iPad halo effect brightens iPhone prospects

Gregg Keizer
10 August, 2010
View more articles fromthe author

Apple’s new iPad casts a “halo” over the iPhone, with owners of the tablet about twice as likely to want the company’s smartphone as consumers who own neither, a Nielsen analyst said today.

“It’s the common operating system,” said Roger Entner, head of research for Nielsen’s telecommunications group. “That, and the ability to share apps between the two. Any investment you make in an app for the iPad, you can leverage on the iPhone, and vice versa.”

According to a Nielsen survey of more than 64,000 mobile subscribers conducted between April and June, 51 percent of those who own an iPad but not an iPhone said that their next smartphone would be Apple’s. That number was almost double the 26 percent who currently owned neither an iPad or iPhone , but who tagged the latter as their next smartphone.

Those numbers, however, were puny compared to the loyalty of consumers who already own an iPhone.

Of people who own both an iPhone and an iPad, 91 percent said that they would buy a new iPhone the next time they purchased a smartphone. And 85 percent of those who own an iPhone but not an iPad said the same.

“The big thing is that people with an iPhone really don’t look anywhere else,” said Entner, for their next smartphone. “It’s like having the most beautiful woman in the world on your arm. Why would you look anywhere else?”

In a blog post last week, Entner said that Apple has created a “mutually-reinforcing ecosphere” that attracts new customers and retains current customers. The common operating system – now dubbed iOS – on all its mobile devices, including the iPhone, iPad and iPod touch, is a primary factor in Apple’s ability to keep customers, and get buyers of one device to purchase another in the line-up.

But the App Store plays a big part, too.

“Being able to share the same applications they purchased on all their other devices free of charge leads consumers to add more devices from the same universe, and effectively retains them as upgrade customers,” said Entner.

Applications purchased for the iPhone can run on the iPad, although they take up only a portion of the tablet’s screen; if expanded, they can look pixelated.

Other findings from the Nielsen survey confirmed that consumers aged 25 to 36 who reported incomes over US$100,000 are the most likely to buy Apple, a fact Entner called a “no brainer”. Almost 40 percent of iPad owners reported earning more than US$100,000, for example, compared to about 20 percent of mobile subscribers overall.

But Apple has a solid shot at convincing older consumers to also tap the iPad, Entner maintained. Currently, just 15 percent of iPad owners are 56 years old or older, compared to the 33 percent who own a mobile phone.

“I see this as similar to text messaging, which started out with the under-18 age crowd,” Entner said. “The 25-to-36 group will show [the iPad] to their parents, tell them, ‘You’re always complaining how hard it is to use a PC, look how easy this is.’ If iPad owners go out and evangelise, parents is the first segment they’ll evangelise.”

Other research analysts have argued an iPad halo exists. In May, consumer spending research firm ChangeWave claimed that rather than cannibalise sales of Macs, especially Apple’s laptop line, the new tablet was actually contributing to Mac sales because of the publicity it attracted last spring and the traffic it routed into Apple’s retail stores.

According to Apple’s latest earnings statement, the company sold nearly 3.3 million iPads in the second quarter of 2010, along with 8.4 million iPhones and a record 3.5 million Macs.

Leave a Comment

Please keep your comments friendly on the topic.

Contact us