iPhone success no sure thing, says IDC

Computerworld - For all the buzz building about Apple Inc.'s iPhone launch next week, success is not a sure bet, according to a survey released today.

"The first million, no problem," said IDC mobile technology analyst Chris Hazelton, referring to iPhone sales. "Interest in this has been building for years. But the '08 goal [of 10 million sold]... that will depend on the iPhone experience. If it's not rock-solid."

In the survey by Framingham, Mass.-based IDC, which polled online users researching their next cell phone purchase, a majority of respondents said they were interested in the iPhone. But the study also revealed several hurdles to mass acceptance. For example, only about 10% of the respondents said they were willing to pay full price -- the iPhone will list at $499 and $599 for the 4GB and 8GB models, respectively -- and sign a two-year service contract with AT&T Inc., the iPhone's sole carrier. That's close to the estimate spelled out in another survey detailed yesterday by M:Metrics, a Seattle research firm, which said that 9%, or about 19 million, of all U.S. cell phone subscribers described their iPhone purchase intent as "high."

Although Hazelton didn't argue with M:Metrics' numbers, he stressed the snags that could limit the iPhone to a much smaller group than Apple and AT&T hope to reach.

"The exclusivity of AT&T will be the largest barrier," said Hazelton. "Only some people will have timed it right so that they can leave their carrier and won't have to pay an early termination fee." Other survey respondents said they were unwilling or unable to eat the penalties.

AT&T's rumored five-year exclusivity agreement with Apple will give the two companies the time to "weed out" other carriers from the market of consumers interested in the iPhone, he noted. But again, that could be a slower process than the companies have planned on. "And then there's the price of the iPhone itself, and the need for a data plan on top of a voice plan," Hazelton said. "That's probably $80-plus a month right there. People will pay it if they want the iPhone experience, but moving forward, that may be simply too expensive."

If the iPhone doesn't deliver on its promises, though, all might be moot. Dubbing it the "iPhone experience," Hazelton ticked off many of the potential pitfalls identified by other analysts, ranging from the lack of a tactile keyboard to the slower speed of AT&T's EDGE-based data network. How users react to the iPhone, and how they expect to use it, said Hazelton, will ultimately be the most important determiner of success.