Low-income users latch on to iPhone

Lower-income U.S. consumers are flocking to Apple's iPhone, sending an early signal that smartphones are changing from a luxury to a necessity, according to research company ComScore Mobile.

In a series of surveys ending in August, ComScore found that iPhone purchases grew fastest among people with annual household incomes between US$25,000 and $50,000. The growth rate in this group was 48 percent, compared with just 16 percent among people with incomes above $100,000.

Consumers in that lower-income group still made up only 15 percent of the iPhone crowd, which is dominated by affluent males between the ages of 18 and 35, the company said. But the fact that they are increasingly willing to pay $199 for an iPhone 3G and about $70 per month or more for AT&T's service plans suggests smartphones are becoming a mainstream product, said ComScore Mobile analyst Jen Wu.

"Although it's not shifting the iPhone audience all that much, it is still indicating a larger trend that we might be seeing more of in the future," Wu said.

The trend became most pronounced after the iPhone 3G arrived in early July, with higher speed, the App Store for third-party tools and a 50 percent price cut, she said.

Massive advertising, media coverage and word-of-mouth promotion are playing a role in attracting these users to the iPhone, but they may also see the device as a good value because of the number of things it can do, Wu said. Because it can be a music and video player, Internet access device, e-mail and instant-messaging platform, camera and many other things, the iPhone gives cash-strapped consumers more for their money than do single-purpose products, she said. And because it can be used on the go, it can help people make better use of their time, she added.

"People have started to see that it's worth the cost," Wu said.

Typical uses of smartphones are also on the rise among people in this income group, according to ComScore. The number of people in this group who listened to mobile music has been growing at about 5 percent, versus a drop of 0.3 percent for the mobile market overall, the company said. Using a browser to check out news or other information also rose 5 percent in that group, compared with 3 percent for the overall market.

iPhone purchases also are rising rapidly in households making between $50,000 and $75,000 per year, and among people older than 45, ComScore said. Increasingly, people in all these groups find it's expected that they'll be able to get e-mail, access the Internet and use other data services on their phones, Wu said. In its studies of the mobile market, ComScore uses a sample of more than 33,000 users.

Wu doesn't expect the current economic downturn to make much of a dent in this trend, which follows at least two years of rising monthly spending on mobile services.

"I don't see there's going to be much of a slowdown, just because wireless devices are so much more of a necessity than they used to be," Wu said.

Some of the demand may be met by less-expensive phones that have a subset of the iPhone's capabilities, as well as by rival platforms such as Google's Android, but the iPhone still reigns supreme as the handset to have, even though it represents only about 1 percent of the market, Wu said.

IDG News Service

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