The iPhone impact

As the market eagerly awaits the release of Apple's iPhone on June 29, there has been a lot of recent press about the the impact of this phone on the wireless market.

1. According to Bear Stearns, AT&T Inc. may gain as many as 915,000 customers in the second half of this year as the sole wireless service provider of Apple Inc.'s new iPhone, with half of those new subscribers coming at the expense of rival wireless carriers, including Verizon Communications Inc.

2. According to M:Metrics, two-thirds of mobile-phone users who are interested in purchasing the iPhone aren't AT&T customers but would be willing to switch carriers to obtain the device.

3. According to Compete, in a separate survey of people who were shopping for iPods on the Internet, 12% of respondents said they have postponed their wireless-phone purchases to wait for the release of the iPhone and an equal percentage said they had postponed their purchase of an MP3 player. Additionally, a quarter of the people interviewed said they were either very likely or extremely likely to switch cellular carriers to get the iPhone.

I have discussed this topic with a number of people in the industry, and have gotten a lot of interesting responses. Apple expects to sell 10 million iPhones in 2008 which on the surface, doesn't sound like a huge number considering Apple has sold over 100 million iPods. But, beyond the fact that the device is only available through AT&T, the fact of the matter is that the cost of a an iPhone is a lot more than the $500 for the device. If you're an existing AT&T subscriber, it probably won't be too painful to upgrade your current device to an iPhone, but if you're on another network, you'll have to sign up for a 2 year contract and make sure your existing contract has ended or risk paying for two service plans.

Apple was certainly very smart to pre-announce the device so that the early adopters could get mentally (and financially) prepared for the launch, but I think when the average consumer realizes they can't easily switch from Verizon, Sprint, or T-Mobile to AT&T until their contract ends, they will think twice about buying the iPhone, which will have a drag on sales.

What do you think?

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[Source: Mobile Phone Blog]