Eye on Microsoft
About this Blog:
This is Shane O'Neill's blog about Microsoft's corporate strategy and its various software and services — the good, the bad and the ugly.
Are Smartphones Threatening Windows Laptop Sales?
When Apple didn't budge on prices for its new MacBooks a few weeks ago, I thought it was typical hubris. I felt it was Apple saying, 'we don't compete with those lowly Windows PCs, so they can drop prices all they want. We have our trendy high-end buyers set in stone. We're in a different league.'
I still feel that way, but it's become clear to me that there was a bigger strategy at play. Apple is not going to cripple Windows laptop sales by hitting them over the head with a pricey MacBook, but by sweeping the legs with that little computer in your pocket: the iPhone.
Recent data from comScore shows that the iPhone is successfully bridging the worlds of rich and poor. According to the ComScore report, consumers below the median household income are buying iPhones in droves.
The iPhone still remains the instrument of the elite (43 percent of iPhone users have household incomes of $100,000 or more), but iPhone adoption since June 2008 rose 48 percent among those earning between $25,000 and $50,000 per year and by 46 percent among those earning between $25,000 and $75,000, according to comScore.
Those growth rates are triple that of those earning more than $100,000 per year.
It's funny how things change. I remember when the iPhone first came out in June, 2007, costing an average of $550. I honestly thought Paris Hilton and her friends would be the only people to buy the damn thing. How silly that seems now.
The iPhone 3G currently goes for an average of $250 and people who probably can't afford to have both a smartphone and a laptop are choosing the iPhone (or possibly the even cheaper G1 or Blackberry) to fulfill all their needs.
This buying shift will likely carry over into the holiday season. There are good reasons why middle and lower income earners will opt for an iPhone or a G1 or a Blackberry instead of an $850 laptop or even a $350 netbook. A smartphone, though cheaper, does not give you the same user experience as a laptop. But depending on what you want from a laptop, a smartphone may be good enough in lean times like these. If what you want is access to the Internet, e-mail, and your music and photo collections, an iPhone will do you just fine.
This is definitely bad news for Microsoft's lost child Windows Mobile, but does this smartphone buying frenzy have enough momentum to hurt Windows in general? Windows laptops are losing out to cheaper netbooks, but will they also be cut down by smartphones?
Let me know what you think.
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