Michael Waterson, an economics professor at the University of Warwick, has just completed a study that monitored rocketing sales of the
iPhone 4 on the online auction site eBay just after the product was launched in the UK. He is predicting that consumers will once again pay well above the retail price of the iPhone 5, which is expected to launch in the next few weeks.
Waterson’s study monitored sales of the iPhone 4 on eBay for six weeks after it was launched in the UK. He found people paid between £600 and £1,500 on eBay for the handsets, which normally retailed at around £499 to £599 in stores.
Waterson says prices appeared to be driven up by consumers who wanted the “snob value” of being an early adopter of the new iPhone.
Higher prices were paid for phones that were not locked to a particular mobile network and also if the seller was willing to send the phone outside the UK, possibly to a country where it had not yet been introduced.
“We monitored all eBay transactions on the iPhone 4 for six weeks from 24th June last year when it became available in the UK,” says Waterson. “The extent of eBay activity on this product was extraordinary, with total transactions amounting to around £1.5m for 2,183 sales.
“For the 16GB version of the phone, 98 percent of sales completed at a value in excess of the listed retail price of £499. The average price was £640.35 and the maximum achieved was £1,180. For the 32GB version of the phone, 97 percent of the sales completed above the listed retail price of £599. The average price was £778.73 and the maximum price achieved was £1,551.”
Although the iPhone 4 was still officially on sale in stores at this time, there was a delay in getting stocks to retailers.
“The product was in short supply at this time and so it’s probable that demand was influenced by immediacy or ‘snob value’. It will be fascinating to see what will happen to the iPhone 5 as the launch is eagerly anticipated. I think we will see the same level of activity,” says Waterson.
“It seems we are willing to pay well over the retail price for the kudos of being one of the first people to own the latest piece of technology. This study suggests technology is the one area where we are not prepared to tighten our belts in the current financial climate.”
Phone 5: No clear winner among mobile, carriers
AT&T, Verizon Wireless, and reportedly Sprint each stand to grab a healthy slice of the market demand for the new iPhone. But each carrier brings something different to the table, making it difficult to predict which one might benefit the most, says ComScore.
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AT&T holds the dominant share of existing iPhone customers. As of July, 81.9 percent of iPhone subscribers were with AT&T, leaving only 15.1 percent for Verizon, according to the report.
Following the launch of the new phone, all current iPhone carriers will likely continue to offer the iPhone 4 at a discount. AT&T could pick up even more customers by also continuing to sell the iPhone 3GS cheap. But that advantage may be short-lived since at some point, the older model iPhone will cease production, especially if Apple launches a low-cost iPhone 4.
Though Verizon's percentage of iPhone users may be low, its satisfaction rates continue to be high. In July, ComScore found that more than 76 percent of Verizon smartphone customers graded the carrier with a score of 8 or higher out of 10, compared with 68 percent for other carriers. Among existing iPhone users, 23 percent said that they will switch or are seriously thinking of switching to another provider, opening the door for more business to come Verizon's way.
However, Sprint also stands to do well if it gets custody of the new iPhone as it would be the only carrier to still offer an unlimited data plan. That benefit alone could scoop up new customers and prompt current data-slurpping users to switch carriers to grab the lower-price plan. However, questions have been raised as to how long Sprint could retain its unlimited plan, especially given a flood of iPhone users gobbling up data that the network might having trouble supporting.
No matter how the carriers fare with the new iPhone, the one company certain to come out ahead is Apple, ComScore said.
"Putting the operators aside, the one clear winner so far would appear to be Apple, which stands to gain market share from the additional market sectors penetrated by Sprint and providing another device option for customers of AT&T and Verizon," the report noted. "As the Android platform continues to grow in popularity, it will be interesting to see the role the iPhone 5 plays in the platform share race and how this will ultimately impact the operator industry."
