Professional Documents
Culture Documents
A Consumer Perspective
Attribution
Authored by: Kurt Scherf, Michael Cai, John Barrett
Published by Parks Associates
All rights reserved. No part of this book may be reproduced, in any form or by any
means, without permission in writing from the publisher.
Disclaimer
Parks Associates has made every reasonable effort to ensure that all information in this
report is correct. We assume no responsibility for any inadvertent errors.
Table of Contents
Data Points..........................................................................................................................1
List of Figures
Figure 1 AT&T Wireless Subscriber Growth..................................................................... 3
Figure 2 Apple® iPod® Shipments .................................................................................... 4
Figure 3 U.S. Mobile Phone Revenues & ARPU: 1999-2010............................................ 5
Figure 4 Predicted versus Actual Purchase, Portable Devices ........................................... 6
Figure 5 Penetration of Consumer Electronics Devices ..................................................... 7
Figure 6 Internet Use for Videos and Games...................................................................... 7
Figure 7 Mobile Devices: Desired Entertainment Features................................................ 8
Figure 8 Smart Phone: Familiarity...................................................................................... 9
Figure 9 Interest in the iPhone at Specific Price Points.................................................... 10
Figure 10 Consumers and Mobile Convergence............................................................... 11
Figure 11 What are Key Barriers to Converged Mobile Devices? ................................... 12
Figure 12 Decision Factors in Choosing a Mobile Carrier ............................................... 13
Data Points
• Only 3% of U.S. consumers express a strong interest
in purchasing the iPhone at a $499.99 price point and
two-year contract.
• The majority of consumers still consider network and
voice quality as the most important factors for their
choice of mobile carriers, and only a small percentage
consider handset design as important.
• AT&T has extensive reach with its current customers – it now serves more than
62 million customers, and its customer base has grown at least 40% since the end
of 2004.
• Apple has sold more than two billion songs since iTunes was launched in 2003,
and shipments of iPods have increased from 4.4 million in 2004 to 39.4 million
units in 2006.
• 40% of all U.S. households have a portable digital music player (such as an iPod).
• 17% of U.S. Internet households revealed an interest in playing digital music files
on a new mobile device.
• Consumers on average are willing to pay only $99 for a regular phone and $199
for a smart phone with a two-year contract.
• 22% of U.S. Internet households are clearly in favor of a mobile device with the
type of converged functionality embodied by the iPhone. Significantly, 41% of
portable music player owners prefer a stand-alone portable device, and only 26%
desire a multifunction device.
• Cost and performance are key reasons why consumers prefer stand-alone devices
— 49% believe multifunction devices would be expensive, and roughly one-third
believe it would suffer from performance issues, including limited battery life.
• Only 10% of mobile subscribers regard “exclusive handsets” as a highly
important factor in their selection of a mobile carrier (45% said it was not
important), while network coverage (72%) and voice quality (68%) were much
more significant factors for consumers.
The iPhone is exclusive to AT&T customers (formerly Cingular Wireless), which may be
a boon for the wireless carrier. The “must-have” nature of the phone will draw a certain
group of customers to AT&T and away from other wireless carriers in the U.S. (assuming
that they can extricate themselves from their current contracts). However, the million-
dollar question is exactly how many wireless subscribers will switch carriers for the
iPhone. Our consumer survey Mobile Entertainment Platforms & Services (Second
Edition) shows the majority of consumers still consider network and voice quality as the
most important factors for their choice of mobile carriers and only a small percentage
consider handset design as important. Nonetheless, AT&T has extensive reach with its
current customers – it now serves more than 62 million customers2, and its customer base
has grown at least 40% since the end of 2004 (when Cingular Wireless operated the
service). Given AT&T’s large customer base, an iPhone introduction could attract
millions of users (Figure 1).
1
“Apple Reinvents the Phone with iPhone,” Apple® Inc. press release, January 9, 2007.
2
Q1 2007 earnings release from AT&T.
61.0
60
54.0
50
49.1
40
2004 2005 2006
39.4
40
Millions of Units (#M)
30
22.5
20
10
4.4
0.9
0
2003 2004 2005 2006
$150
$50
$0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$-
Total Revenues ($B) $19 $56 $87 $97 $111 $125 $140 $153 $163 $172 $181
ARPU ($M) $16 $39 $54 $54 $54 $53 $53 $53 $53 $53 $54
40% 38%
Likelihood of Purchase in 2007 (Q1 2007): n=1,000
30%
22%
20%
15% 14%
10% 7%
5%
0%
Cell-phone or mobile phones Portable, MP3 player such as iPod
Sources: Electronic Living @ Home (2003); National Technology Scan (2005); National Technology Scan (2007)
© 2007 Parks Associates
3
Apple CEO Steve Jobs noted at the iPhone release that the company’s goal would be to sell ten million
units by the end of 2008. Considering that Apple has an exclusive contract with AT&T in the U.S., close
to 14% of AT&T wireless subscribers would have to purchase an iPhone to reach that goal, assuming 69
million AT&T wireless subscribers by year-end 2008.
84%
Percentage of U.S. Households (%)
78%
73%
75%
50%
37%
27% 29%
25% 19%
10%
0%
Mobile phone Portable, MP3 player such Portable DVD player
as iPod
Sources: Electronic Living @ Home (2003); National Technology Scan (2005); National Technology Scan (2007)
© 2007 Parks Associates
15%
10% 9%
7%
5%
0%
Play digital music files Purchase and download Download and play videos
iTunes music to phone
Sources: Mobile Entertainment Platforms & Services (Second Edition)
© 2007 Parks Associates
Highly
Interested
3%
Other
Responses
97%
I don't care.
40%
I prefer
I prefer purchasing a
purchasing a stand-alone
portable device portable device
with multiple for a specific
functionalities. purpose.
22% 38%
4
“iPhone Delivers Up to Eight Hours of Talk Time,” Apple Inc. press release, June 18, 2007.
60%
49%
Percentage of U.S. Households (%)
40%
32%
20%
0%
I believe that such a device would be very I believe that the battery on such a device
expensive would drain quickly
Source: Mobile Entertainment Platforms & Services (Second Edition)
© 2007 Parks Associates
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