• by Mark Walsh  @markfwal, July 21, 2010

Apple's latest earnings report showed the iPhone continues to power the company's growth, with profit up 78% from a year ago and revenue up 61% to $15.7 billion. And that's including only two days of iPhone 4 sales before the end of Apple's fiscal third quarter. The company has said it has sold 3 million of the devices so far, despite the controversy surrounding its antenna reception problem.

But a new Yankee Group study focuses not so much on how many people are using the iPhone as who, and how they're using it. With an average age of 32 and household income of $100,000, iPhone owners represent an attractive demographic for mobile advertisers and operators. Other smartphone owners, by comparison, are 34 on average with income of $85,000.

People also tend to use the iPhone more for things other than talking. Yankee Group's survey found that iPhone users spend 37 minutes a day browsing the mobile Web, compared to 32 for other smartphone users and 19 minutes for all mobile customers. Not surprisingly, they're also more enthusiastic app users, downloading 12.6 apps during the past 90 days. That's more than twice as many as other mobile subscribers.

On top of that, iPhone users are also more apt to conduct mobile transactions including banking, making payments and comparison shopping from their handsets. To explain the iPhone's success as a mobile media device, Yankee Group points to factors including the intuitive touchscreen, required data plans, the ease of one-click buying via iTunes and the App Store's extensive catalog of titles as well as 300 retail stores worldwide.

During its earnings conference call, Apple said more than 60 million people visited those stores in the last quarter, spending $2.7 billion.

Yankee Group also made a case for the iPhone halo extending to wireless partner AT&T based on three-quarters of customers rating the carrier's service 8, 9 or 10 on a 10-point scale. "That percentage is five points higher than AT&T subscribers in our survey overall, and four points higher than the average mobile phone or smartphone user," stated the study, based on feedback from 3,425 mobile subscribers.

Assuming the survey included iPhone customers in New York and San Francisco, this finding is a little hard to explain. iPhone users complained long and loud enough for AT&T to undertake efforts to upgrade service in those cities beginning late last year. The true test of how favorably customers view AT&T will come when and if the long-rumored Apple partnership with Verizon Wireless for the iPhone finally comes to fruition.

Faced with the iPhone juggernaut, Yankee Group recommends that other handset makers should not try to beat Apple at its own game. "Android-based phones such as the Motorola Droid and Droid X have made headway by touting their openness and customizability, while competitors like RIM have focused on security and compatibility with enterprise systems. But competitors have to choose a differentiation and stick with it to win," according to the report, which argues that Research in Motion's switch to touchscreen phones with the BlackBerry Storm, for instance, only confused customers about how it was really different.

Competitors should also try to create long-term value for consumers and operators, as Apple has done, by combining its user-friendly interface with a mandatory data plan. "Other manufacturers may want to focus on other lifetime value propositions, such as cloud storage for mobile information or life-streaming apps such as those offered by the now-discontinued Microsoft Kin," advises Yankee Group. Between the iPhone and the Kin, however, using the Apple device as a model for long-term success is probably a better idea.