TMO Reports - Analyst: 18% of Surveyed Interested in Apple-Branded Phone

by , 5:25 PM EDT, September 6th, 2005

18% of 200 people surveyed by Piper Jaffray expressed interest in buying an Apple-branded cell phone. This could be of particular interest to Apple because the cell phone market is 13 times as big as the digital media device market. According to Piper Jaffary, some 774 million cell phones will be sold worldwide in 2005, while 57 million digital media devices (MP3 players, iPods, and competitors) will be sold during the same time.

According to Mr. Munster, such a phone has not been announced by Apple, and shouldn't be confused with the iTunes cell phone that many expect Apple to unveil Wednesday, September 7th, in a media event. That phone is expected to be a Motorola-branded product that was announced in July of 2004.

Instead, Piper Jaffray's survey was designed to measure interest in an entirely new and unannounced device that would combine cell phone and iPod capabilities, designed and marketed by Apple in an attempt to further leverage the company's growing brand.

While Apple has no foothold with cell phone carriers, Mr. Munster said that Apple could work with an original design manufacturer (ODM), who could then help the company work out deals with carriers. The research note said that there are already ODMs working to produce niche, high-end cell phones with whom Apple could work.

Of further note is that the actual results of the survey showed a staggering 45% of respondents showing interest in an Apple-branded phone. Those results were skewed, however, by the fact that 18.5% of respondents already owned an iPod, a figure much higher than the actual 7.5% market penetration of the iPod, while 10% owned a Mac, far higher than Apple's actual market share.

Accordingly, Piper Jaffray arrived the 18% figure as "normalized interest" through statistical analysis. Additional methodology was used to arrive at that figure, as well.

The survey was conducted among 20-55 years old across all incomes. Most of the respondents were in the Midwest, and all were in the U.S. The medium price respondents said they would pay for such an Apple-branded device is US$255.

Apple's stock closed Tuesday at 48.80, a gain of 2.58 (+5.58%), setting a new record. Mr. Munster maintained his "Outperform" rating on the stock, as well as a 12-month price target of $52.50.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

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