Study: Consumers aren't willing to pay $500 for iPhone

Consumers aren't willing to pay the price Apple has quoted for its iPhone, according to a survey

Consumers aren't willing to pay what Apple may ask for the iPhone but if the price drops they'll switch their mobile service in order to get it, according to results of a survey released Thursday.

Online market research firm Compete surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the U.S. in June.

Among the 26 percent of respondents who said they're likely to buy an iPhone, only 1 percent said they'd pay US$500 for it. When Apple introduced the iPhone in January, it said it would cost US$500 on the low end.

Forty-two percent of those who said they're likely to buy the phone said they'd pay US$200 to US$299.

The iPhone will be available only to subscribers of Cingular Wireless, now part of AT&T. In a blow to the operator's competitors, 60 percent of those in the survey who said they were likely to buy the phone said they'd switch their mobile operator in order to get it.

While the iPhone has been discussed as a competitor to other handsets like Research In Motion's BlackBerry, the two serve very different markets, said Andy Neff, an analyst at Bear Stearns who participated in a conference call to discuss the results of the study. "Even though there's talk about this as an alternative to RIM, it's not a corporate product," he said. Instead, the iPhone is an indication of a broad shift toward smartphones and the emergence of niches within the category, he said.

The analysts were split on what price they think the device will ultimately retail for. Operators recently haven't been discounting phones in the similar price range as the iPhone, said Phil Cusick, an analyst at Bear Stearns.

However, Apple has been known to announce a product with one price and ultimately sell it for less. Apple TV, for example, was expected to cost US$399 but sells for US$299, he said.

The phone may start out around US$500 because early adopters will pay that, said Neff. But pricing will likely drop by US$100 to US$200 to target the mass market, he said.

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