Cheaper iDevice models driving teen interest

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Apple's 'discount' prices of carry-over products are generating a growing interest in younger would-be customers who want iOS devices but can't necessarily pay the premium for new generation items.

According to investment bank Piper Jaffray's teen survey, 40 percent of high school students plan on buying an iPhone in the next six months possibly due to more affordable previous generation models like the iPhone 3GS.

The 23rd semi-annual nationwide study that surveyed 5,600 high school students showed that the number of teen iPhone owners continues to rise, jumping up to 34 percent from 23 percent in Fall 2011 and 17 percent last Spring.

Senior Research Analyst Gene Munster believes that the spike in both iPhone ownership and intent to buy is being driven by more affordable models like the 3GS, which ranges in price from free to $49 on contract.

The percentage of surveyed teens looking to buy a new Apple handset rose to an all-time high of 40 percent versus 38 percent from the end of 2011. Intent-to-buy was distributed evenly between owners and non-owners as both demographics claimed a 40 percent interest in making a purchase within the coming half year.

Tablet ownership and interest is also growing in the teen market, and some 34 percent of students already own a tablet. The number is up from 29 percent from Fall 2011.

Just as with the overall tablet market, Apple's iPad is dominant in the teen sector and enjoys a 70 percent share of the market followed by Android and the Kindle Fire with 19 percent and 11 percent, respectively.

Of those teens who don't yet own an tablet, 19 percent said they planned to buy one in the next six months, with 80 percent of that group looking to buy an iPad. When the third-generation iPad was launched in March, the iPad 2 saw a significant price drop that makes it a more attractive option for cash-strapped students.

Source: Piper Jaffray

Product synergy is an important factor as some 53 percent of iPad owners stayed within the Apple product ecosystem and also own an iPhone.

Munster reiterates an overweight rating for AAPL stock, and expects the company's popularity with young users to create a growing base of loyal customers.