iPhone Buyers Have No Regrets

Early iPhone owners are overwhelmingly happy with their devices, a survey out Friday says, and Apple (AAPL) and AT&T (T) are luring customers from rivals as a result. In one of the first such studies, 90% of 200 owners said they were "extremely" or "very" satisfied with their phone. And 85% said they are "extremely" or "very" likely to recommend the device to others, says the online survey conducted and paid for by market researcher Interpret of Santa Monica, Calif. The firm surveyed 1,000 cellphone users July 6-10.

The findings are "pretty much off the charts," says Jason Kramer, Interpret's chief strategy officer.

The firm's clients are in the entertainment and mobile industries.

Kelly Croy, a seventh-grade teacher in Oak Harbor, Ohio, is a happy buyer. "Overall, the coolest device I've ever owned," he says.

Apple launched the combination cellphone, iPod music player and Internet gadget with much fanfare on June 29. AT&T is the exclusive service provider.

Greg Joswiak, Apple's vice president of worldwide marketing for the iPod and iPhone, said positive word-of-mouth reaction is "critically important" to any product, as it was with the iPod. "We're getting even greater reaction to the iPhone," he says.

Apple still faces challenges. The high cost of the two iPhone models — $499 and $599 — ranks as the No. 1 reason consumers interested in the device did not buy one, the survey says. Those consumers said they would pay an average of, at most, $180.

Owners said there's room for improvement. At the top of their wish list: longer battery life, faster Internet speed and more internal memory. Other factors, including the lack of a physical keyboard, were well down on their lists.

The iPhone is extending Apple's reach, the survey says. Three of 10 buyers were first-time Apple customers. For 40%, iPhone is their first iPod.

Apple could "change the physics in the phone market," if it is as successful building loyalty to the iPhone as it has been in the music and computer markets, says Gene Munster, senior research analyst at Piper Jaffray.

Interpret's survey also bodes well for AT&T. Half the buyers switched from another carrier. Of those, 35% paid an average $167 to break a contract. "We thought AT&T would be more of a barrier to entry," says Munster.

Another boon for AT&T: IPhone owners surveyed expect to pay about $35 more in monthly service fees compared with their previous cellphones.

Contributing: Jefferson Graham

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