iphone pre-launch consumer survey

1

iPhone Pre-Launch Consumer Survey

miro kazakoffdirector, wirelesscompete, inc.617 933 5615 telephone202 489 4798 [email protected]

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2Confidential © 2007 Compete, Inc. All Rights Reserved. 2

Compete’s methodology provides a unique view of consumers

Industry’s largest continuous consumer behavior database

2 million consumers representative of the US online marketplace

360-degree view of in-market consumers, across competitors, partner and client sites

80 million page views per day

100 terabytes of data

How do we get our data? Diversified panel acquisition strategy Panel balancing and projection methodology Patent-pending grid architecture and technology Rigorous privacy and data security procedures (no

personally identifiable information)


— This study compares the results of the initial survey fielded by Compete shortly after the iPhone announcement in January with the responses to similar survey targeting conducted in early June

▪ Both surveys targeted consumers observed researching iPods online

— Consumers’ interest in purchasing the iPhone has quadrupled since its announcement▪ A decrease in the percentage of people who want to purchase the iPhone more than offset by an

increase in the number of people willing to pay the asking price

— Those interested in the device appear ready to switch carriers in order to buy it

— Concerns about the iPhone’s Internet browsing speeds appear to be a major potential reason for interested customers to pass on the device

— Consumers would be willing to buy a similar device from other manufacturers traditionally in the mobile phone space; providing a window of opportunity to Apple’s competitors

Executive Summary


Effective purchase interest in the iPhone has quadrupled since the product’s announcement

Asked of all Respondents

How likely would you be to purchase an iPhone? & How much are you willing to pay for an iPhone? (Percentage selecting option)

— At announcement only 0.3% of respondents said were very likely to buy an iPhone and willing to pay over $500 for it

▪ By early June that number had quadrupled to 1.2% of respondents

0.3%

1.2%

0.0%

0.5%

1.0%

1.5%

Jan-07 Jun-07

Very likely to buy an iPhone and willing to spend over $500


Fewer people are planning to buy the iPhone…

— Only 15% of respondents indicated that they are “very likely” or “extremely likely” to purchase an iPhone compared to 26% in January


How likely would you be to purchase an iPhone?(Percentage selecting option)

14%

25%

36%

20%

6%

30%

25%

30%

13%

2%

0%

10%

20%

30%

40%

Not at all likely Not very likely Neither likely norunlikely

Very likely Extremely likely

Jan-07 (N=379) June-07 (N=680)


… but more are willing to pay for it

— 8% of iPhone shoppers who are very likely to buy an iPhone are willing to pay more than $500 (as compared to only 1% in January)

― Current market players may have an opportunity to promote value in the period before any price drops

How much would you be willing to pay for an iPhone?(Percentage selecting option, n=103, June 2007)

Asked of iPod Shoppers who were very or extremely likely to purchase an iPhone

1%

8%

0%

2%

4%

6%

8%

10%

Jan-07 Jun-07

Willing to spend more than $500


Switching carriers is not a barrier for iPhone enthusiasts

— For people seriously interested in the iPhone, switching carriers is not a hurdle; 60% indicated that they would be very likely to change providers in order to get an iPhone, consistent with January findings

How likely would you be to switch carriers in order to purchase an iPhone? (Percentage selecting option, n=62, June 2007)

Asked of iPod Shoppers who were very or extremely likely to purchase an iPhone and were not AT&T customers

18%

60%

0%

10%

20%

30%

40%

50%

60%

70%

Not very likley Very Likely


35%

31%

35%31%

27%

19%

0%

10%

20%

30%

40%

Sprint/Nextel T-Mobile Verizon Wireless

Sprint/Nextel customers are most likely defect for the iPhone

— Interest in switching carriers has dropped across all of AT&T’s competitors, but remains highest at Sprint/Nextel

— Interest in switching from Verizon has dropped the most substantially, suggesting their network messaging resonates even with those interested in the iPhone

How likely would you be to switch carriers in order to purchase an iPhone? (Percentage selecting “Very or Extremely Likely” to switch, by current carrier)

Asked of Respondents who are interested in the iPhone and are not AT&T customers

Jan. 07 Jun. 07

Extremely likelyNot at all likely1 42 3 5


Cost is still the primary barrier to switching

— Satisfaction with current carrier, price and early termination fees are still the main reasons why customers would choose to stay with their provider

— In contrast to January, when 40% of respondents indicated that they are generally uninterested in combining cell phone and music player into one, only 18% held that opinion in June

18%

29%

38%

40%

49%

67%

67%

67%

0% 20% 40% 60% 80%

I don’t want a combination music player and phone

I'd rather use a more e-mail friendly device

Cingular's service plans are too expensive

I'd rather wait for a 3G version

Cingular doesn't have service/coverage that I need

I don’t want to be charged an early termination fee

Price of iPhone is too high

My current carrier has phones that meet my needs

How much of an impact do each of the following have on why you would not switch carriers to purchase an iPhone? (top-2 box score on 1-5 scale, n=55, June 2007)

Asked of iPod Shoppers who were not AT&T customers and unlikely to switch carriers


Consumers’ concerns about specific iPhone issues are low and undifferentiated

— Before release consumers did not appear substantially concerned about any one of several hypothetical iPhone issues

16%

21%

21%

24%

25%

0% 5% 10% 15% 20% 25% 30%

Text messaging and Instant messaging would bedifficult using a touch screen

It could dent/scratch easily

It would be more likely to misdial/press the wrongkey on a touch screen

It could lock up/freeze often

The phone-specific functionality would not be asgood as music-specific functionality


Which of the following would be your concerns you might have about the iPhone?(Percentage selecting option, n=680, June 2007)


Data connection speeds may sour consumer readiness to purchase an iPhone

— 58% of iPhone shoppers indicated that they would be “less likely” or “considerably less likely” to buy an iPhone if its internet browsing speed would be comparable to a dial-up modem

— AT&T must set expectations carefully with data connection speeds on this device or risk opening a big opportunity for other carriers

26%

32%

27%

8%6%

0%

5%

10%

15%

20%

25%

30%

35%

1 - Considerablyless likely topurchase the

iPhone

2 3 4 5 - Considerablymore likely topurchase the

iPhone

Asked of iPod Shoppers

If Internet browsing speed on the iPhone was closer to a dial-up modem than to a cable/broadband modem what impact would this have on your decision to purchase the iPhone? (Percentage selecting option, n=307,June 2007)


Consumers appear willing to try similar device from other phone manufacturers

— Although Apple was the most popular choice, 22% of respondents indicated that they would primarily like to purchase iPhone-esque device from Motorola

— Other cell phone manufacturers could leverage their market reputation to offer comparable devices at lower prices

2%

5%

6%

7%

11%

11%

22%

29%

0% 5% 10% 15% 20% 25% 30%

Panasonic

Microsoft

Dell

Samsung

Sony

LG

Motorola

Apple

Imagine a mobile device that was a combination of wireless phone and digital music/MP3 player. The device would have an oversized color screen, a touchpad and at least 4GB of storage. Which manufacturers would you be most likely to purchase this device from?(Percentage selecting option, n=62, June 2007)



Most respondents prefer to keep their music and phone calls separate

— Most consumers still prefer two separate devices for their phone calls and music needs

— There is still an opportunity to deliver great phones that focus on making calls


Which of the following do you prefer regarding your cell phone and music player?(Percentage selecting option, n=680, June 2007)

42%

55%

3%

0%

20%

40%

60%

I would prefer to use one devicefor my cell phone and music

I would prefer to use separatedevices for my cell phone and

music

I already use my cell phone asmy music player


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iphone pre-launch consumer survey

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