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Digital Content Today: Money Changes Everything For iPhones

Tuesday, July 20, 2010
Digital Content Today: Money Changes Everything For iPhones

Antennagate aside, the peripheral customer value of iPhone users continues to be illustrated by new research reports. Both the Yankee Group and Juniper Research unveiled reports analysis on Tuesday that shows iPhone users are a competitive goldmine after they make their initial purchase.

Yankee Group research shows Apple iPhone owners shop more, buy more and remain more loyal to their phones than users of other devices. With more than 1.7 million consumers lining up for iPhone 4s in its first three days of sale, the report estimates that those same consumers will be worth more than $1.8 billion to AT&T this year, and more than $9 billion to it over the next five years. “Why iPhones Matter,” a new report supported by data from the Yankee Group Anywhere Consumer Survey, outlines the following characteristics of iPhone users:

  • Demographics:iPhone users average 32 years of age with $100,000 of household income, compared with other Smartphone users, who average 34 years of age with $85,000 of household income.
  • Mobile Internet Usage: The average mobile phone user spends 19 minutes a day browsing the mobile Internet. Smartphone users spend 32 minutes a day, while iPhone users top the scales at 37 minutes.
  • Utility: The average iPhone customer downloaded nearly 13 apps during the past 90 days; other Smartphone owners average less than half that. In addition, iPhone owners are more interested in mobile transactions and conduct more m-commerce than users of other smartphones and mobile phones.
  • Long-term value: Despite the fact that iPhone owners incur more bandwidth costs to the carrier, iPhone owners represent $5,345 in net revenue after subtracting out subsidies and bandwidth costs over five years, compared with just $5,097 for other Smartphone owners.

The Juniper Report finds long-term value in apps as well, but encourages other operators to follow suit. According to the report, players across the mobile value chain are seeking to emulate Apple's success with the App Store by launching own-brand storefronts, such as 'Mobile Market' from China Unicom, 'Airtel App Central' from Bharti and the 'Apps & Games Shop' on Vodafone 360. Furthermore, the transition to an app-centric environment has also benefited more established storefronts such as GetJar, which passed 1 billion downloads earlier this month.

However, the Juniper report cautioned that players seeking to launch app stores would need to demonstrate sufficient scale to be able to induce developers to provide them with unique content. As report author Dr Windsor Holden observed, "Apple has been able to achieve several billion downloads from a comparatively small handset base because customers are buying the iPhone for the apps. That's not been the case with other handsets. So even if you have a subscriber base of tens of millions, your addressable market is a fraction of that -- and spread across a variety of operating systems and handsets."

 The report also noted that freemium was becoming the prevalent business model, with publishers increasingly offering applications free at point of sale and dirving revenue via in-app billing of subscription-based services, upgrades to premium content or micropayments for virtual items.

Tags: iPhone, Juniper Research, Yankee Group

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