The cost of an iPhone is proving to be a sticking point for UK consumers, according to a survey.
The Apple handset's not-so-dinky £269 price tag is putting off swathes of potential buyers, according to a poll by market research company GfK NOP, which surveyed 500 people across the UK.
Almost half (46 percent) of consumers polled said they would never buy an iPhone at that price, while a further 26 percent said that, although they like the look of the phone, it's simply too expensive.
Just two percent said they are considering adding it to their Christmas list.
UK consumers willing to shell out for the hardware must sign up to an 18-month contract with O2, Apple's UK iPhone partner. In Germany, mobile operator Vodafone recently won a court injunction forcing Apple and its partner there, T-Mobile, to sell an unlocked version of the phone. In France, Apple is obliged by law to offer unlocked iPhones after six months.
The success of the UK's mobile market has been driven by subsidised handsets, said GfK NOP, which means the high retail price of the iPhone sets it apart from other offerings. Apple must therefore work much harder in the UK than it did in the US if it is to penetrate the mass market, the company said.
The cost of the handset is also a barrier for business: a recent vote by a CIO user panel found bosses view it as too expensive to roll out as a corporate mobile.
There is one bit of good news for Apple in the survey — consumer awareness of the iPhone is strong, with 75 percent of respondents saying they have heard of the device. Consumers also strongly associate the device with music and email and web surfing.
At the time of writing, Apple had not replied to a request for comment.
Talkback
The price of the iPhone is not holding me back from buying it, the 18 month contract from 02 at £35 per month is!
£35 per month, over 18 months, is expensive when the products value comes from the device and not the mobile network.
iPhone - £269
02 Contract - £630
Steve Jobs' when questioned about the high price tag at the UK O2 deal announcement was "sometimes you get what you pay for". Also some US journalists stated the iPhone is "5 years ahead of any other phone".
Having bought an iPhone on launch day I have to say that both statements are wrong. The iPhone feature-wise is greatly inferior than many handsets already out there - saying it's 5 years ahead is just plain ignorance of fan-boyism. Do you get what you pay for? Well when you consider more feature-packed or powerful mobiles are out there already and have been for years and are free on similar or cheaper contracts then again - no. That leaves the only advantages of the iPhone - the design and the responsiveness and multi-touch features of the touch screen. Is that worth £269? That is a matter of opinion.
I am one of the few iPhone haters that own an iPhone and have recently started to love the phone - not because of what you get out of the box - but the vast array of useful apps you can get if you're brave enough to jailbreak it. It still only a 412mhz processor with 116mb of ram compared to a 520mhz processor with 128mb ram on my last phone - the xda exec - however the OS runs a lot quicker and smoother than windows mobile 5 and so it feels like a faster phone even though it's not all that powerful as some would have you belive.
Since Apple is opening it up for 3rd party apps soon it will potentially be a lot better device. But it won't change hardware limitations such as the lack of 3G and the ram/processor.
If you are considering spending £200+ on an iPod anyway - it's worth it as the the iPod features are great and you get a nice phone thrown in. If you already have a digital music player and a decent phone such as the xda exec or Nokia N95 8GB then you'll be hard pressed to see the iPhone being worth the price.
I also share these doubts about pricing of the iPhone, but surely it is too early to start making judgement calls about the impact for the future of the iPhone? I doubt whether this research will overly concern O2 or Apple...
Firstly - The iPhone (like the iPod before it) will rely heavily on word of mouth - the buzz created by early adopters who demo the device to friends and colleagues - even just seeing the iPhone in use on the tube or in a meeting will get people talking. It will take time for this to build-up and start to filter through to demand in-store.
Secondly - worth remembering that O2 have set a target of 200k sales by Christmas, over-cautious I agree, but even if they double that target (as analysts have forecast) it will still only need 1% of UK adults to buy one. So some of the data in this report may be exactly what O2 are expecting!
Thirdly - UK consumers are not daft, they will have seen that Apple reduced the price of the iPhone in the US shortly after launch, so many will be playing a wait and see game before committing to buying one.
I look forward to a more realistic update on this data next year...
@ Gareth.Kennett I am totally agree.
I've been tempted by the iPhone from the start, but I just don't want to be tied in to a year and a half contract paying £35 a month. Besides, won't Apple antagonise a lot of early users if they introduce too many improvements to the phone in the first year (or two years in the States)? I think Apple could be tying their own hands. People will be stuck to their contracts with an early model, and unable to upgrade.
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Apparently the figures suggest that the overall cost of the iPhone is lower in the UK than in the other countries!
The iPhone isn't just a fashion phone or a replacement iPod, it's actually a very handy web device as well. Just like the bigger screened Nokia 710/N800/N810 this thing gives you a better window to the web than other smartphones. It also handles all the usual media formats but with a bigger screen for video.
Unfortunately it's unfinished. It's going to include the usual Apple tie-ins because applications for the iPhone will only be available from iTunes and will definately be DRMed (hopefully helping developers avoid the usual software pirating issues). I predicted that apple would add an Applications section to iTunes in January 2007 when the iPhone was announced, but it's taking them a very long time to complete the system required to fulfill this prophecy.
The iPhone software (and hardware) is still in it's infancy. It got a lot of potential but for now it's good enough for casual users and a few power users who sometimes end up carrying more than one phone - mainly because third party applications aren't being allowed yet.
By this time next year it'll be a truly powerful device and apple's next iPod. Then I'll have to see how the S60 Touch interface compares and which device includes a real keyboard!
I keep hearing about potential and power.
No software update is going to magically change 412mhz into 800mhz or add 3G etc. The hardware limitations are fixed. If you are referring to a new handset then surely you should be encouraging people not to buy the iPhone as it is going to be replaced by a better model.
After using the phone over a longer period I can still say that it's a fun fashion phone but using it for business has been incredibly frustrating. Yes I can receive email and browse the web - but can I copy and paste information from a page and put it in an email - no. Can I quickly forward an important text message on to a colleague - no. I find I am depending more and more on the low-tech pen and paper to assist with the iPhone. These are the sort of things that I hope will be fixed with software updates but until they are it can be a frustrating experience.
Usually when a big fuss is made about a new shiny bit of technology I see it in use everywhere. When the PSP/DS/ipod came out I'd see it on the bus every day. When the new blackberry came out I'd spot people emailing away on the bus, the train in the office etc. When the iPhone came out I've so far seen 1 other person with it. It's not that people are keeping it in their pockets - I see ipod headphones everywhere and look for the tell-tell mic piece that seperates the iPhone from it's music playing brothers and sisters and it is only 1 occasion that I've spotted one.
True word of mouth will encouraged people to buy - I feel like a salesman when people keep asking for a quick demo. People are then tempted but they ask me the $10mil question - is it worth it. I have to tell them truthfully - no. I list the missing features and annoyances and the price tag and few are still keen. I don't want to put people off buying it because of my pet peeves so I never tell anyone not to get it - I just give them the facts and demo the cool stuff and leave it to them so far no takers. Those that show off with it and don't mention the downside may be leading people to buy something they will ultimately be disappointed with.