One third of high school students choosing Apple for next handset

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While a new wave of smart phones are believed to be chipping away at Apple's share of the portal media player market amongst high schoolers, interest in the company's iPhone among that same teenage demographic is up sharply since the launch of the iPhone 4 to a new all-time high.

Investment research firm Piper Jaffray recently completed its 20th bi-annual teen survey, a national study which polls around 6,000 students around the country about their interest and buying patterns in mobile phones, portable media players and online music services.

According to the results of that survey, the percentage of teens that own an iPhone currently sits at 14%, which is essentially unchanged from the same survey conducted last year. However, interest in purchasing an iPhone in the next 6 months rose to an all-time high of 33%.

"Historically, interest in buying an iPhone has correlated to future market share gains among teens, although the last two surveys have not shown the same share gains we saw when the iPhone first launched," said analyst Gene Munster. "Interest among teens in purchasing an iPhone has grown steadily since Apple introduced the iPhone, and we expect this to continue."

At the same time, Apple's market share amongst teens in the portable media player (PMP) category took a hit, falling to 78% from 92% in a similar study six months ago. Share gains from Sony and the "other" category — comprised mostly cheaper music players — could be causing this decline, according to the analyst.

"Also, students may be considering their smart phones in the 'other' category, as 50% now listen to music on their phones," he explained.

Overall, 90% of students reported owning a PMP, up from 86% six months ago. Apple remains the dominant force in the market, with its lead seemingly swelling as the market nears saturation.

"In light of this, we see Apple turning its focus to secondary iPods like the shuffle, and iPods with more features like the iPod touch," Munster said. "More specifically, Apple recently announced Game Center as a part of the new mobile operating system for iPod touch."

Game Center is a social gaming network (like Xbox Live) and highlights Apple's focus on the gaming sector. Munster sees this as an important one for teens and their mobile devices, and he believes the Cupertino-based company has therefore captured the early lead.


As for how high schoolers are obtaining the music they put on their PMPs and smartphones, the percentage downloading their tunes over the Internet remains high at 76%, essentially unchanged since last year.

However, most (66%) are using free (P2P) music sharing networks instead of paying for music legally, according to Piper Jaffray's findings. In the online music store category, iTunes' share remains high, approaching saturation, at 95%.


"With the addition of new features to iTunes software and the Ping social network we believe Apple is well-positioned to hold its lead and even extend it," Munster said. "Also, the App Store has likely been a driver for teens to use the iTunes Store for free apps, then look to purchase music in the music section of the store."

The average age of students in Piper Jaffray's survey was 16.3 years old; 51% of which were male and 49% female.