Note to Apple: Users Value Price Over Phone

The allure of a specific phone ranked No. 7 among the factors consumers consider when buying a new phone, Nielsen says.
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BOSTON (TheStreet) -- Dear iPhone users: It's not about you.

We're talking to you, fanboys. We realize you're all geeked up on that

Gartner

(IT) - Get Report

report released earlier this month that said

Apple's

(AAPL) - Get Report

iPhone sales were up 10.5% from the same time last year. Guess what? Nobody cares.

According to a

Nielsen

report based on findings from its 2009 Mobile Insights Survey, the merits of a specific phone ranked No. 7 among the factors consumers consider when buying a new phone -- the same position held in pre-iPhone 2006. They cited price as their top concern.

While the Gartner report highlighted the iPhone's sales growth, it also pantsed Apple's 13% smartphone market share by placing it squarely in the shadow of

Research In Motion's

(RIMM)

nearly 19% stake and

Nokia's

(NOK) - Get Report

45% stranglehold on the sector.

In fact, according to estimates from mobile advertising server AdMob, there are as many iPod Touch units (11.5 million) in the U.S. right now as there are iPhones (13.25 million). Blame Apple's exclusivity agreement with

AT&T

(T) - Get Report

(and AT&T's service problems) if you'd like, but analysts won't be downloading an excuses app any time soon.

"People care about the iPhone, but not about anything else," says Roger Entner, Nielsen's senior vice president of research, insights and telecom, and author of the report. "Let's stop pretending that this is about handset exclusivity and that people are crippled and stifled by these exclusive contracts. They don't give a (expletive)."

According to Entner's findings, 23% of people who signed up with AT&T joined because of the iPhone. For the smartphone market as a whole, that group is in the mid-single digits. Globally, judging by an

In-Stat

report released in June, those choosing AT&T for the iPhone are an infinitesimally smaller piece of the pie -- considering only 11% of mobile users embrace 3G technology at all. In four years, iPhone 3G, 3GS and other 3G users still won't make up 30% of the market. Nielsen's findings show that most people care about cost, availability of family plans and sound quality.

"A great number of consumers pick a company like

Verizon Communications

(VZ) - Get Report

because they prefer the service," says Jeff Blyskal, associate editor at Consumer Reports. "If you get the iPhone, you have to go with AT&T, but the market shows that the people are going with better service."

AT&T may have shrugged off the static when iPhone 3GS sales helped it fetch 1.4 million new U.S. subscribers last quarter, compared to Verizon's 1.1 newcomers. However, its 79.6 million U.S. subscribers still pale to Verizon's 87.7 million, and it unanimously finished behind Verizon in Consumer Reports' last mobile phone service survey in January. Network quality may not be as important as it was in 2006, when Nielsen cited it as the No. 2 concern for wireless users, but it still ranks a few rungs above specific handsets and has made AT&T the public punching bag for most of the iPhone's problems.

"Apple is in the driver's seat of this relationship," Entner says. "Apple is wearing a Teflon suit, and all the eggs that get thrown at it bounce off and go right onto AT&T's face."

Apple and AT&T are making baby steps toward value, offering the original recipe model for $99 and forcing Verizon,

T-Mobile

and

Sprint Nextel

(S) - Get Report

to do the same for some of their outdated

HTC

,

Samsung

and BlackBerry models. T-Mobile actually offered a new Blackberry Curve 8520 for $50.

Entner says the iPhone will one day spur phone charges to be measured in bytes instead of minutes and force all carriers to go global, but that day remains far off. As long as price and plans rule the day and getting a clear signal between two Code Division Multiple Access (CDMA) phones 10 miles apart trumps linking a Global System for Mobile (GSM) phone in Cleveland to another in Paris, the iPhone will be just another plaything in the tech toy box.

"We always recommend that you shop for the plan first, go with the best quality service and then look for the phone," Blyskal says. "If you really have to have an iPhone, you're going to have to go with AT&T, and that's a personal choice."

One, it seems, more people are willing to blog about than make.

-- Reported by Jason Notte in Boston

.

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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.