Brisk Apple iPhone Sales Dominated by Upgrades

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Brisk Apple iPhone Sales Dominated by Upgrades
Existing iPhone owners upgrading to the iPhone 4 were mostly responsible for draining the stock of the coveted phone at retail stores across the U.S. Thursday. Seventy-seven percent of iPhone customers in line at Apple Stores on Thursday were repeat iPhone users, according to researchers at Piper Jaffray.

The Piper Jaffray numbers come from a research it shared with its clients and also reported by publications such as Fortune. The survey results give an interesting view of who Apple's die hard iPhone customers, willing stand in line for hours, really are. Here are the highlights.

Overwhelming Repeats

Piper Jaffray reports that 38 percent more people upgraded their iPhone the first day the latest model became available compared to last year. In 2009 Jaffray reported 56 percent of iPhone 3GS buyers on launch day were upgrading their handsets and 38 percent of iPhone 3G buyers from 2008 did so.

"Apple has in three years built brand loyalty in the phone market that compels users to upgrade to the latest version and wait in line for one to six hours to pick up their iPhone," writes Piper Jaffray analyst Gene Munster.

Smartphone Loyalty

As far as wooing new iPhone users from other smartphone bases, 6 percent of non-iPhone users were switching from Research in Motion's Blackberry, 3 percent from Google's Android and 2 percent were from Nokia.

Piper Jaffray's findings appear to back up results from other surveys that suggest customer loyalty is relatively high for most, but not all smartphone brands. A Nielsen study recently found that 80 percent of iPhone users and 70 percent of Android users intended to stick with their smartphone brand. Only 47 percent of Blackberry users, however, were interested in sticking with RIM.

It's All About the Features

Perhaps unsurprisingly Piper Jaffray found that 90 percent of iPhone 4 buyers wanted the device for its new features such as the video calling feature, FaceTime. Only 10 percent of iPhone 4 customers were getting the new device because their mobile phone plans had expired.

Getting Worse for AT&T

All those repeat iPhoners are good news for Apple, but may be bad news for AT&T. With 77 percent repeat iPhone users, only 16 percent of those surveyed were new to AT&T. That's down from 28 percent new AT&T customers in 2009, 38 percent in 2008, and a whopping 54 percent in 2007, when the original iPhone debuted. Then again, these are only launch day results; it remains to be seen whether AT&T's recent iPhone monthly fee price cut will attract new users.

While Apple has stood by AT&T as the iPhone's carrier of choice, criticisms continue to mount against AT&T's quality of service. ChangeWave Research recently found that AT&T had the lowest rate of customer satisfaction among the major cell phone carriers. Another survey by ChangeWave said AT&T also had the most dropped calls of any major carrier. It's doubtful AT&T's recent iPhone pre-ordering snafu helped matters either. Regardless, it looks like U.S. iPhone users won't have a choice beyond AT&T until at least 2012.

Munster also said Piper Jaffray expects Apple to sell 1 million to 1.5 million iPhones by Sunday including pre-orders, according to Fortune. Those sales numbers would line up with previous iPhone launch weekends. In 2008 and 2009, Apple said it had sold "more than one million" iPhone 3G and iPhone 3GS devices during their respective launch weekends.

Connect with Ian on Twitter (@ianpaul).

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