iPhone Sales to Double with Price Cuts?
Adario Strange on the Wired blog concludes the following from those numbers:
-8 percent of consumers would be willing to pay for the iPhone at its original price point of $599.
-The “sweet spot” of consumer interest appears to be $100-$299.
-At $399, interest increased almost 2.5X to 18 percent.
So, if we’re to believe Compete’s survey, the iPhone sales flurry is just getting started.
Well, I fully agree that we will see a massive increase in interest by consumers in the iPhone, but mostly because the iPhone is now irrationally perceived as a bargain instead of a pricey luxury item.
However, the data from Compete isn’t much evidence for anything.
Here are the problems:
- The data is from before the launch. People’s ideas about the phone have changed from then. That might be a positive thing for Apple, because consumers love the phone, but it doesn’t mean much good for the study.
- The sample size seems to be 103 people. Not exactly a broad base for any study, and it only includes people shopping for an iPod.
- Compete’s graph shows that 18% of respondents were interested in buying the phone if it were to cost more than $400. 28% of all respondents were interested in buying it if it cost more than $300. How this adds up to a 2.5x increase in potential sales, I don’t know.
Why do they says this? Because of the following flawed logic:
At a price point of $299, Apple seems to be signaling to its customers that the iPod portion of the iPhone is worth $299, and the phone portion is worth $100. That’s right in the sweet spot, which could mean even more iPhone interest moving forward than the 2.5X increase we’ve shown above.
Now, the price point isn’t $299, it is $399 – iPod or not. The 2.5x number only makes sense for an iPhone that costs $299. But the phone costs $399. Maybe a large group of people rationalizes the expense by saying that they are getting a free (and more versatile) iPod Touch worth $299 with their buy, but I am not sure how many consumers will think this way.