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Apple Doesn't Disappoint |
October 23, 2007 By Tobin Smith, Editor, ChangeWave Investing |
Tobin Smith
Tobin Smith is the founder and editor of ChangeWave Investing. He also serves as executive editor of ChangeWave MicroCap Investor, and contributes his weekly market outlook and editorial rants to ChangeWave's WaveWire e-letter, which is read by more than 250,000 investors each week.
As a general rule, people disappoint you as you know them."—Astronomer Maria Mitchell, 1858
This 19th century astronomer's rather cynical viewpoint may hold true in relationships between human beings, but to date there are no signs of disappointment between consumers and their iPhones.
According to ChangeWave's latest consumer cell phone survey, completed Oct. 2, the Apple (AAPL) iPhone continued to enjoy solid growth while it raced to a huge lead in terms of customer satisfaction.
The survey of 3,654 Alliance consumers looked at key market share changes among the major cell phone manufacturers and service providers and found that, while the iPhone has been on the shelf just three months, its impact is already being felt industry-wide.
iPhone Ups Its Share
Apple's current cell phone market share showed solid growth that was in line with previous expectations. Among respondents, market share has doubled since our previous cell phone survey in July, rising to 2%.
The top cell phone manufacturer, Motorola (MOT), maintained its No. 1 spot in terms of current market share with 30%; however, that figure has fallen one percentage point since our July survey to its lowest level in more than a year.
But the most striking finding of the survey is the iPhone's outstanding customer satisfaction rating. An unprecedented 82% of iPhone owners reported being very satisfied with their purchase, up five points from our previous survey, and by far the highest rating of any cellular manufacturer.
The only other company with a satisfaction rating above 50% was Research In Motion (RIMM) with 51%.
At the other end of the spectrum, Motorola was next to last among cellular manufacturers in customer satisfaction, and Sony (SNE) Ericsson (ERIC) was at rock bottom.
But it's when we asked respondents about their planned future cell phone purchases that the iPhone marketplace transformation became fully apparent.
Going forward, we found an astonishing 16% of respondents who plan to purchase a cell phone in the next six months said they'll buy an iPhone—placing Apple at the top of all manufacturers.
Importantly, while the number of European and Canadian respondents in this survey wasn't large enough to draw final conclusions, the iPhone also appeared set for a fantastic debut when it launches in Europe and Canada in the coming months.
"There's no longer any doubt about the staying power of the iPhone," said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing. "The continuing embrace of the iPhone by the public is a stellar example of how a new product can forever alter its own playing field."
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Motorola's Downward Slide
In other findings, after a long and horrendous slide, Motorola's future planned purchases—down one point to 15%—appeared to be bottoming for the first time in a year. Note, however, that ChangeWave surveys throughout 2007 showed Motorola to be the manufacturer hurt most by the iPhone, and the current survey results continued to support that finding.
The above chart illustrates Motorola's dramatic rise and fall in terms of planned purchases during the past two-plus years. Notably, the decline first appeared in our January 2007 survey, conducted immediately after Steve Job's original iPhone announcement.
On a more upbeat note, Nokia (NOK) planned purchases jumped three points since our July survey to 13%. Conversely, LG and Palm each fell two points to 4% and 2%, respectively.
Service Provider Wars
Within the cellular service providers market, the tug-of-war between Verizon (VZ) and AT&T (T) rages on.
In terms of current market share, both Verizon (30%) and AT&T (29%) gained one point since the previous survey in July. For AT&T—the iPhone's exclusive service provider in the United States—this is the third-consecutive survey in which they've racked up a one-point gain.
Far behind in third place was Sprint Nextel (S) with 12%. The company still showed no signs of a turnaround from its downward spiral.
Looking ahead, after the initial wave of excitement for the iPhone, planned future demand for AT&T—while still historically high—seemed to be returning to more normal levels. Among respondents who said they plan to switch carriers during the next six months, 23% said they'll go with AT&T—a full seven points lower than our July survey.
Verizon, on the other hand, has halted its downward slide in planned purchases that began immediately after the Steve Jobs iPhone announcement in January. All told, the company has increased its share of planned purchases two points to 21%—significantly narrowing the gap with chief competitor AT&T.
Here's another look at the roller-coaster slugfest in planned purchases between Verizon and AT&T during the past two-plus years:
Importantly, Verizon customers continued to give their company the highest satisfaction rankings in the industry, as lower satisfaction ratings continued to plague AT&T. We note that previous surveys have identified the speed of the AT&T network as the top complaint among iPhone users.
Going forward, Sprint barely registered in planned purchases, garnering a minuscule 3%.
In sum, the survey showed the Apple iPhone is far from a disappointment to date. That is, perhaps, unless you're one of Apple's chief cellular competitors, in which case you may well be feeling a sense of disappointment in your own products.
Paul Carton is Executive Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor.
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The Alliance is a network of 11,000 highly qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.
