credited me, but I don't think I really ever got it back.

I don't want to get into a pissing match about which company is full of the biggest liars or cheaters, especially since I think they are all crooks and full of crap (especially the operators), but I will say I am much happier with my AT&T service.

As for the phone comparison, my point was, they charged me for FULL internet service on an A900 when it clearly isn't a device with "FULL" internet capability, and as you know, sprint charges extra for the tethering feature, nearly the price of comcast cable broadband. There were no reasonable prices on most of the services Sprint offered.

As for my iPhone cost comparison, after my $100 credit from Apple for buying early, the price wasn't much different than what I paid for my A900 when it first came out, maybe $100 difference. After all the extra taxes and fees, I pay under $100 a month for my iPhone. 200 texts, which I rarely go over except when I'm at a conference or away from home plus however many minutes they give you. Sorry, I can't compare it to the phones you mentioned, the HTC Diamond and HTC Touch weren't around when the iPhone came out, those companies were just warming up the xerox machines at that point.

If you don't like the iPhone 3G plans, which I agree are a little high, I would recommend buying a used or refurbished iPhone 1st Gen. Edge network isn't as bad as everybody says, and you find wifi nearly everywhere you. The app store cannot be compared to any other feature on any other phone. It is worth the price of admission right there.

[michaelsaxon]

Lower income iPhone owners, yet I'm bombarded daily with tales of being in an economic apocalypse.

[sahnert]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_1 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5F136 Safari/525.20)

I don't buy the reasoning that the iPhone is replacing a broadband connection. Perhaps people are downgrading their service to DSL, but you still have to have a home internet connection to get the iPhone to function. So it doesn't save all that much money. I ditched my land line, but even so I'm paying far more now (with a family plan) than I ever thought I would for a "phone."

Unfortunately, I'm not sure I could do without my iPhone now. Maybe AT&T will show a little love and drop their price -- or at least allow tethering!

I disagree. I am saving money with the iPhone plan because I dropped my land line phone and Internet.

[czachorski]

It's even worse that the cheap printer/expensive ink scenario. Imagine if you were under contract to buy new cartridges every month, whether or not you used them.

Now imagine you are low-income, locked into a voice/data contract, and after a few hard months your choices are food or phone bill.

AT&T may become the sub-prime phone company.

Ummmm - can't you cancel an iPhone contract for something like $175? If it's food or phone bill, maybe they should cancel the phone.

[chagla]

Which is why I don't have an iPhone.

Then again I only need a phone. :rolleyes:

even better, i got a prepaid. after paying about $70 every month for a year, then cancelled it only get $@^#$^#ed by a penalty for $350.

us cell phone is nothing less than highway robbery.
where i come from, cell phone service dirt cheap. no montly fee, no pentaly,

AND...
everything incoming is FREE! (sms, calls, etc)

i will never go for plan service again in my life in the US. i dont understand how US cell service providers are able to use public as milking cows.

[Rot'nApple]

Or, maybe people with lower incomes spend money frivolously on stuff they can't really afford...which is why they are probably lower income?

When I was working two jobs to save for a down payment on my house, I can't tell you how many times while I was delivering pizza that I'd be going to an absolute dump or trailer, with a nice Audi or 'pimped out' car in the driveway and a giant home theater in the inside...People have their priorities all wrong.

I'm surprised I didn't see any complaints coming from lower income households during Obama's infomercial the other night!

From Obama's infomercial...

"OBAMA: Rebecca Johnston is all about her family.

JOHNSTON (opening the door to a full refrigerator): This is where our snacks would go. Um, Gabriella and Nathan and my husband and I; and my daughter; and Ethan, my son. If they know that it's -- this is it for them for the whole week, then they will make it last longer. (dramatic music) I think everybody feels the same way, that they'd like to see an end in sight to all the worry and the chaos of -- of everyday living (dramatic guitar strum) trying to make ends meet."

Make ends meet when it comes to SNACKS!... SNACKS!!! Oh the humanity, but that would have been the perfect time to bring up AT&T's high cost smart phone rate plan and maybe even see if a few more dollars can be shed from Apple's iPhone asking price. After all, we all want "to see an end in sight to all the worry and the chaos of -- of everyday living (dramatic guitar strum) trying to make ends meet." And in Obama's world, once the wealth is spread around, we will. :)

[Rocketman]

If you take the liberty to listen to the most recent discussion of market share, it focused on REVENUE share. I suspect iPhone is similar if not superior in the phone market as compared to MacBooks in the computer market considering the relative maturity of the markets for data enabled devices.

Rocketman

[brad.c]

Ummmm - can't you cancel an iPhone contract for something like $175? If it's food or phone bill, maybe they should cancel the phone.

I'm in Canada, where Rogers requires a three year contract. I know I can't get a data plan with prepaid voice; any other detail is moot, so I don't have specifics. But I have read the ECF is $400, and you need to return the phone if you cancel in under 12 months.

[neuropsychguy]

Geez I must be a lot worse off than I thought, because there is no way in hell that I could justify paying that much for a cell phone plan. The iPhone itself is at an okay price but the plan is ridiculous.

I will stick with my $30/month for 500 minutes, unlimited texting and unlimited data for now. Sprint SERO FTW.

I can't even justify paying that much for a cell phone. I have pre-paid and spend maybe $50 a year on my cell phone (even that's a bit of a high estimate). :)

[Ping Guo]

Lower income iPhone owners, yet I'm bombarded daily with tales of being in an economic apocalypse.

It's not the upfront cost that get you, it's the plan. One of the reasons people stay "lower income" is because they blow their money on frivolous toys and consumer junk instead of saving and investing.

Heck, back in the states I see more tricked-out Bimmers and $70K SUVs in low-income neighborhoods than in wealthy ones, because smart people realize that cars, like mobile phones, are a crap investment.

Just like it used to be easy to get a mortgage you couldn't really afford, it is more or less easy to get into a wireless plan you can't really afford. This addiction to credit is a disease, I tell ya. I'm happy with my prepaid SIM and unlocked Motorola, but as I'm in China prepaid is dirt cheap here. Maybe I'll look into those legally unlocked iPhones next time I visit Hong Kong.:)

[Ping Guo]

even better, i got a prepaid. after paying about $70 every month for a year, then cancelled it only get $@^#$^#ed by a penalty for $350.

us cell phone is nothing less than highway robbery.
where i come from, cell phone service dirt cheap. no montly fee, no pentaly,

AND...
everything incoming is FREE! (sms, calls, etc)

i will never go for plan service again in my life in the US. i dont understand how US cell service providers are able to use public as milking cows.

QFT

I love my prepaid and will never go back to a plan. I have 3 SIM cards in my wallet for when I travel. When I arrive I just pop in my SIM and top off my credit with a prepaid if necessary. I have call forwarding set up on Skype so anybody who needs to reach me from overseas can do so even if they don't have my local number.

It's normal in much of the world, when I explained to some of my friends in the US who were griping about their mobile rates, they were like "wow I never thought of that!"

American laws favor big business over consumers, we're forced to roll over and spread 'em for Ma Bell!!:mad:

[Shivetya]

Apple, however, appears to be making inroads with even lower-income households according to a new study (http://online.wsj.com/article/SB122532966811882759.html). ComScore reports that the fastest growth in iPhone sales came from households that earn less than the median income.

and the poor continue to stay poor or make their situation worse and they cannot seem to understand why.


I know its mean, but damn it, there is a reason why many people never break out of their self imposed income levels.


15 to 1 these are the very same people who will bitch about other people making more money and then standing there waiting for a handout

[brad.c]

and the poor continue to stay poor or make their situation worse and they cannot seem to understand why.

I know its mean, but damn it, there is a reason why many people never break out of their self imposed income levels.

I agree. Despite being hammered with advertising and peer pressure to consume as much as possible, it's still up to the individual to set their own limits. We're trained to buy from our first favourite television show, but there's no corresponding lessons in budgeting or constraint.

We are seeing what happens to the economy when people over-extend themselves, but out of curiosity, I wonder what happens to growth expectations when people buy only what they need?

I guess that's more of a PRSI forums debate. Go Apple! (Stay, Wallet!)

15 to 1 these are the very same people who will bitch about other people making more money and then standing there waiting for a handout

Bookie estimates?

[kaiwai]

Which is why I don't have an iPhone.

Then again I only need a phone. :rolleyes:

Meh, you could get rid of the phone part - and if all it had was text messaging, I would be a happy lad.

[kaiwai]

I agree. Despite being hammered with advertising and peer pressure to consume as much as possible, it's still up to the individual to set their own limits. We're trained to buy from our first favourite television show, but there's no corresponding lessons in budgeting or constraint.

We are seeing what happens to the economy when people over-extend themselves, but out of curiosity, I wonder what happens to growth expectations when people buy only what they need?

I guess that's more of a PRSI forums debate. Go Apple! (Stay, Wallet!)

It is all about self control. For me, if I see something, I walk away, wait a week and more often than not I find that after a week of reflection, I really can't justify the purchase.

As for budgeting - that is up to the parents. It doesn't help when the parents don't have the back bone to tell their children from a young age, "we can't afford it, put it back" and "that's an extravagant waste of money". Maybe if they heard more of than from their parents - they wouldn't be in the financial quagmire that they are in now.

[alphadog00]

Lower income households justify to themselves that they save money by doing getting an iPhone. The truth is that it is a phone. The rest is convenience and status.

Everyone wants to be part of the cool crowd and wants things now. The big problem with the US and what is different from generations past - everyone has to have everything now. No savings, no waiting, no doing without.

I love gadgets, technology, and the internet - but i was poor once. If I find myself there again, I will dump the frivolities. If you have no savings, getting an iPhone is not smart, but neither is credit card debt.

As a previous poster mentioned, the libraries have internet, dial up is still an option for email, and a basic home copper voice line still works. All of that is much cheaper then an iPhone. 20 years ago, no one had cell phones and everyone survived.

How many of these lower income households also have a 42" LCD/Plasma hanging on the wall? Digitial cable? I don't think that can be rationalized as a cost savings measure and neither can the iPhone. Let's call a rose a rose and call these people dumb consumers.

[sprice25]

its a good gimmick lowering the initial price of the iphone. in the end youre paying more in fees and service with att. 1 year from now there will be a cheaper iphone and a better one. even more people will buy. i wouldnt be surprised if apple lowers the price and introduces a larger GB model before the end of the year to spark sales for the iphone before years-end.

[rjlawrencejr]

Once again, some of you have proved you didn't actually read the article and only read the summary. However, even if you read the summary you might discover you're off-base - at least somewhat.

Both the article and the summary refer to "lower-income" households, not low income households. There is a difference. As the article states, there has been a marked increase in iPhone adoption in households earning between $25,000 and $50,000 annually. These are not low income households but households where there may be only one earner who makes less than the US median household income. Remember, what may have prevented these lower-income households from adopting iPhone initially was the high barrier to entry (ie $600).

I live in such a household and I don't consider myself low income. I am well educated but I made a decision to work in a field that doesn't pay really high wages (as of now at least, I am earning a doctorate). Unfortunately I do have a high debt ratio at the moment (undergraduate expenses, rent, insurance, etc). Therefore I decided to forgo cable, high speed Internet, and a landline and I simply use my iphone and a basic Netflix account and I am set.

For those times when I really need access through my computer, I either wait until the next morning or if it is a real emergency (which is almost never), I can drive down to my local library and use their wifi if necessary.

[kironin]

as for the data plan,
well my reception is so much better with my iPhone than it was with my RAZR that I haven't had to use my landline for long distance over the fast few weeks and I am considering dropping my unlimited national long distance on my landline in my home office. That would save me at least $30/mo and effectively mean I am paying no more per month than I was paying before. Except now, I have a mobile device to check my email business accounts, gps mapping, easy mileage logging, getting things done organizer is now mobile and with me at all time, video player for my training and presentation videos, audio recorder, audio player for my training's, conferences, and meetings, camera, business expenses and budget trackers, photos including sets of converted powerpoint slide sets for presentation that with a special cable means I can display through a normal projector, book reader, carry files to view and transmit, weather/fitness training/bike track logging, daily journal, business tracking, dictionary, one-tap access to certain critical sites, alarm clock, etc. and oh, right also a phone which the initial expense I can write off. :)

[weg]

It would be nice if total OS X marketshare can include Apple TV and iPhone devices.

Well.. the Windows market share doesn't include Windows Mobile and Embedded CE either...