iPhone Running Away With Smartphone Market

Apple’s iPhone is a runaway hit worldwide, as I noted last week, and again earlier today based on a new set of numbers from Japan.

I just got a look at a summary of Piper Jaffray analyst Gene Munster’s report to clients, which includes the incredible fact that 38 percent of 3GS customers were upgrading from the original iPhone, validating the idea that the only way for a customer to upgrade from an iPhone is to buy another iPhone.

The report of iPhone 3G S sales is based in part on observations of Apple and AT&T stores in New York and Minneapolis, estimates of the rates of sales, the hours of operation and the number of units supplied to each store, as well as surveys of 283 attendees.

More highlights from the report:

• Roughly one million iPhones sold worldwide in three days, despite activation problems;
• 400,000 sold in the United States, 250,000 in the United Kingdom, an average of 18,000 in 19 other countries;
• 380,000 sold in the first two days (compared with 270,000 in a day and a half last year);
• Sales were actually slowed by the approximately 15 minutes it took to activate each phone (sales at Apple stores last year took about 1 minute each);
• Two-thirds of customers purchased the 16 GB iPhone (compared with last year, when 91 percent bought the top-of-the-line 8 GB model);
• 39% of customers were PC users (versus 25 percent last year);
• 38% of customers in the United States were new to AT&T, as opposed to 52% last year.

Why is Apple dominating the market like this? Giff Gfroerer, president of text message vendor i2SMS, wrote in an email that

what the iPhone did was give the normobs [normal mobile users] of the world a simple phone that they could understand. The [Nokia] N97 might have the best technology, but you need a Ph.D. to operate it.  The iPhone gives the end user what they need in a very simple format and is not concerned with functionality the normob does not need.

I see. Give people what they want and they might buy it. In droves. Pretty simply concept. Hard to execute.