Survey: Pre, Android Threaten iPhone Lead

By Joseph Palenchar -- TWICE, 9/30/2009

Ann Arbor, Mich. - The iPhone is the unsurpassed leader in customer satisfaction among U.S. smartphone users, but Android-based smartphones and the Palm Pre are narrowing the gap, and more recent BlackBerry smartphones "pose a bigger threat" to the iPhone than earlier versions, according to a CFI smartphone report.

The online survey of 1,074 smartphone users was conducted by business consulting company CFI Group, which also found that "generic" smartphones based on the Windows Mobile and Symbian operating systems enjoyed the lowest customer satisfaction levels even though those systems appear in the majority of smartphones. "The generic smartphone is unloved, unappreciated, and unlikely to encourage any devotion among its users," the report said. "Its main role appears to be as a stepping stone to a branded smartphone."

In assessing loyalty to specific smartphone models, CFI found on a 0 to 100 point customer-satisfaction scale the iPhone scored an 83, followed closely by Android and the Palm Pre at 77 each, BlackBerry at 73, the Palm Treo at 70, and other smartphones, including Windows Mobile and Symbian, at 66. Scores above 80 are considered very good, while scores below 70 "are a cause for concern," the company said.

CFI also found that 92 percent of iPhone users describe their iPhone as the "ideal smartphone," followed by 58 percent of Android users, 56 percent of Palm Pre users, 49 percent of BlackBerry users, 16 percent of Palm Treo users, and 19 percent of Windows Mobile and Symbian smartphone users.

"Android is an up-and-coming competitor to the iPhone," the report contended. "Customers like using the Android and its applications, and as newer Android-compatible phones are released, the hardware gap with iPhone will diminish." As for Palm's Pre, "the device "is a strong entry for Palm into the new smartphone market," but the device "trails badly in the applications area." If Palm can shore up the Pre's applications availability, "it will be even more competitive," CFI said. As for BlackBerry models, "legacy phones are a drag on BlackBerry's customer satisfaction," but BlackBerry "is narrowing the gap with iPhone with its newer phones," the company said.

Satisfaction with generic smartphones may be low in large part because consumers who buy them aren't really looking for a smartphone, CFI said. Generic smartphone users "are the most likely group to get their phone because of a deal or ‘just because' they ended up replacing an old non-smartphone with a new smartphone." Carriers, the report said, "are pushing these smartphones onto the customer." As a result, "There is no better way to harm customer satisfaction than to give customers something they don't really want and ask them to pay more [in the long run] for that privilege."

In another conclusion, the report said satisfaction with the iPhone hasn't translated into satisfaction with the AT&T network on which it operates. "[T]he exclusive iPhone relationship is not all positive for AT&T," the report said. Only 50 percent of iPhone users rate AT&T as their ideal carrier, and they would like to defect mainly to improve coverage, the report said. A total of 75 percent of AT&T's non-iPhone users, however, rate AT&T as their ideal carrier.

Much of the dissatisfaction can also be traced to the statistic that 40 percent of iPhone users churned from another carrier to get an iPhone, whereas only 12 percent off Android users and 9 percent of Pre users switched carriers to get their smartphone, the report said. "These [churned] customers are not predisposed to liking AT&T, and they make it clear in their lack of loyalty [to AT&T]," the report said. On a 0-100 scale rating overall carrier satisfaction, AT&T scored only 64 among iPhone owners who switched to AT&T but scored 72 among iPhone owners who didn't switch to AT&T.

"By forcing customers to join the AT&T network in order to acquire their smartphone, AT&T is in effect inviting satisfaction ‘saboteurs' onto its platform," CFI contended. "These dissatisfied customers worsen AT&T's word-of-mouth and raise AT&T's cost of doing business, from responding to calls to customer care to addressing inquiries by the media."