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iPhone is overpriced, say consumers

People in the US not willing to pay £250

Consumers in the US aren't willing to pay what Apple may ask for the iPhone. However, if the price drops they'll switch their mobile service to AT&T in order to get Apple’s new handset, according to results of a new survey.

Online market research firm Compete surveyed 379 people in the US, most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device. The iPhone is a combined music player and mobile phone that Apple plans to start selling in the US in June.

Among the 26 percent of respondents who said they're likely to buy an iPhone, only 1 percent said they'd pay $500 (£255) for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.

Forty-two percent of those who said they're likely to buy the phone said they'd pay $200 to $299 (£102 to £153).

The iPhone will be available only to subscribers of Cingular Wireless, now part of AT&T. In a blow to the operator's competitors, 60 percent of those in the survey who said they were likely to buy the phone said they'd switch their mobile operator in order to get it.

While the iPhone has been discussed as a competitor to other handsets like Research In Motion's BlackBerry, the two serve very different markets, said Andy Neff, an analyst at Bear Stearns who participated in a conference call to discuss the results of the study. "Even though there's talk about this as an alternative to RIM, it's not a corporate product," he said. Instead, the iPhone is an indication of a broad shift toward smartphones and the emergence of niches within the category, he said.

The analysts were split on what price they think the device will ultimately retail for. Operators recently haven't been discounting phones in the similar price range as the iPhone, said Phil Cusick, an analyst at Bear Stearns.

However, Apple has been known to announce a product with one price and ultimately sell it for less. Apple TV, for example, was expected to cost $399 (£204) but sells for $299 (£153), he said.

The iPhone may start out at around $500 (£255) in the US because early adopters will pay that, said Neff. But pricing will likely drop by $100 to $200 (£51 to £102) to target the mass market, he said.


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