Fascinating iPhone stats in Morgan Stanley report quoting Rubicon

Our friend Robin Jewsbury sent a link to the latest Morgan Stanley Tech Trends report from June 2008. It has lots of interesting updates to the trends they track. I was drawn to the iPhone user info page, which was based on Rubicon research from March 2008 and the numbers seem to be based on USA iPhoner users but that point is not explicitly made. Here things that struck me..

80% of iPhone users are satisfied..  Note the reverse, which I think is a surprisingly big number, that 20% are thus not satisfied? I would assume most who bought an iPhone were knowing what they were getting, so this is a small cause of alarm in terms of iPhone loyalty. Now, granted no phone has 100% loyalty, but as the early buyers of the iPhone were very strongly Apple loyalists (computers, iPods, even former Newton users, etc), this is a mildly alarming number. Perhaps it helps explain why the Spring sales numbers for the (first generation) iPhone were so soft, and why the iPhone 3G has seen its price so severely slashed.

53% of iPhone users had changed carriers. This is very good news for AT&T and is a big part of why the mobile operators/carriers in the rest of the world are so eager to get the iPhone into their product mix.

33% of iPhone users have another phone. Note that the worldwide average is 28% and the European average is over 50%. The American level of second mobile subscriptions is about 15% so this is twice the American level, so iPhone users are nearing the typical European user as the leading edge of American consumers in driving the American wireless industry. This is good news...  I would also point out two impacts - first, that therefore for one in three iPhone users, the iPhone did not bring "absolute churn" to the carrier(s)/operator(s) but rather partial churn (the second phone is mostly on a rival network). And secondly, this has an impact to any "deficiencies" of the iPhone, say any clumsiness in SMS text messaging use or lack of video calling or video recording or MMS - the second phone will tend to have all those covered; if the iPhone is not the only phone, then its "shortcomings" are mostly mitigated by the alternate phone..

Most used functions - perhaps a bit surprising, the iPod-smartphone does not have music as the top used feature.. It is fourth on the list, with reading email, SMS text messaging and web browsing all ahead of music consumption. Only about 60% of iPhone users listen to music daily (vs 70% who use email); but both features are used at least occasionally by 95% of iPhone owners.

SMS texting is clearly not a deal-breaker for iPhone users, some 68% of iPhone users send or receive SMS daily on the iPhone and 95% use SMS texting occasionally. These numbers are significantly above the US average and approaching the global average. But as is typical with email and SMS, North America is the last region of the world where more users still use email than SMS texting - and this pattern still holds (just barely) for the iPhone as well.

There are also fascinating findings on the emerging types of activities and opportunities in mobile and the extent of these iPhone users doing these activities daily. Approx 27% of iPhone users play videogames daily, 22% listen to podcasts daily, 10% buy something from iTunes - daily !!! - let me stop here for a moment. 10% of iPhone users buy iTunes daily. Wow.. This is promising both for iTunes and for music sales to musicphones.

Then one more, 10% read ebooks daily. This is also a big number, considering the Amazon Kindle ebook reader sales in the 100,000 range. If Apple has an installed base of some 8 million iPhones by now, it means that iPhone users who read books on their iPhone (daily) outnumber Kindle users (which includes those who only occasionally use the Amazon ebook reader) by 8 to 1..   This is the 7th Mass Media channel again, the ultimate cannibal.

And talking about cannibalization. Perhaps the most revealing number. The people who have stopped carrying a laptop because of owning an iPhone. 21% strongly agree (ie have mostly stopped carrying a laptop) and another 40% mildly agree - meaning that the iPhone has replaced completely or partially the laptop for about 61% of iPhone users. A clear early trend marker for where the internet is headed. Headed to a smartphone near you....

But like we say here at Communities Dominate and in our book, Generation C (Community Generation) is not a single purpose single network consumer. They multitask, they optimize. So also the finding shows that 39% of iPhone owners disagree with the statement that the iPhone had replaced carrying the laptop. Its not going to be one network, it will be several, ha-ha... Typical Generation C behaviour.

As to what did the iPhone replace. 24% of iPhone owners replaced a Motorola Razr with the iPhone. That hurts big Moto real bad. These must be among the 80% satisfied users...  This is also why I think the Rubicon survey was among USA based users, as the proportion of Razr vs Nokia (ie Symbian phones) is totally out of whack. The only region where Motorola outsells Nokia is North America. If we had UK and other European market data, you'd see far higher Symbian phones among those that were replaced by the iPhone. And most of the smartphone types listed in the report are of the "PDA-style" smartphones ie Palm, Blackberry etc. rather than the European/Asian smartphone types like SonyEricsson, Samsung, LG etc.

Blackberry - 13% of those with an iPhone replaced a Blackberry. I would guess some of the unsatisfied users - perhaps not even half, but part - are among these users. This is a significantly large number but it does reflect the disproportionate amount of Blackberries that are on the North American continent, last year RIM reported that 75% of all Blackberrries were still in North America - which has only 8% of the total global cellphone subscriber base and a far lower rate of premium and smartphones than teh worldwide average - and only 25% of total Blackberry installed base was in the rest of the world. So this relatively high cannibalization rate of Blackberries, reflects more the installed base of US smartphones than strictly a competitive game. I'd venture to guess, that in Europe the proportion of Blackberry users to abandon that device in favour of the iPhone is far smaller than miscellaneous other smartphones, expressly because the Blackberry is so good at the single most important feature (SMS text messaging) - so if you decide to carry two, and already have a BB, it makes sense to drop the "other" phone in favour of the iPhone rather than the BB. But like I said, the USA market is skewed, so this number to my mind is not as alarming as it might seem.

Windows Mobile devices were 14% of the discarded devices, Palm smartphones were among 7% and only 4% were Symbian devices. This seems to support my thinking, that once customers were willing to consider a 500 dollar smartphone and did a bit of comparison shopping, the Nokia N-Series etc looks very appealing. The success of the N-95 last year is certainly partly due to the big hype and interest around the iPhone. And if you are already a smartphone user on say a Nokia, you will tend to like the way Nokias work and tend to prefer that user interface (especially for SMS texting..)

And 26% replaced some other phone (typically a non-smartphone) and 10% did not replace anything. That also is an interesting number. If 33% carry two phones, and 10% did not replace any phone, then 23% of current iPhone users were carrying two phones already prior to getting the iPhone.. I think it is fair to assume that over 99% of iPhone users had had at least one mobile phone (cellphone) before the iPhone..  So the iPhone user base is already among the very forward-leaning cutting edge American mobile telephony users, 23% of them had two or more phones prior to getting the iPhone (near the global average of 28%) and if 68% of them use SMS daily, that is also well ahead of the US average, and most of that behaviour was probably not triggered by the iPhone but was already a learned habit prior to acquiring the iPhone.

There is much more in the latest Morgan Stanley report, its good reading. Thanks Robin for pointing it out to us.

Comments

[Giff Gfroerer, i2SMS]

Tomi,

Great read. You state "SMS texting is clearly not a deal-breaker for iPhone users, some 68% of iPhone users send or receive SMS daily on the iPhone and 95% use SMS texting occasionally." Not too surprising to me here in the states.

Our SMS numbers continue to grow month to month. Email is still the preferred mode of communication for those over 35, SMS for those under 35. If you did a breakdown on age for this survey, and compared to those emailing to texting, you would most likely see these numbers relate quite well.

In the end, we are excited to hear that 95% use SMS occasionally. Great figures that continue to show growth in the states. And note, if we haven't been texting for as long as other countries have, then the lack of ease of texting on an iPhone compared to the N95 may not be as obvious to newer texters as it is to texters of 5 years or more.

Giff

[mark]

The Rubicon study was a survey of 460 randomly-selected iPhone users in the US. Here's the link to the pdf: http://rubiconconsulting.com/downloads/whitepapers/Rubicon-iPhone_User_Survey.pdf

The Rubicon study doesn't provide a point of comparison for other phones for the satisfaction rating, but Changewave has also done quarterly mobile user satisfaction surveys (I think also US-based, but usually 3000-4000 respondents). For consumers, iPhone has consistently scored 70%-80% in VERY SATISFIED, with RIM second at about 55% each time, and the rest (LG, Nokia, ..., Palm) between 40 and 30%. iPhone is pretty much off the chart, and other than RIM, there is a huge drop-off (Again, this is the US). For corporate users, iPhone scored 59% VERY SATISFIED, with RIM at 47% (though there was a decline of 8 pts for RIM since iPhone released). Note these are "VERY SATISFIED" numbers.

So why not higher than 80%? Altho most people think Apple "fanboys" give Apple a pass, I think Apple "fanboys" (Mac fanboys, in particular) actually expect a lot from Apple in terms of implementation quality; they only give Apple slack in terms of schedule (i.e., allowing Apple to deliver late so as to ensure quality).

[Alan Moore]

Dear Mark,

I think you are correct in your observations. I believe that Apple have set the bar marked highest. You shoot for the stars to reach the moon - right? Apple have taught us to expect a user experience that is perhaps unique.

But also Apple fans - me being one of them would expect nothing less and would certainly point the finger if we thought that our user experience was not what it should be.

This is about being task and end-user orientated - few companies in my opinion are prepared to be that focused.

Thanks for posting

Alan