Will you pay $500 for the iPhone?

Will you pay $500 for the iPhone?

Summary: A study by online market research firm Compete Inc suggests that consumers won't be willing to pay $500 for Apple's upcoming iPhone and that in order to get users to switch to AT&T the price will have to come down dramatically.


A study by online market research firm Compete Inc suggests that consumers won't be willing to pay $500 for Apple's upcoming iPhone and that in order to get users to switch to AT&T the price will have to come down dramatically.   

Here's what this uncommissioned study found.  26 percent of the interested respondents said that they were likely to buy an iPhone, but only 1 percent said that they would be willing to pay $500.  The number of interested parties increased to forty-two percent if the price dropped to between $200 and $299.

[poll id=93]

I'm not statistician but the fact that Compete Inc only quizzed 379 people seems like a flaw to me.  A sample of 379 seems incredibly small to me, too small to draw any real conclusions from.  Apple's reach into the consumer electronics market goes deep and a large proportion of these people are more than happy to pay whatever price Jobs asks for the latest bit of Apple-branded kit.  Apple's success is down to having a solid and expanding base of loyal users willing to pay more for a product that's different to the norm.

The real question is not the price, but the size of the market and whether Apple can hit the goal that Jobs set - 10 million users by 2008.  That's 10 million in 6 months.  Are there 10 million users willing to pay $500 for a first generation iPhone or will Apple have to drop the price?  This is a question that only time will truly answer but given Apple's track record, I'm inclined to feel that Jobs didn't pull this number out of the air and if he's gone on record with that figure, that he has some basis for it.

Topic: Apple

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  • Not a statistician?

    >I'm not statistician but the fact that Compete Inc only quizzed >379 people seems like a flaw to me. A sample of 379 seems >incredibly small to me, too small to draw any real conclusions >from.

    To obtain a 95% confidence level with a confidence interval of 5 on a population of, say, 300,000,000 (which is far more than the number of cellphone customers in the United States) requires a sample size of 384.

    A better way to think about it is "If I choose N people randomly out of a population, what is the probability that they don't represent that population." And that probability falls dramatically with each additional new member of the sample set. If you ask 5 people a yes/no question and 4/5 say no, it's possible that they are a cluster of weirdos, but if you ask 100 and 75 say no it is much less likely that continued sampling will significantly (+/- 5 points) alter that percentage.
  • It's all about Cingular

    I would pay the $500 gladly with a decent 3G network. I'm concerned that iPhone may never be available for Verizon, given what I've read about the breakdown in negotiations between Apple and Verizon over Verizon's insistence on having their VCAST music store on the device. Hopefully mutual self-interest will prevail...
  • Yes, when the iPhone price comes way down.

    I'm not interested in music but, it would be nice for me to have my photos with
    me, get to the Web when needed, and, use it as a PDA.

    At present I have a Razer that does not sync with all Mac iCal and Address book
    items. Also I'm a very satisfied Cingular (AT&T) customer. For many years Verizon
    was my carrier however, a few years ago I didn't like the way they hobbled their
    phones along with other issues. I took the time to write Verizon but they didn't
    respond to my concerns so I switched to Cingular. To me Cingular customer
    service, and, phone service is much better than Verizon; I'm in the Atlanta metro
  • 6 months or 18 months?

    6 months to sell 10m phones? Are you sure it's not 18 months?

    I remember watching the Macworld keynote - I can't remember the exact wording steve jobs used at the time but the screen behind said "2008 - 10 million sold"

    Now a lot of people are interpreting this as "10m sold BEFORE 2008" (i.e. by 31st December, 2007). If this was the case, don't you think they would have said "10 million iPhones will be sold in 2007?", as it sounds more impressive if it was their actual plan.

    No they said "2008 - 10m million phones", which to me means thay plan to sell 10m by 31st December, 2008. Which leaves them 18 months to sell 10 million iPhones - much more realistic.

    But to answer your question, yes, I would most certainly pay $500 for an iPhone. I live in the UK, so that works out at just above ?250, which seems very reasonable to me. BUT, like everything else caught up in whatever effect the atlantic ocean seems to have on prices (Vista, anyone?), the iPhone will no doubt sell for about ?350 here (~$700). Believe it or not, I would still probably buy it for this. You americans try living over here for a year or two, THEN go home and dare complain about your high prices for electronic goods and software :-)
    • That's how I remember it also

      Basically 18 months to sell the 10 million units.

      Remember that the iPhone will not be released internationally, nor will 3G
      be initially available. Early 2008 will be the start of full international sales -
      and probably 3G. By the end of 2008 I would expect that Apple will be well
      past the 10 million mark, as long as the suppliers are able to deliver the
      quantities required.

      As for the UK pricing, you do have VAT thrown in the retail price, where we
      get sales tax added onto the price at the cash register. Wages are higher,
      but income tax is probably more painful.
    • The iPhone in the UK ...

      ... could be closer to ?500.
      Adrian Kingsley-Hughes
    • There is ambiguity ...

      ... 10 million and 2008 could be 6 months or 18 months ... I think Apple wanted it that way :-)
      Adrian Kingsley-Hughes
  • purpose of article?

    what is the purpose of this article? The writer does not know the statistical quality of the study (which only "suggests" - a rather weak term), but uses it anyway to attemt to discuss the pricing of the iPhone. Is this merely gossip or is there some significant point to be made? If so, then please state it.
    • Isn't price an important point?

      Adrian Kingsley-Hughes
  • My answers

    Would I pay $500 for a phone that I couldn't install apps on, wouldn't sync with my PIM software, wouldn't support Java, can't sync wirelessly, can't replace the battery when it dies in 6 months, doesn't support any removable media, forces me to use 1 carrier, forces me to sign a 2 year contract, from a company that is the #1 seller of DRM infrastructure and content? Hmm, let me think about that for a second...

    Do I think they will sell 10 million phones though? I think they would sell 30 million phones even if the price was $1,000 and you had to sign a 10 year contract. After all, the 30 million customers who bought a Mac have shown time and time again that they will pay any amount of money for anything with an Apple logo on it. Getting anyone who doesn't own a Mac to buy one of these DumbPhones will be difficult though.
    • Whoa

      me thinks you need something[b] no one [/b]will give you.
      • Many devices out there right now

        I don't need to wait for the iPhone to get something with touchscreen buttons but absolutely none of the horrific negatives that comes with buying yet another Apple product. If the iPhone was one of a kind in what it could do, I could be tempted but it offers nothing other than 2 finger picture resizing. Yippee! I promise that the next time I find myself looking at a picture on my iPaq wishing that I could resize it with 2 fingers, I'll consider the iPhone. Until then, it has [b]nothing[/b] positive over the multitude of competing devices. Apple is late to this market just like they were late to the MP3 market but this time they're going against companies that know how to compete. Apple has never done well in competitive situations.
        • It's so obvious

          [i]"Even a caveman would understand![/i]
          Is it me?! Nevermind.

          Oh, wait. Shoot. Hey. I can't get into a debate right now.
          Have to get to the [url=http://www.youtube.com/watch?v=v3deQbBw9sc]airport![/url]

          D T Schmitz
  • As innovative as it may be

    The iPhone will become one of many new smart devices with their own operating systems coming on-line in the US.

    For example, we are just starting to see the effect of embedded Linux reflected in [url=http://www.linuxdevices.com/news/NS2657814070.html]OpenMoko[/url] and [url=http://www.nokiausa.com/N800]Nokia 800.[/url]

    I'll pass on the iPhone and put my money on Linux embedded.
    D T Schmitz
    • Thanks _dietrich

      Those phones look [b]far[/b] more interesting, innovative, and, what a concept, [b]FUNCTIONAL[/b] than Apple's DumbPhone. I also feel better supporting companies with better corporate ethics than Apple has.
      • You are welcome

        Heck it's so obvious, [i]"Even a caveman would understand!"[/i]
        D T Schmitz
  • It depends

    Would I spend it? Can't say right now, I'll have to try out the device and read the actual reviews when it comes out. Keep in mind that Motorola sold 10 million RAZR's at a similar price in its first year of existence. Given how lame the RAZR is in comparison here, it's not much of a stretch to see Apple doing the same.

    Also keep in mind Apple's pricing strategy--they usually don't drop their prices much, just add new models that do more at the same old price.
    tic swayback
    • Yeah ... the RAZR did it ...

      ... I know, I bought one ...

      OK phone but that's about it. I got mine well after the price had dropped though so it wasn't such a bad deal. But when they came out they were $500 ... way overpriced!
      Adrian Kingsley-Hughes
      • Hello MotoRIZR Z6, Grundig Mobile

        (tap tap. Is this mic on? OK, Ah hem.)

        [b][i]<<< Linux embedded! >>>[/b][/i]

        Are you jiggy with it?
        D T Schmitz
  • 1 percent is good enough if

    Lets make some assumptions;
    1. Apple launches a GSM model overseas in a year
    2. The total iPhone market is 1 billion units per year
    3. Of this, 20% of consumers will be looking to buy an internet communications-equipped-smart-phone-mp3-player
    4. Will apple get 5% of this market?

    Of these four, 1. and 2. are more or less established facts. That makes #3 the key hypothesis of this analysis. Here is how we can tease it out-- 2 Million people were expected to buy the video iPod in 2007. For this they'd have paid $300. They'd also have had atleast one of the following; a PDA, Camera, and Cellphone.These 2 Million would now readily convert to iPhone (remember, the device was announced early in the year to permit these customers to holdoff the iPod purchase). How about 2 of the 5 million that'd bought another smart-phone and MP3 player? That gives us 4 million users in 2007. By 2008, when the iPhone is released abroad, at 2/3rd the price of the Prada phone, and rivaling the blackberry with a push email, it will easily double this to 10 million users.

    The reason that this survey shows only 1% of users will buy the iPhone is because it was not aimed at those in the market. 1% of what? A 1% of world population will suggest 60 million buyers, 1% of Americans will be 4 million, 1% of middle-class consumers will be 20 million. The problem with such amorphos research is, it does not define the subset it applies to.