ComScore has recently come out with a report detailing the demographics of iPhone users, and the results are surprising. While the iPhone might stereotypically be thought of as the province of tech geeks with money to burn, ComScore’s findings indicate that the real driver behind the iPhones tremendous growth has come from users who earn less than the median household income.
From June to August 2008, the growth rate of the iPhone for individuals who earn over $100,000 was 16%. Meanwhile, the growth rate of the iPhone for individuals earning between $25,000 and $50,000 was 48%, and for individuals earning betweein $50,000 and $75,000, the growth rate was 46%.
The release of the iPhone 3G in July clearly has a lot to do with these statistics. When Apple lowered the base cost of the iPhone to $199, it instantly became a viable, affordable, and more attractive option for consumers who wouldn’t ordinarily pay upwards of $400 for a cellphone. Jen Wu, a senior analyst at Comscore noted:
“As an additional household budget item, a $200 device plus at least $70 per month for phone service seems a bit extravagant for those with lower disposable income. However, one actually realizes cost savings when the device is used in lieu of multiple digital devices and services, transforming the iPhone from a luxury item to a practical communication and entertainment tool.”
Another explanation behind the data could be that individuals earning over $100,000 most likely already had an iPhone if they wanted one, and decided not to upgrade to the 3G model. Lower income users, however, were not as likely to spend $499 for an iPhone when it first came out.
In light of Apple’s recent earnings report, lowering the base price of the iPhone to $199 seems to have been a great move, and as the data suggests, has opened up the iPhone to the masses. Steve Jobs even noted that Apple sold more iPhones during its last quarter than it did in all previous quarters combined.
Mark Donovan, another analyst at ComScore noted:
“These data indicate that lower-income mobile subscribers are increasingly turning to their mobile devices to access the Internet, e-mail and their music collections. Smartphones, and the iPhone in particular, are appealing to a new demographic and satisfying demand for a single device for communication and entertainment, even as consumers weather the economy by cutting back on gadgets.”
Will competing phones such as the BlackBerry Storm and T-Mobile’s G1 have any impact on consumers who are seeking an all-in-one device? Not necessarily. People tend to forget that the iPhone is also a full-fledged iPod, and offers storage capabilities that other competing smartphones can’t match straight out of the box. An entry level iPhone comes with 8gb of storage, while T-Mobile’s G1 and the BlackBerry Storm both come with only 1GB of storage, which lets you put on around 240 or so MP3’s. Customers can, of course, put in a MicroSD card for more memory, but that will most likely cancel out any initial savings in cost. Also, consumers looking for a phone and media device in one might be disappointed to find out that the G1 doesn’t come with a built in video player, though one can be downloaded from the Android Market.