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Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so

By | June 25, 2010, 4:58am PDT

Summary: Apple’s iPhone’s 4 debut is meeting its advanced billing: The device is creating a powerful upgrade cycle where 77 percent of buyers are upgrades and desire trumps need.

Apple’s iPhone’s 4 debut is meeting its advanced billing: The device is creating a powerful upgrade cycle.

Analysts on Friday were busy handicapping the first day sales for the iPhone 4. Piper Jaffray analyst Gene Munster said his firm surveyed 608 people in line for the iPhone 4 and found that 77 percent of buyers were existing iPhone owners, compared to 56 percent in 2009 and 38 percent in 2008.

With 77% of our surveyed iPhone buyers upgrades, Apple is effectively building a recurring revenue stream, where iPhone users pay on average $200 year to stay current with the latest iPhone. While it’s true that iPhone 4 is a more significant feature upgrade compared to the 3GS, and we expect this upgrade rate to decline next year, Apple has in three years built brand loyalty in the phone market that compels users to upgrade to the latest version and wait in line for one to six hours to pick up their iPhone. While we think Apple will sell between 1.0m to 1.5m iPhones in the first three days (including preorders), the actual number is largely irrelevant.

All iPhone coverage and scenes from the iPhone 4 launch

What’s notable here is that only 16 percent of iPhone 4 buyers were switching carriers to go to AT&T, down from 28 percent last year. In a nutshell, if you haven’t moved to AT&T for the iPhone you probably aren’t going to.

Other details of note from Munster’s survey:

  • 54 percent of buyers bought the 32GB phone;
  • 28 percent of buyers also owned an iPad;
  • Of the 72 percent of iPhone buyers that didn’t own an iPad, 39 percent of that group said they would likely buy one in the next year;
  • 90 percent of buyers cited new features for the primary reason they were standing in line for the iPhone.

Meanwhile, Oppenheimer analyst Yair Reiner conducted a survey of 174 iPhone 4 buyers. His findings:

  • 76 percent of iPhone 4 buyers already had the iPhone;
  • 26 percent of respondents bought the iPhone because their old phone was failing them (desire over need);
  • Android was seen by respondents as the best iPhone alternative. Previously, RIM’s BlackBerry was the choice.

Reiner is projecting first day iPhone 4 sales of 1.5 million.

Related: Analysts drool over Apple iPhone 4 upgrade cycle

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Topics

Apple iPhone, Apple Inc., Reiner, Smart Phones, Consumer Electronics, Personal Technology, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
tomlin21-24319035676893835085146735905770 11th Oct
You concluded a handful of excellent elements there. I did a lookup more than the problem and noticed predominantly nfl jerseys people today may have particularly the identical impression with the webpage.
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what a joke
HansGrueber 25th Jun 2010
100% of iPhone 4 users are gonna be really unhappy when they realise that they can't actually make calls while holding their latest magical device.

Hehe.

http://geekcomforts.com/2010/06/iphone-4ever/
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Haha, that was hilarious!!!!! (nt)
NonZealot 25th Jun 2010
@HansGrueber
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You have a problem!!!
richardw66 25th Jun 2010
@NonZealot

You like the idea of a million people getting a useless phone. This somehow is funny to you???

Most likely of course it will not turn out to be true.

But if it was then it would not be funny except to sick minds who enjoy people experiencing problems.

I guess that's why you want people to use Windows - suffering amuses you!!
  • Flagged
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
TxM2xTx 25th Jun 2010
@NonZealot Agreed. That would be funny. It would mean Apple is able to sell more air to people. Just not air time.
  • Flagged
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
Pete "athynz" Athens 25th Jun 2010
@richardw66 But NZ does like around a million people getting a useless phone - hell he's got one... ANYTHING running WM is pretty much useless.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
rtk 25th Jun 2010
@athynz Great comeback, the schoolyard equivalent of "I know you are but what am I".
  • Flagged
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Poor prognostication on your part--
vulpine@... 25th Jun 2010
@HansGrueber : ... since the issue is easily bypassed. Interestingly enough, the call quality appears to be significantly better than its predecessor as well. In fact, the most vocal about the issue are those who are anti-Apple zealots, again. While there are some user complaints, the non-users have blown the complaint completely out of proportion. As usual.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
rhonin 25th Jun 2010
@vulpine@...
Easily bypassed?
You sir are an idiot. Designs of this type never promote a company - they just fleece the user.

From an engineering perspective the i4 is a joke.
Lots of phones may have some antenna interferance but this is the first that just hangs you up.

I would not be suprised if we see a class-action on this "device".
  • Flagged
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
Gis Bun 26th Jun 2010
@vulpine@... Errrr. It is part of Apple's shoddy quality control. Remember the shipments of 17" desktops with the busted screens [while they were still in the box]? YOu can tell that they didn't bother doing proper testing - especially if they made a major change [like where the antenaue may be].

Don't go blaming the "anti-Apple zealots". It's the bloggers who have made comments about the iPhone and it's current issues. Majority of these bloggers tend to like their gadgets and probably have an iPhone.

While it *may* be blown out of proportion, it can still be an issue. You spend a few hundred dollars only to find out that you can't hold the phone a certain way after holding it that way with a previous iPhone? What's next? You can only speak while from 0.5 inches to 1 inches away from the microphone and anything else won't work?

Sh?t. Surprised you didn't blame Microsoft or Google or RIM.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
ubiquitous one 26th Jun 2010
@vulpine@... I'm as anti-M$ as they come, but even the antennae and the way you hold the phone, sucks royal balls. Jobs says to hold it a different way? - lol... grin Get real...

Not good enough. Apple better fix it. Otherwise it's an EPIC FAIL
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Where are the hords of complaining owners?
jgpeters 25th Jun 2010
@HansGrueber I have had my iPhone 4 since the 23rd and call quality is great. I have had no dropped calls, but then again I never had problems with dropped calls before. So far, the only complainers I have seen about the design are people like you that don't own an iPhone and hate Apple in the first place.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
richbrunt 25th Jun 2010
@jgpeters, Do you have the bluetooth turned on? I understand that it is the bluetooth antenna and the phone antenna are shorted out by your hand. Have you put your hand across the gap on the bottom left and observed the signal strength?
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
iMaverick 25th Jun 2010
@HansGrueber If I did not like my experience with the iPhone, why would I keep buying it over and over again? And for those who have owned one at some time or another, what is it that brought you to scorn it forever? Because it wasn't a Blackberry, Droid, or Evo? You hate white phones, perhaps? If I have any quibbles, it is with AT&T and not Apple.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
iMaverick 25th Jun 2010
@HansGrueber If I didn't like my experience using the iPhone, why would I buy it over and over again? To be "one of them"? Not really. If I had any quibbles it would be with the carrier, not the iPhone.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
corey.a.arndt@... 28th Jun 2010
@iMaverick I have a 3G and had no problems but it was time for an upgrade. I do find that my Iphone 4 does drop calls more and also makes a clicking sound sometime when on a call.
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I think you may be showing
unclefixer@... Updated - 26th Jun 2010
@HansGrueber that you're enjoying being a hatemonger. I, and everyone I know with an iPhone- and the ones I know who have gotten the new one, haven't had any problems so far.
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Interesting. So the vast majority
John Zern 25th Jun 2010
of iPhone buyers are people that allready owned one?

Doesn't help the sales of apps in the App store all that much, I would say.
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New owners of their old iPhone will likely buy apps
linuser 25th Jun 2010
Their old phones will likely be sold or given to someone else. I assume the apps are tied to a person's iTunes account, so those people would have to buy their own apps.

Thus, app sales should still increase.
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Perhaps, but not a significantly.
Becksly 25th Jun 2010
@linuser
I accept your argument about the old iPhone being given to somebody but those people are not likely to be downloading new apps since they didn't even bother to get an iPhone in the first place - they were given it. Secondly anyone that is buying a second hand out of date iPhone, is again not likely to be buying many apps. People that get phones in this manner want two things, to make phone calls and to receive phone calls. Oh and maybe send/receive an SMS also.
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Not sure what you point is...
jgpeters 25th Jun 2010
@John Zern Are you feeling bad for the developers? Apple gets 1% of net income from the app store, so I don't think Apple is worried about it. The app store is a feature of the iPhone that makes people buy iPhones and iPods, which is where the money is. As as linuser suggested, I am gifting my iPhone 3 to my son. He won't be able to use my apps so he will need to get his own. Don't see much of a down side to selling iPhones to existing customers. I doubt that the majority of 3g or 3gs phones will end up in a landfill.
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Apple App sales
eldernorm 25th Jun 2010
@John Zern ,
But John, Apple does not make that much money selling Apps. And I do think it says that at least 77% of iPhone owners love their phone so much that they wanted the next better thing. Plus others that cannot get one due to contract issues.... Verizon should be scared. Android owners jump from HTC to Samsung to whom ever... Apple owners jump to the next great Apple... I think it says a lot.

Just a thought,
en
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Do not forget the investment made, as a factor
Mister Spock 27th Jun 2010
for people's unwillingness to move to another phone.

For those that had purchased many apps and songs, they may feel that have no choice but to either move to the next version iPhone, or switch and spend the money a second time for those same apps on a competing platform.

Much like how many people like to claim that people's investment in applications as the sole reason as to why the do not move away from Windows, but instead upgrade to a new version.
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Wasn't the initial batch mainly for existing clients?
financegozu Updated - 25th Jun 2010
IIRC AT&T had a preference for existing clients to upgrade their iPhone.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
BigRonW 25th Jun 2010
Yet another "IS there anywhere outside of the USA?" story. Here in the UK, iPhones are available from most of the major carriers. And "most of the major carriers" each have coverage that extends to >90% of the country. What do WE care about the USA's self-obsession, or medieval phone infrastructure?
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Aggreed
haughto 25th Jun 2010
@BigRonW
Totally agree
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Listen, troll
evilkillerwhale@... 25th Jun 2010
@BigRonW
An American author on an American site wrote about America, which has more than five times as many people as the UK.

Furthermore, you assume that none of those surveyed were British, which, in no way, does the article state. Maybe your complain about self-obsession and medieval phone infrastructure should be applied more globally, pal.

I can't believe a guy who's country still owns other countries because they're too bigoted to release them is yelling at a different guy from a different country who he perceives as not wanting to report on them. What a troll.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
mart5.1 25th Jun 2010
@evilkillerwhale@... five times the people = five times the idiots
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
John Biles 25th Jun 2010
While a large number of people are staving to death each day, others are obsessed with owning another be out of date in 6 months gadget. The human is quit a dumb creature really. Aliens will laugh at us when they arrive......
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Phoning home
richardw66 25th Jun 2010
@John Biles

Yeah, the aliens have upgraded to iPhone 10 already.

But yes, I see no reason to upgrade. Mind you I didn't get an iPhone till about a month ago. And mind you I will upgrade because I am an App developer.

My current iPhone is way more than I need as a user, and it is by no means missing anything, except a 9 inch screen.

Personally I have never been convinced that video calling is a great thing. I would not like it to become normal for phone calls to have vision as an expected and normal thing, the semi-privacy of voice only is a good thing.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
rhonin Updated - 25th Jun 2010
@richardw66
If they already have the i10 - cool!
Now they have absolutely no way to call/text/mms/email/internet home.

It's the iPhone 10 - it works - not!
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
TxM2xTx 25th Jun 2010
@John Biles I don't think humans are dumb. They're just plain greedy ! And pretty much control freaks.
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Which would explain the starvation around the world
frgough 25th Jun 2010
as thug dictators oppress people and deny them the liberty they need to produce abundantly.

Oh. Wait. You were thinking American capitalism was causing starvation around the world...
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Most likely they'll just shake their head at idiots
frgough 25th Jun 2010
who think buying a new phone has anything to do with causing starvation around the world.
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Why single out the iPhone?
jgpeters Updated - 25th Jun 2010
@John Biles Why not complain about BMWs or HD TVs? There are plenty of things that people could not buy, and then donate the money to starving children. The money from one Mercedes would feed a lot more people than one iPhone (even with the AT&T bill wink )
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
ubiquitous one 26th Jun 2010
Well @John Biles, when I see you ladling out the gruel over in Darfur, then give us a call.

In the meantime, get lost...
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23% of iPhone 4 purchasers were new
davebarnes 25th Jun 2010
to the iPhone world.

I personally think that is amazing. That virgins would stand in line for hours to purchase a device they have no experience with.
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23%
hill60 25th Jun 2010
@davebarnes

That would be around 345,000 iPhone's.

So how many Evo's sold in total the first day?

How many Nexus ones are there?
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Ridiculous comparison
evilkillerwhale@... 25th Jun 2010
@hill60
Yes, because comparing AT&T to Sprint is fair.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
rhonin 25th Jun 2010
@hill60
at least I can make a call with my NexOne....
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million u
storm14k 25th Jun 2010
@hill60 Don't forget the Incredible that sold 200000 on the first day and Verizon said with stock they could have doubled sales. So let's see.... 400000 Incredible plus any number of Evos and N1s who are all most likely new to Android is more than the new customers to IPhone. Then we havent seen the Droid X Droid 2, Vibrant, Captivated or the Verizon and Sprint versions of the Galaxy S and that's not even all to come just this year. To make it plain Google matches the IPhone launch day figures EVERY WEEK. It's just a launch day spike for Apple. It's life as usual for Android.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
Stan57 25th Jun 2010
@davebarnes
Only to find out later it has major antenna problems. Yep there nothing better then a frist empression. They will find out apple is a name, nothing more.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
Pete "athynz" Athens 25th Jun 2010
@Stan57 Don't you mean "first impression"? Like I've said before Apple must be doing something right if 77 percent of new iPhone buyers are previous iPhone owners...
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77% Shows significant satisfaction
Ken_z 25th Jun 2010
Apple haters go nuts over the high satisfaction levels that Apple continually pulls in.

Hate them as you will, but Apple invests the time and money to focus their products on their target market and it looks like no one is doing a better job these days.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
josephvba@... 25th Jun 2010
Also shows:
- users are not moving from other platforms to Apple....
- users are not switching to AT&T because the iPhone...
- developers are going to be screw because current users don't need to buy the same app again.
.
.
.
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I thought that was a positive point for consumers
oncall 25th Jun 2010
@josephvba@...

"- developers are going to be screw because current users don't need to buy the same app again."

You're suggesting consumers not having to repurchase their apps every time they upgrade their iPhone is somehow a bad thing? However, unlike some here I try to look at this as a positive. Not all of those retired iPhones will be dumped in a bucket, some will see further use as iPhone/iPod touch hand-me-downs or sold on Ebay.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
aldux 25th Jun 2010
@josephvba@... 345,000 purchasers were new to Apple. Probably from other platforms. The upgrading users are quite possibly either selling their existing iPhones, or passing them to other family members, so AT&T could possibly be gaining 1.5 million new customers.

And, I bet you buy a new copy of Office every time you change your desktop PC don't you? No? So your new Dell/GatewaySony/Whatever is screwing the Microsoft developers according to your logic...

Seriously, do you Apple haters ever actually stop to think? Or is it just a conditioned reflex like Pavlov's dogs...
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No, it shows that 23% of cell phone buyers ARE
frgough 25th Jun 2010
moving from other platforms to Apple...
switching to AT&T because of the iPhone
making developers smile as they have 25% more customers to sell to.

Only an idiot thinks 23% is insignificant.
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
rhonin 25th Jun 2010
@aldux
or like my faimly did with our 3G's...
they became "iTouch" devices able to use the same already purchased app....

No new customer
No new apps
No new sales
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
Pete "athynz" Athens 25th Jun 2010
@josephvba@... So what do you call the other 23 percent of iPhone purchasers if not switching to AT&T because of the iPhone? Or moving from other platforms to the iPhone? So your first two points are a fail. Let's look at point #3 where the devs are screwed because that 77 percent won't have to buy the same app again - there is the other 23 percent that are new to the iPhone and getting a new 4th gen iPhone - presumably most of the 77 percent who are getting the new iPhones will be selling or giving their older units away to people who have not used an iPhone so those people will buy apps from devs... so how exactly are the devs getting screwed again?
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RE: Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
tomlin21-24319035676893835085146735905770 11th Oct
You concluded a handful of excellent elements there. I did a lookup more than the problem and noticed predominantly nfl jerseys people today may have particularly the identical impression with the webpage.

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