Demand Steady for iPhone, BlackBerry; Slight Uptick for Palm

April 20, 2009

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Analytics, Automated & MarTech | Financial Services | Retail & E-Commerce | Technology | Telecom

Smartphone demand in the next 90 days will remain steady for Apple’s iPhone and Research in Motion’s (RIM) Blackberry, but also appears to be picking up for the Palm Pre, according to the most recent smartphone survey from ChangeWave Research.

Despite this uptick in interest in the Pre, however, Changewave says Palm is facing a tall order if it aspires to compete with Apple and RIM in this market.

The March survey of cell phone owners examined anticipated demand for all three smartphones, including early consumer reaction to the Palm Pre launch and the consumer impact of Apple’s just-announced iPhone upgrades.

Smartphone Demand – Next 90 Days

The most recent ChangeWave smartphone survey found, not surprisingly, that the overall shift to smartphones continues, although a slight dip is forecast for the spring season, as Apple and RIM have no immediate product launches scheduled for the next 90 days.

After the launch of the iPhone 3G and the significant successes of the new Blackberry models, 11.2% of respondents report they’ll be buying a smartphone within the next 90 days, one point less than in ChangeWave’s December, 2008 survey. Despite this small decline, the 11.2% is the third-highest percentage recorded in a ChangeWave survey dating back to 2005. Changewave anticipates that new product launches and upgrades set for the summer are likely to boost this number.

changewave-consumer-market-smartphone-buying-intent-march-2009.jpg

RIM’s Blackberry models (41%) continue to sustain the company as the overall market-share leader among consumers, while Apple (24%; up one point) remains firmly in second place, and Palm places a distant third.

Among respondents planning to buy a new smart phone in the next 90 days:

changewave-consumer-market-smartphone-buying-apple-rim-blackberry-palm-march-2009.jpg

  • 37% say they’ll buy a RIM Blackberry – two points below the surge seen in our prior survey and the highest level of demand in the smartphone industry.
  • 30% say they’ll buy an iPhone, a number which remains unchanged from the last survey and keeps Apple in a strong second place.
  • For only the second time since October 2006, 4% of respondents say they would buy a Palm (up three points). The public anticipation generated by the recent Pre announcement is driving this increase, ChangeWave said.

Apple Stays Strong

At the same time as intereserest builds for the Pre, Apple is expected to release upgraded iPhone models with improved features and new pricing – perhaps as early as this summer. Though these numbers do not reflect purchase intent within the next 90 days, survey results show these new models and pricing plans have considerable appeal among consumers surveyed:

  • 9% of consumers say they are likely to buy a 32GB iPhone 3G ($299)
  • 11% say they are likely to buy a 16GB iPhone 3G ($199)
  • 8% say they are likely to buy the 8GB traditional iPhone ($99)

The Cupertino, California manufacturer is also expected to release its next generation iPhone operating system – iPhone OS 3.0? -? within the next few months, ChangeWave said, adding that findings show that? one-in-five consumers (20%) say they’re more likely to buy an iPhone as a result.

The Steve Jobs Effect

With Steve Jobs’ recent health disclosure and taking a leave of absence and the related speculation on whether Apple will stumble without him, ChangeWave asked consumers what effect it would have on their likelihood of buying Apple products if Jobs were to permanently step down as CEO:

  • Four-in-five (80%) now say it would have no effect on their likelihood of buying Apple products.
  • While 9% still say they’d be less likely to buy Apple products if Jobs steps down, it is a five-point improvement from six months ago.

Pre Interest Rises, but Palm Faces Challenges

When demand trends for the 2009 Palm Pre launch are compared with early potential demand for both the RIM Blackberry Bold (2008) and the original Apple iPhone (2007), ChangeWave found the following:

  • A total of 1% of consumers say they’re very likely and 4% are somewhat likely to buy the new Palm Pre in the future. This compares with 4% very and 13% somewhat likely before the 2008 RIM Bold launch, and 5% very and 11% somewhat likely before the 2007 original iPhone launch.

changewave-comparison-future-smartphone-buyers-palm-rim-original-iphone-march-2009.jpg

  • The most likely buyers of the Palm Pre are current Palm customers, with 14% saying they’re very likely and 23% somewhat likely to buy the new model. Beyond existing Palm owners, the Pre also shows the potential to attract customers from some competitors, particularly Sanyo (3%) and HTC (3%).

ChangeWave reported that though the demand for the Pre is less impressive than the early interest for the Bold or the iPhone, it is still significant and has the potential to “breathe life back into the company if the new model performs even close to expectations.”

Still, even if the Pre is successful, ChangeWave acknowledges that Palm will have to outperform the market for it to be competitive in this race. Among the obstacles:

  • Association with Sprint: Though the survey showed 17% of consumers say the most important reason they’re not considering buying the Palm Pre is because they don’t like the requirement to use Sprint. (t the same percentage who say they won’t buy an iPhone because they’d have to use AT&T), Palm’s bigger problem is that Sprint (10% of current market share) trails AT&T (31%) and Verizon (30%) by a huge margin At the same time, only 1% of consumers who are likely to change cellular service providers in the next six months say they’ll switch to Sprint. Thus, considering Sprint’s weakness, the Sprint exclusivity deal is yet another big obstacle Palm will have to overcome as part of its Pre launch.
  • Customer Satisfaction Issues: Only 31% of Palm’s customers report they’re very satisfied with their current Palm smart phone. In contrast, four-in-five owners (79%) of the iPhone report being satisfied with their devic e. RIM ranks a strong second with 50% of its customers very satisfied.

changewave-cell-phone-satisfaction-rating-by-manufacturer-march-2009.jpg

“Even if the Pre can outperform, it will take world class marketing and a huge advertising budget for Palm to rebuild its brand name in order to compete successfully in the high end smart phone market,” ChangeWave said.

About the survey: The survey was conducted March 17-23, 2009 among 4,292 US cell phone owners.

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