Cost-Concious Consumers Opting For iPod Touch Over iPhone?

This story was written by Dianne See Morrison.
Mobile ad network AdMob released December figures Thursday, and while our usual caveat that these figures are from only one vendor still stands, they nonetheless highlight some interesting trends. Most notably, AdMob saw a jump in the number of ads it served up to iPod Touch users, which surged from 86 million in November to 292 million in December. The requests doubled overnight on Christmasrevealing that many received an iPod Touch as a giftand remained strong throughout the close of the month.

So what's behind the boom and what does this mean for the iPhone? BusinessWeek puts the boost down to economics. While the iPod Touch is priced from $229-399, it is still plenty more affordable than the iPhone, as consumers aren't saddled with a pricey monthly phone plan. Plus, with the growing number of games on Apple's App Store, the iPod Touch is presenting buyers with an alternative to a Nintendo DS or Sony (NYSE: SNE) PSP. Indeed, Kleiner Perkins Caufield & Byers partner Matt Murphy, who manages its $100 million iFund for App Store developers told BusinessWeek that aside form becoming a "legitimate gaming platform," young people are using it for social networking and other applications. He noted, "It's becoming a computer replacement." BusinessWeek also references a note from BMO Capital Markets analyst Keith Bachman that found Canadian telco Rogers Communications sold 130,000 iPhones in the December quarter, significantly lower than 235,000 in the previous quarter and wondered if more cost-conscious consumers are turning away from the iPhone to the iPod Touch instead. In Canada, Rogers charges $60-$70 Canadian dollars ($51-$60) a month and customers are locked into a three-year plan. In the US, AT&T (NYSE: T) charges from $69-$130 for individual monthly plans that run a minimum of 24 months. So yes, at that price, carrying around a cheaper phone to make calls along with your iPod Touch makes sense.

By Dianne See Morrison