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4/2/2008
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Survey Reveals Most iPhone Users Were Already Apple Customers

Market researchers question whether the handset can entice non-Apple users to step up and acquire an iPhone.

A new in-depth survey of iPhone users reveals that at least 75% of the phone's users were previous Apple customers, raising the question whether the handset has the allure and stamina to entice non-Apple users to step up and acquire an iPhone.

In a 35-page summation of its survey of 460 iPhone users, Rubicon Consulting found that as a group iPhone users were "very satisfied" with their device whose functions they used extensively. In one surprise finding, e-mail usage -- not music playing -- was the main function used by iPhone owners. Reading of e-mail eclipsed e-mail writing.

"It's not at all surprising that the iPhone is used less often for composing e-mail than reading it since the devices lacks a physical keyboard," the market research firm said, noting that a significant number of survey respondents expressed a wish that Apple would provide a qwerty tactile keyboard in the future.

Rubicon estimated that 3 million iPhones have been sold to date and called AT&T's decision to back the phone an unmitigated success. "AT&T made a good choice," Rubicon said. "...AT&T gains services revenue from the iPhone in two ways. First, the iPhone increases the average monthly phone bills of existing AT&T customers who switch to the iPhone. Second, because AT&T is the exclusive carrier for the iPhone in the U.S., it causes some people to switch from other carriers to AT&T."

Rubicon estimated that AT&T is getting about $2 billion a year in incremental income traceable to the iPhone. The consulting company said about 3 million iPhones have been activated to date.

But what has been Apple's and AT&T's gain has translated into a loss for other companies. Rubicon said Motorola's RAZR handset was the device "most often replaced." And the survey found that about half of iPhone users surveyed left a previous carrier when they moved to the iPhone.

Rubicon found that about 50% of iPhone users dropped a conventional mobile phone when they switched to the iPhone; 40% replaced a smartphone with the iPhone; and the remaining 10% either hadn't had a mobile phone to begin with or were carrying more than one mobile phone.

Rubicon asked an important rhetorical question? "Is the iPhone expanding Apple's market or selling to current Apple users?"

"At this point," Rubicon answered, "it appears to be selling mostly to Apple's installed base. About three out of four iPhone users were previous Apple users. One quarter of iPhone users were Mac users and another half had previously owned iPods."

Rubicon noted that Apple will need to reach beyond its loyal base, if it is to aggressively grow iPhone sales in the future.

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