ChangeWave HotWire Blog

Apple Soars Behind iPhone 3GS Momentum

2009-10-27T13:40:59Z

By Jean Crumrine
October 27, 2009

These are heady times for the smart phone market, with consumer buying plans near record levels. Moreover, electronics spending in general shows signs of a pick up. But what impact are the new Apple iPhone 3GS and Palm Pre models having on the market?

A September 14-21 survey by ChangeWave Research provides an up-close look at the impact of the new Apple (APPL) and Palm (PALM) offerings – along with an update on Research In Motion (RIMM) and overall smart phone industry trends going forward.

The survey of 4,255 consumers shows strong growth continues in the smart phone market, with 39% of respondents now reporting they own a smart phone – up 2-pts since June and nearly double the level of two years ago.

Looking ahead, while the current survey shows a slight dip in consumer buying plans for the next 90 days, that’s to be expected in the aftermath of the huge iPhone 3GS and Palm Pre product launches back in June. A total of 11.6% now say they plan on buying a smart phone in the next 90 days – 3-pts less than in June but still one of the highest percentages ever recorded in a ChangeWave survey.

Smart Phone Demand: Apple vs. RIM vs. Palm

Current Market Share: RIM (40%) remains the current market share leader among consumers, but its fallen 1-pt since the previous survey and is at its lowest level in two years.

Apple (30%) has seen a huge market share jump since the previous survey. Not only has the iPhone 3GS release enabled them to gain 5-pts overall – for the first time it has also placed them within striking distance of the number one spot in the consumer market.

Palm (7%) remains far behind in third place, but we note that this is the first survey in nearly two years where their share hasn’t fallen – and that’s a clearly encouraging sign.

Next 90 Days: Going forward, Apple’s share of planned smart phone purchases has settled back somewhat after the huge spike of excitement it enjoyed in June from the iPhone 3GS release. Note that its 8-pt drop between June and September (from 44% to 36%) is far less than the 22-pt drop we picked up a year ago after the iPhone 3G launch.

What’s more, Apple remains the leader in terms of planned buying going forward – 36% of those who plan to purchase a smart phone in the next 90 days say they’ll get an iPhone.

RIM is still in second with 27% of planned purchases – up 4-pts since June, but below its percentage from a year ago. Palm, meanwhile, remains unchanged at 8% – which is not surprising given the burst of momentum it previously received in June with the Pre launch.

Cell Phone Customer Satisfaction

The Apple iPhone continues to maintain the highest customer satisfaction rating in the industry among major cell phone manufacturers – with 74% of owners reporting they’re Very Satisfied with their iPhone.

RIM ranks second with 43% saying they’re Very Satisfied, down 5-pts since June. Third place LG customers (39%) rate their cell phones a few points behind. Also, note that while Palm’s Very Satisfied rating is only 33%, it’s been on an upswing since the Pre entered the market.

Bottom Line

In the horserace among manufacturers, the release of the iPhone 3GS has led to a big jump in smart phone market share for Apple and has placed them within striking distance of Research In Motion – whose slew of models are still number one but have fallen to their lowest level in two years.

There are very few things for RIM to crow about in the current survey results. Besides its downtick in market share, the firm’s Very Satisfied rating among Blackberry owners has fallen 5-pts since June to its lowest level ever in a ChangeWave survey.

Also, while it’s up 4-pts in terms of planned purchases, that’s below its number of a year ago when new Bold, Storm and Pearl models were either already in stores or approaching release. In short, RIM has its work cut out to regain its momentum in the fourth quarter.

All this notwithstanding, RIM is expected to have multiple device launches and will introduce new services in the coming months. Moreover it continues to outperform in its core corporate smart phone market. Thus, despite RIM’s underperformance in the current consumer survey, longer term trends suggest that it is still well positioned for long term growth and will continue to remain one of the premier players in the rapidly expanding smart phone sector.

In terms of Palm, the new Pre model has helped reverse the firm’s long, multi-year slide. For the first time in nearly two years of surveys, their market share is no longer falling.

Paul Carton co-wrote this article

U.S. Consumer Spending Holds Steady in October - Key Retailers Showing Improvement

2009-10-23T18:30:53Z

By Jean Crumrine
October 23, 2009

Following two consecutive monthly improvements, ChangeWave’s latest survey of U.S. consumers shows the spending outlook holding steady in October.

One-in-four U.S. consumers (25%) now say they'll spend more over the next 90 days than they did a year ago – down 1-pt since the previous survey in September. But while two-in-five (40%) say they’ll spend less – that’s actually 1-pt improved from previously.

In short, overall spending among consumers continues to remain at the highest level in a ChangeWave survey since May 2008 – but has not improved since our previous survey in September.

Importantly, the October 1-12 survey of 2,731 U.S. consumers also points to a spending uptick for a handful of major retailers as we approach the holiday season.

The encouraging findings are led by a significant pickup in momentum for Macy’s (M; +3) and signs of improvement for Target (TGT; +2), Costco (COST; +1) and BJ's Wholesale Club (BJ; +1).

On the entertainment front, once again Amazon (AMZN) shows the most momentum, with 28% saying they’ll be shopping at Amazon for home entertainment and computer networking products over the next 90 days – a 2-pt jump since September and equaling the highest level ever recorded for the online retailer in a ChangeWave survey.

Industry leader Best Buy (BBY; 42%) is also up 2-pts from previously, but continues to remain below its levels of a year ago.

While most overall spending categories remain unchanged and some have even registered a pullback, there is one category in particular that shows improvement:

Restaurant spending is continuing to creep up – with 12% of respondents now saying they’ll spend more over the next 90 days compared to 33% less – a net 4-pt jump since September and our best reading in 15 months.

Overall Consumer Electronics spending has also registered a very slight improvement.

On the downside, Automobile spending has dropped right back to the levels we saw before the hugely popular ‘Cash for Clunkers’ program was announced this past summer.

Lower Consumer Sentiment and Expectations

Counterbalancing the above findings, for the second month in a row we’re finding a worsening in consumer sentiment and expectations.

Well over a third (35%) now thinks the overall direction of the U.S. economy is going to worsen over the next 90 days – a 1-pt drop since September. Only 24% believe it will improve – 3-pts worse than previously.

In a sign of weaker consumer confidence, only 25% say they are More Confident in the U.S. stock market than they were 90 days ago and 34% say they’re Less Confident – a net 5-pts worse than a month ago.

Other consumer sentiment indicators echo these findings:

• Three-in-ten report they worry A Great Deal (9%) or Quite A Bit (21%) about someone in their family losing their job – 1-pt worse than our September survey.

• Just 6% say they’re very satisfied with the current state of their personal finances, unchanged from the previous survey.

Paul Carton co-wrote this article

Clear Signs of Improvement for Restaurants

2009-10-13T18:08:55Z

By Mike Wrobel
October 13, 2009

After four months of little to no change, two recent ChangeWave consumer surveys show clear signs of improvement for the restaurant industry – with Olive Garden (DRI), Red Lobster (DRI), Chipotle (CMG), Maggiano’s (EAT) and Starbucks (SBUX) showing the most momentum.

To start, better than one-in-ten respondents (11%) now say they’ll spend more money at restaurants going forward – 1-pt improved over August.

Another 36% say they'll be spending less, also 1-pt better than previously.

Other positive signs:

• Looking at the past 90 days, 27% of respondents say they've spent More than planned on eating out and only 19% Less than planned – a net 11-pt improvement since May

• The percentage who say they’re Ordering Less Expensive Items on the Menu (26%) has declined 3-pts, as has the percentage who say they've been Skipping Beverages when dining out (29%; down 3-pts)

• And while 35% say they’ve been Eating More Meals at Home over the past 90 days – that’s 2-pts less than previously

Winning and Losing Restaurant Categories

We next asked respondents to tell us which types of restaurants they'll be eating at more or less often over the next 90 days. The one category showing improvement since our May survey was Upscale/ Fine Dining Restaurants (Change in Net Difference Score = +4).

And for the second consecutive survey, the category of Fast Food Restaurants (-4) has experienced the largest decline – evidence that consumers are "trading up" when it comes to dining out.

Individual Restaurant Chains. Here’s a look at the 4 best positioned and 3 worst positioned restaurant chains in terms of where respondents say they’ll spend more vs. less money over the next 90 days:

Coffee Buying Trends. For the second consecutive survey Starbucks (SBUX; +5) has experienced the biggest improvement of any coffee shop or restaurant surveyed. They are clearly a momentum winner at this point of the recovery.

Other Industry Trends

Frequency of Dining Out. A total of 12% say they expect to dine out More Frequently over the next 90 days compared to the previous 90 – and 26% report they’ll dine out Less Frequently. All told, these results are 5-pts less than the previous survey, most likely caused by seasonality factors (i.e., the end of summer vacation).

As a follow-up, we asked those consumers who expect to dine out 'More Frequently' over the next 90 days to tell us why – and 26% say it's because Restaurants are Offering a Better Value (up 8-pts). Another 25% say they have Less Time to Cook at Home (up 5-pts).

In a positive sign for the overall economy, one-in-ten (10%; up 5-pts) say it's because they're Not Trying to Save as Much Money, and 8% (up 3-pts) because they're Less Concerned About Job Security.

Reasons For Dining Out Less Frequently. Saving More Money (36%; down 4-pts) and Reduced Income (32%; down 5-pts) still remain the top reasons given by those who are dining out less frequently, but each have declined since our May survey.

We note that Recent Purchase of Big Ticket Item (8%) has increased by 4-pts since May – another positive sign for the overall economy.

Paul Carton co-wrote this article

U.S. Economy Continues to Improve

2009-10-06T14:08:45Z

By Paul Carton
October 6, 2009

ChangeWave’s latest corporate survey shows the U.S. economy continuing to recover, but compared to the major improvements seen last quarter the rate of recovery has slowed.

The August 24-September 2 survey of 3,006 corporate respondents shows a slight improvement in third quarter sales. Signs of progress have also occurred in sales pipeline projections and in capital spending going forward. Yet while the overall picture still points towards an end to the U.S. recession, the slowing rate of improvement is a key issue that needs to be watched closely.

Importantly, the current survey also shows no further easing of the U.S. credit crunch – even though we had picked up clear improvements in our previous survey. The best that can be said at present, is the credit crisis does not appear to be getting any worse.

U.S. Economic Growth

Two-in-five respondents (41%) now say that their company sales will come in Below Plan for third quarter 2009 – although that’s three points better than the previous survey. Another 15% say their company sales will come in Above Plan – which represents a two point uptick.

Looking forward, sales pipeline projections have also improved for the fourth quarter – albeit at a slower rate than we picked up last quarter.

Better than one-in-five (21%) now say their company sales will come in Above Plan – which is a three point improvement over the previous survey. At the same time, only 26% report they’ll come in Below Plan – two points better than the previous survey.

Thus, fourth quarter sales projections represent a net five point positive change from the previous quarter.

Going forward we continue to track a deceleration in the rate of capital spending decline, with 10% projecting an increase in their fourth quarter capital budgets – a one point improvement over our previous survey.

While 24% of respondents still project a decrease in their company’s fourth quarter capital budget, that’s two points better than our previous survey and a considerable improvement over the freefall in capital spending we were reporting nine months ago (December 2008).

So although the rate of improvement in capital spending is nowhere near as dramatic as we picked up last quarter, the recovery continues to inch ahead.

Job Market. For the second consecutive survey, the U.S. labor market shows signs of stabilizing. A total of 11% report there are More new hires in their company at this point in the third quarter vs. last quarter – up one point since the previous survey. A total of 21% say there are Less new hires – down one point from previously.

Similar to the patterns unearthed throughout this survey, the rate of improvement this quarter is not as great as last quarter.

Impact of the Credit Crunch. For the last two years we’ve been measuring the impact of the credit crisis on U.S. businesses – generally considered to be a key cause of the recession.

Last quarter we picked up the first measurable signs of improvement in the credit crisis. However, a key finding of the current survey is there has been no further easing of the credit crunch.

One-in-four (25%) respondents still say that it is harder for their company to borrow money than it was 90 days ago – unchanged from the previous survey. Another 3% say it is easier to borrow money, also unchanged from previously. Thus on this all-important issue, it remains just as hard for companies to borrow money this quarter as it was last quarter.

In terms of individual sectors, the Semiconductor sector is showing signs of strength for the third consecutive survey. Other sectors showing momentum include Transportation, Manufacturing Equipment & Services, and Natural Gas & Oil. On the downside, we’re picking up weakness in Defense, Construction and Energy Utilities.

Bottom Line

The signs of a stabilizing economy that we saw last quarter across a range of key indicators have extended into the current quarter – although the pace of recovery has slowed.

One potential Achilles’ heel to a continuing recovery is the ongoing credit crunch. The current survey shows no further easing on this all-important issue – it remains exactly as hard for companies to borrow money this quarter as it was last quarter.

Importantly, we’ll continue tracking these issues in upcoming ChangeWave surveys – including whether the Holiday shopping season will help improve consumer spending this fall and whether the credit crunch will ease further for businesses.

Jean Crumrine co-wrote this article

It's An Uptick! U.S. Consumer Spending Continues to Improve in September

2009-09-29T17:19:56Z

By Paul Carton
September 29, 2009

A new ChangeWave survey of 2,719 U.S. consumers shows spending is continuing to improve going forward, led by upticks in consumer electronics, durable goods for the home, restaurant spending and household repairs/improvements.

Tempering these findings, the September survey shows large numbers of consumers are still hunkered down attempting to repair their finances. Nonetheless, things are looking significantly more positive for consumers as we head towards the crucial holiday spending season.

Improved Spending for September

Better than one-in-four U.S. consumers (26%) now say they'll spend more over the next 90 days than they did a year ago – up 2-pts since the previous survey in August. While 41% still say they’ll spend less, that’s 3-pts improved from previously.

The improvement in consumer spending is occurring across several key categories – with consumer electronics, restaurants spending, durable goods for the home, and household repairs/improvements the biggest beneficiaries.

• Consumer Electronics spending has risen a net 3-pts since August – with 17% saying they’ll spend more on electronics going forward compared to 34% less.

• For the first time since June we’re also seeing an improvement in Restaurant spending – up a net 2-pts since the previous survey.

• Spending on consumer Durable Goods for the Home has continued to improve for the second consecutive survey – and is up a net 2-pts for the month.

• For the first time since May spending on Household Repairs/ Improvements is improving (up 2-pts) – 34% say they’ll spend more compared to 16% less.

Other categories, however, show weakness – particularly automobiles.

• After having experienced an uptick in the previous survey, Automobile spending is down 2-pts in the current survey – most likely due to the ending of the hugely popular ‘Cash for Clunkers’ program.

Retail Store Trends

Along with Sam's Club (WMT; +2), which is currently showing momentum, the only other major U.S. retailers in our survey to register slight increases were Nordstrom (JWN) and Sears (SHLD) – each up 1-pt in overall spending going forward.

Note this is the first time since before the recession began that we’ve picked up slight indications of momentum for Nordstrom.

Somewhat surprisingly, the large discount retailers have registered a slight downtick since the August survey, with Costco (COST) declining 2-pts and Wal-Mart (WMT) down 1-pt. Target (TGT) – which has shown momentum in recent surveys – is also down 2-pts.

Sam's Club (10%) and eBay (EBAY; 8%) are the two retailers showing signs of momentum in entertainment and networking shopping – even as industry leader Best Buy (BBY; 40%) remains unchanged.

We note that Amazon (AMZN) finds itself down slightly from its record high of three months ago, although it’s still up 8-pts compared to one year ago.

But the bottom line is that spending is continuing to improve going forward, led by upticks in consumer electronics, durable goods for the home, restaurant spending, and household repairs/improvements.

However, the September survey shows large numbers of consumers are still hunkered down attempting to repair their finances. Moreover, there are few signs the September spending increase will result in any big improvements for the major retailers.

Nonetheless, things are looking significantly more positive for consumers as we head towards the crucial holiday spending season.

Jean Crumrine co-wrote this article

U.S. Stimulus Program Causing Rebound in Water Project Spending

2009-09-22T15:16:26Z

By Paul Carton
September 22, 2009

There’s a rebound occurring in water project spending over the next 12 months – largely driven by the U.S. government’s economic stimulus program.

These are the results of a July ChangeWave survey of 101 respondents working for companies in the water industry.

Top Winners and Losers

Water Infrastructure Repair and Replacement remains the top water industry sector – with 71% of industry respondents saying it will attract the Most Spending over the next two years and only 8% the Least Spending (Net Difference Score = +63).

Wastewater Treatment (+27) is also seen as a winner.

On the downside, Desalination (-29) and Water Metering (-23) are expected to attract the least spending.

Which Companies Will Benefit Most? Water industry respondents were also asked a series of questions about best positioned companies within specific water sectors. Here are companies seen as having the most momentum:

• Veolia, an environmental services company, operates a water division that provides water and wastewater services for municipalities and industrial clients. Respondent PLS40326 cites Veolia’s “proven presence and performance worldwide,” while POT05073 adds they’re “best positioned for expansion.”

• Tetra Tech provides resource management and sustainable infrastructure services to government agencies and commercial customers. As WAT1273 puts it, "Tetra Tech seems to be maintaining a good backlog and is involved in managing public water systems for municipalities. Budget cuts at these municipalities will lead to increased business for Tetra Tech, as many of their services are contracted out."

Overall Industry Trends – Water Spending Set To Increase

Better than two-thirds of respondents (68%) report spending on water projects will increase over the next 12 months – double ChangeWave’s previous survey in October 2008. Just 6% say spending will decrease – a considerable 22-pt improvement.

At the country level, respondents project the U.S. (43%) will experience the biggest increase in spending over the next 12 months – surpassing China (38%) in this regard.

As respondent EEP05829 sees it, the U.S. will enjoy the biggest spending increases because of “stimulus funds…and because there is a real need to get infrastructure repaired, rehabbed, and replaced.”

PLS40326 believes that demand in China is “…inelastic and money must be spent," while KEN96574 points out that China has to “…meet its drinking water needs because of demographic shifts and to control pollution.”

A Closer Look at U.S. Water Project Spending. Regarding the U.S., 80% of respondents see Federal spending increasing over the next 12 months – triple the amount from October 2008. State governments (48%) are also set to make big gains comparatively – local governments (37%) less so.

The reason for the surge in U.S. government spending: The economic stimulus program, of course – which includes an estimated $6 Billion allocated to water projects.

Note that when we asked respondents about the impact the U.S. stimulus program will have over the next year, 30% said it will cause a Significant Increase in water project spending and 61% a Slight Increase.

Andy Golub co-wrote this article

Slower Going for IT Spending - But the Recovery Continues

2009-09-15T18:27:54Z

By Paul Carton
September 15, 2009

Last quarter we saw corporate IT spending in the process of rapidly stabilizing. Our latest ChangeWave survey shows the rate of recovery is slower this quarter – but on the positive side things are still continuing to improve and there are signs of a bigger uptick in store for 1st Half 2010.

The ChangeWave survey was conducted August 10-19, and 1,801 respondents involved with IT spending in their organization participated.

Looking ahead, 18% of respondents said their company’s IT spending will increase for the fourth quarter – a three point improvement since our May survey.

However, one-in-four respondents (25%) said that their company’s IT spending will decrease (or there will be no spending at all) – which is one point worse than previously.

We also asked respondents if their IT spending was on track thus far in the third quarter, and our findings show only a very slight change since the previous survey.

Thirty-two percent said they’ve spent Less than Planned so far in the third quarter, and 11% say they’ve spent More than Planned – altogether a net one point improvement.

1st Half 2010

On a more positive note, when we look ahead to first half 2010, we see more bullish signs. One-in-four (24%) said they think their company’s first half 2010 budget will be greater than second half 2009, a 4-point improvement since the previous survey.

Only 19% said they think their company’s IT budget will be less than second half 2009 – also 4-points improved. We note that this is the most optimistic longer-term outlook we’ve seen in two years.

Individual IT Categories. Out of the 13 IT categories we looked at in this survey, Networking (Change in Net Difference Score = +3) registered the biggest increase since the previous quarter. Application Development Software/Tools (+2) and Storage (+1) are also showing some signs of momentum.

In the same survey we also focused on corporate smart phone buying. Going forward, 35% of respondents report their company plans to buy smart phones next quarter – down 1-point from previously.

In terms of manufacturers, Research in Motion (RIMM; 74%) is set to maintain its dominant share of planned corporate buying.

Apple (APPL; 27%) remains in second place, up 1-point from previously.

Of course, most of Apple’s corporate share is among small- to medium-sized companies (under 1,000 Employees), while RIM’s corporate share is heavily concentrated among larger companies (over 1,000 Employees).

Palm (PALM; 7%) is also registering a 1-pt uptick in planned purchases – likely attributable to its recent launch of the Palm Pre.

Bottom Line

Nearly all signs point to a slowdown in the rate of recovery for corporate IT spending this quarter. But on the positive side, spending is still continuing to improve and there are signs of a bigger uptick in store for first half 2010.

In terms of specific vendors, Microsoft (MSFT; +2) and Dell (DELL; +2) are showing signs of momentum going forward – possibly related to the impending release of Windows 7.

Jean Crumrine co-wrote this article

Smart Phone Heavyweight Slugfest - iPhone 3GS vs. Palm Pre

2009-09-08T14:56:34Z

By Paul Carton
September 8, 2009

Enough time has passed for early buyers to have acclimated themselves to the Palm Pre and the Apple iPhone 3GS, so in early August ChangeWave conducted a survey of new owners to see what they think – including which features they like best and dislike the most.

The survey of 198 Apple iPhone 3GS owners and 38 Palm Pre owners also looked at overall customer satisfaction and how well each has lived up to or fallen short of user expectations.

Apple iPhone 3GS. The initial customer satisfaction results for the new Apple iPhone 3GS surpass that of any previous smart phone model we’ve measured in our ChangeWave consumer surveys over the past eight years, with 82% of new owners saying they’re Very Satisfied and 17% Somewhat Satisfied – for a combined near-perfect satisfaction rating.

Palm Pre. While the initial Palm Pre numbers are not as high, the new model’s satisfaction rating is exceptional for a new product release. Nearly half (45%) of Palm Pre owners report they are Very Satisfied with their new smart phone and another 42% say they’re Somewhat Satisfied – for a combined 87% Satisfaction Rating.

To put this in context, BlackBerry manufacturer Research In Motion and Apple are the only other smart phone manufacturers to attain such high Very Satisfied levels – and in this case Palm is accomplishing it with a brand new product release, a very significant achievement.

Meeting Owner Expectations

Apple iPhone 3GS. In another example of the widespread approval among early 3GS buyers, nearly two-in-five (38%) report the new iPhone Exceeds their expectations and another 56% say it Meets their expectations.

Palm Pre. While less robust than the 3GS, once again the Palm Pre results are quite positive – with 18% of Pre owners saying their new phone Exceeds expectations and another 58% reporting it Meets expectations.

Thus, the good news for Palm is its new Pre model has outperformed mightily in terms of customer satisfaction – thereby entering the pantheon of the smart phone industry previously inhabited only by its top two manufacturers, Apple and Research In Motion.

But what is it about Pre and the 3GS that leave their owners so highly satisfied? To find out, we queried users on the features they like and dislike most. Here's what they told us:

A Closer Look at the Palm Pre

Palm Pre Likes. The Pre’s Touch Screen Interface (47%), Multi-Tasking (42%) and Ease of Use (39%) rank as the top three things that owners like best about their new phone.

In addition, one-in-four (24%) say the Coverage/Speed/Quality of Sprint's 3G Network is the feature they like best – a finding that bodes well for Palm’s exclusivity agreement with Sprint.

Palm Pre Dislikes. By a wide margin, Short Battery Life (45%) is the thing owners dislike most about their Palm Pre. A second big issue is its weakness regarding Third Party Applications – with 24% saying they’re unhappy with them.

But in an important finding for Palm, a relatively small percentage of Pre owners say that the company’s exclusivity agreement with Sprint is one of their top dislikes – only 11% report they’re unhappy with the Requirement to use Sprint's Network and just 3% say they dislike the Coverage/Speed/ Quality of Sprint's 3G Network.

A Closer Look at the Apple iPhone 3GS

Apple iPhone 3GS Likes. Similar to what we found with the Pre, the iPhone 3GS’s Touch Screen Interface (45%) and Ease of Use (41%) rank as the top things owners like best about their new phones – followed by Faster Web Browsing (33%) and Third Party Applications (31%).

Respondent GRE5573 sums it up for the iPhone 3GS as follows: "Of all the gadgets I've used in the last 10 years, it's the only one that makes me feel like the future has arrived, by elegantly integrating so many devices in one.

“The GPS works seamlessly with its maps application, the iPod can keep me entertained for days with music and video, the improved camera adds a slick video recording feature, the app store lets me do almost anything I need to with the phone – I could go on and on…

“The reason the iPhone is so popular is because it can easily become whatever it needs to be to make it an integral part of a person's life ... even if you have to use AT&T's less-than-stellar network."

Apple iPhone 3GS Dislikes. Short Battery Life (41%) ranks as the number one dislike for iPhone 3GS owners.

But by far the most significant pitfall for new Apple 3GS owners rests with AT&T. One-in-three (32%) say they don’t like the Requirement to Use AT&T's Network and another 23% say they dislike the Coverage/ Speed/Quality of AT&T's 3G Network.

Thus, there are no indications that Apple’s AT&T problem is going away. On the contrary, the better customers feel about their iPhones the worse they feel about AT&T – with nearly one-in-two 3GS owners citing AT&T-related issues as their biggest dislike. These survey results suggest Apple will be forced to deal with the issue sooner than many analysts expect.

Jean Crumrine co-wrote this article

Solar and Wind Sectors Powering Alternative Energy Industry Going Forward

2009-09-01T16:04:52Z

By Andy Golub
September 1, 2009

Solar and Wind will be driving the alternative energy sector for the next 12-24 months, according to ChangeWave’s July survey of 200 industry respondents.

Hybrid/Electric Vehicles are also on the upswing, as are ‘Smart Grid’ technologies, which are seen as a big beneficiary of new federal energy initiatives and private sector spending.

Here’s a look at key survey findings:

Industry Trends – Solar and Wind Continue to Lead

Wind sector projections have dropped a bit since our previous survey, although it was still considered the best performer of the past 12 months by our alternative energy industry respondents.

Looking at the next one-to-two years, industry respondents believe the Solar sector (53%; up 5-pts) will achieve the most economic growth, with the Wind sector coming in second (36%; down 4-pts) and Hybrid/Electric Vehicles in third (34%; up 4-pts).

We also asked Alternative Energy industry respondents how they think their own company's products and services will be doing in the marketplace going forward:

• Company Sales. 43% of respondents project an Increase in sales of their company’s products and services over the next 90 days, while just 4% project a Decrease. This is a big improvement over December 2008.

• Capital Budgets. Capital budgets have also seen a big improvement since December, although they remain below the levels of last summer. Nearly a third (29%) project their company’s cap budget will Increase over the next 90 days and 14% say it will Decrease.

High Hopes for the New Administration

More than half of industry respondents (54%; up 5-pts) think the Federal Government will be the biggest driver of Alternative Energy technologies going forward.

Another three-in-four (74%) see the Obama administration providing a Substantial or Moderate investment in energy infrastructure over the next 2 years – clear signs that there are still lofty industry expectations for the new Administration.

A Look at Solar Financing

We asked 90 respondents working in the solar industry a series of additional questions, and the biggest positive was that 86% believe U.S. government subsidies will accelerate demand for Solar Photovoltaic (PV) products over the next 12 months.

The companies expected to experience the highest rate of sales growth because of this are First Solar (FSLR), LDK Solar (LDK) and SunPower (SPWRA):

But the bad news is that 44% of respondents now say it’s Significantly Harder to get financing for solar projects than compared to 6 months ago, and 26% say it’s slightly harder.

Thus despite increased federal subsidies, continued weakness in the overall financing environment for solar projects remains the sector’s Achilles' Heel. This issue needs to be watched closely by investors going forward.

‘Smart Grids’ Also Have Momentum

The ‘Smart Grid’ sector is also expected to be a major beneficiary going forward, with 87% of respondents projecting a spending Increase on Smart Grid technologies over the next year.

Smart Meters (37%) are the technology respondents see experiencing the most growth in spending over the next 12 months, followed by Transmission Infrastructure (24%).

The Smart Grid and Energy Efficiency companies seen as having the best growth prospects are Itron (ITRI), Johnson Controls (JCI) and Echelon (ELON).

Mike Wrobel co-wrote this article

Slight Uptick in U.S. Consumer Spending for August - But Longer Term Outlook Remains Clouded

2009-08-25T13:33:26Z

By Jean Crumrine
August 25, 2009

ChangeWave’s latest consumer spending survey points to a slight uptick in U.S. consumer spending going forward – reversing the pullback found in our July survey.

But even though we’re seeing a positive uptick, there is little indication of any major spending expansion in the works for consumers. To the contrary, looking at the longer term, an astonishing one-in-three consumers report they’ve permanently changed their purchasing behavior and spending habits because of the recession – to focus on cutting costs and savings.

The survey, completed August 5th, was composed of 2,705 U.S.consumers.

Slight Uptick in Spending for August

Nearly one-in-four U.S. consumers (24%) now say they'll spend more over the next 90 days than they did a year ago – up 2-pts since our previous survey in July. While 44% still say they’ll spend less, that’s 1-pt better than previously.

We note that spending is at exactly the same level registered in August 2008.

Small Improvement Across Multiple Categories. The improvement in consumer spending is occurring at all income levels, with Consumer Electronics, Travel/Vacation and Durable Goods spending the biggest immediate beneficiaries.

• For the first time since May we’re seeing improvement in Consumer Electronics spending, although the category remains relatively weak. A total of 16% say they’ll spend more on electronics over the next 90 days and 36% less – a net 3-pt improvement.

• After pulling back in the previous survey, Travel/Vacation spending has registered a net 2-pt improvement going forward.

• Consumer Durable Goods for the Home has also registered a 2-pt uptick – its first improvement in four months.

• Automobile spending is up 1-pt since July – from 7% to 8%.

But Longer Term Outlook Remains Cloudy

The August uptick not withstanding, when we look longer term we can still see the enormous toll the recession is continuing to take on the U.S. consumer.

Nearly two-thirds of respondents (63%) report they have changed their purchasing behavior and spending habits due to the recession. And among this group, more than half (55%) say they’ve permanently changed their behavior and spending habits to focus on cutting costs and savings, while only 43% say the changes are temporary.

In sum, what this boils down to is that better than one-in-three consumers (63% x 55% = 35%) say they’ve permanently changed their purchasing behaviors and spending habits because of the recession – an astonishing transformation the likes of which hasn’t been seen in recent years, and which clouds the long term outlook for consumer recovery.

Retailers and “Back to School” Shopping

Will the “Back to School” shopping season help jumpstart consumer spending for the Fall?

We asked respondents about their “Back to School” shopping plans and the results were decidedly mixed. The biggest negative: Only 28% of respondents say they’re shopping for Back-to-School items this year – a major downturn from the 33% of a year ago.

The biggest positive: Among these responders, 35% report they’ll spend More Money than last year and just 20% Less – a net 4-pt increase from a year ago.

Discount Stores and Wholesale Clubs still remain the best positioned category – with 28% of Back-to-School shoppers saying they’ll spend More money at them and just 8% Less (+20; down 2-pts). In a hopeful sign, Home Furnishing/Accessories Stores (-9; up 5-pts), Electronics Retailers (-10; up 4-pts), and Online Shopping (+3; up 3-pts) all show a year-over-year improvement in terms of Back-to-School spending.

But these positives are more than counterbalanced by the significant downturn in the total number of Back-to-School shoppers compared to a year ago. Overall, the survey results point to a tough, end of summer, Back-to-School shopping season.

Retail Store Trends

The spending picture among the major retailers remains relatively unchanged from the July survey, with a couple of notable exceptions – likely due to back-to-school spending.

Retailers Showing Some Momentum: Costco (COST), Bed, Bath & Beyond (BBBY) and JC Penney (JCP) are each up 2-pts since July.

We note that Target (TGT; -3) remains unchanged from last month’s survey.

Importantly, Amazon (AMZN) continues to outperform in terms of online shopping and is widening the gap over its competitors. The percentage of consumers who say they will spend more money online at Amazon.com is up 2-pts since our May survey to a new high.

In another major positive for Amazon, 27% now say they’ll be shopping there for home entertainment and computer networking products over the next 90 days – a 2-pt jump.

Best Buy (BBY; 40%; up 3-pts) and Apple (AAPL; 12%; up 3-pts) are also showing renewed momentum in the home entertainment market.

Paul Carton co-wrote this article

Corporate Software Spending Continues to Improve - But Pace of Recovery Slows

2009-08-18T20:03:36Z

By Paul Carton
August 18, 2009

ChangeWave’s latest corporate software survey shows business purchasing continues to improve even as the pace of the recovery slows. Simply put, the uptick in spending for the next 90-days is not as pronounced as the rate of improvement we saw in April.

But the good news is that for the third software purchasing survey in a row we’re seeing clear improvement – particularly in the Virtualization, Data Storage, and Business Intelligence software spaces.

A total of 1,768 respondents involved with software purchasing in their company participated in the July 13-22 ChangeWave survey.

The Recovery Continues – But at a Slower Pace

Better than one-in-ten buyers (12%) now say their company will spend more on software over the next 90 days – 1-pt better than in our April survey. While 22% still say they’ll spend less – that’s a 5-pt improvement over previously and the best reading in 18 months.

In another positive, for the second consecutive survey we’re seeing an upswing in corporate capital budgets.

A total of 9% say their cap budget has actually increased over the past 90 days – 3-pts better than previously. And just 30% say their cap budget has adjusted lower – 6-pts better than in April and a resounding 16-pt improvement since January.

At the vendor level, Microsoft (MSFT; +3-pts) shows signs of strength going forward in the corporate software market, almost certainly due to the upcoming October 22 release of its new Windows 7 Operating System.

A recent ChangeWave Corporate PC survey of 118 corporate Beta testers trying out the new Microsoft OS points to relatively high satisfaction levels for Windows 7. And our positive corporate software results reinforce that Windows 7 could end up providing a major sales boost for Microsoft this fall and increase its prospects for a profitable second half of the year.

Of course, only about 25% of Microsoft’s total revenue comes from the Client Division which makes the Windows operating system, but the increased likelihood of a highly successful Windows 7 rollout should be welcomed by the Redmond, Washington behemoth – particularly after the haircut it took in its most recent earnings announcement.

Two other companies showing momentum in our survey going forward are IBM (IBM; +3) and SAP (SAP; +2).

Our findings suggest that at this point in the business cycle, it’s the largest-sized software vendors that are outperforming – often at the expense of their smaller counterparts.

Leading Software Categories

A key focus of this survey is on corporate spending increases (and decreases) within specific software categories, and in a further encouraging sign, there are three software categories now showing a projected increase in spending over the next 90 days. Here’s a look:

A total of 17% of respondents say their company is increasing its Virtualization software spending for the next 90 days while only 12% say it is decreasing (Net Score = +5) – a net 6-pt improvement over the previous survey in April.

In addition, Data Storage software spending has registered an uptick in our latest survey, with 16% of companies saying they’ll increase their spending on data storage over the next 90 days and only 11% decreasing – a net 5-pt improvement.

A total of 14% of respondents also say their company is increasing their Business Intelligence software spending going forward while just 12% say it’s decreasing – a net 7-pt improvement.

There is also a fourth category on the verge on turning positive: Customer Relationship Management software (even; up 5-pts). And there are two other categories that, while still negative, are showing improvement – Document/Enterprise Content Management (-3; up 8-pts) and Enterprise Resource Planning (-5; up 6-pts).

Jean Crumrine co-wrote this article

Fiber-Optic Providers Look Strong in TV Service Markets

2009-08-11T15:46:35Z

By Paul Carton
August 11, 2009

Recent ChangeWave consumer surveys have revealed a shift occurring away from traditional TV viewing towards new types of online services and entertainment – a trend with worrisome long term implications for traditional TV service providers.

But focusing on the short term, a recent ChangeWave survey of 2,922 U.S. and Canadian consumers identified winners and losers in the current market share battle among TV service providers.

Cable Leads But Fiber Looks Strong

According to our latest survey, Cable (65%) still owns the bulk of the TV market, even though it’s been slowly ticking downward for much of the past 2+ years. We note, however, that they have gained 2-pts since our previous survey in March.

At the same time, Satellite providers (25%; down 1-pt) have remained relatively flat, even as the core growth story over the past two years has shifted to the fiber-optic TV service providers (11%). But what does this mean at the individual provider level?

Cable Companies: Comcast (23%; down 1-pt) is still the market share leader, but has been gradually sliding for the past year. Time Warner (11%; up 1-pt) remains a distant second – still stuck at the same level of a year ago.

Satellite Companies: DIRECTV (13%; unchanged) continues to hold the market share advantage over DISH Network (9%) – which dropped 1-pt to its lowest level ever in a ChangeWave survey.

Fiber Companies: Verizon FiOS (5%) and AT&T U-verse (3%) have been gaining share steadily – albeit slowly – since they rolled out their fiber services.

Importantly, Fiber TV providers also boast a big lead when it comes to customer satisfaction levels – with an overall 38% Very Satisfied rating, followed by Satellite subscribers (27% Very Satisfied) – both which remain far happier with their TV service than Cable subscribers (13% Very Satisfied).

The difference is even more evident at the company level, where Verizon (VZ) continues to have the most satisfied customers (47% Very Satisfied), followed by AT&T’s U-verse service (39%) and then DIRECTV (34%).

The cable companies rank at the bottom in terms of customer satisfaction – with Time Warner (11%) and Comcast (11%) tied for dead last.

Future Share: Customer Switching. Looking ahead, we asked respondents if they planned to switch TV service providers in the next six months, and only 12% report they’ll be switching – down 2-pts from March.

Among this group, Price (50%) is the top reason respondents plan to switch, while Bundling of Services (10%) continues to be of lesser importance.

So which type of TV provider are switchers moving to?

More than one-in-two (54%) switchers say they’ll choose a fiber-optic service – which is an 8-pt increase since our previous survey just three months ago.

Verizon FiOS TV (28%; unchanged) remains the top provider that switchers plan to move to in the next six months. But AT&T’s U-verse service (23%) has jumped a big 7-pts since our March survey and is currently showing the most momentum among providers.

Note that DIRECTV (20%; down 5-pts) maintains a two-to-one market share advantage over DISH Network (10%; down 2-pts) – but both are hitting new lows. Cable providers bring up the rear – with just 4% of switchers saying they’ll sign up with Comcast (up 1-pt) and 1% for Time Warner.

Thus while cable and satellite providers still lead in terms of current share, their problems continue to grow.

In comparison, fiber-optic companies are excellently positioned to be the biggest winners in terms of future market share growth.

Andy Golub co-wrote this article

Resurgence of Starbucks as Restaurants Slowly Regain Their Appetite

2009-08-05T20:32:31Z

By Mike Wrobel
July 28, 2009

There are signs of improvement within certain pockets of the restaurant industry but the pace of overall growth has slowed, according to two recent ChangeWave consumer surveys.

There were, however, a handful of standout winners.

First, as reported to our ChangeWave Research Network Members on June 30th, Starbucks (SBUX; +9) exhibited "by far the biggest improvement of any coffee shop or restaurant surveyed."

Nearly a month later on July 21st, Starbucks released their earnings and easily blew past Street expectations. As MarketWatch reported it "Starbucks swung to a fiscal third-quarter profit from a year-earlier loss, and showed that its store traffic is improving even as the recession drags on."

Upon the announcement Starbucks immediately rose almost 20% – yet one more example of a ChangeWave survey uncovering the trend weeks ahead of the Street.

Other Winning Restaurant Chains

Outside the coffee realm, there were additional restaurant winners. We asked respondents which individual restaurant chains they'd be spending more and less money at over the next 90 days – and compared the results with the findings from our previous survey.

Six restaurants stood out from the pack in terms of where consumers will be spending more money vs. less money over the next 90 days:

In terms of restaurant categories, high end casual restaurants (+12) and moderate casual restaurants (+11) are experiencing the largest increases going forward. And in a reversal, every category is looking up except for fast food restaurants (-1), suggesting consumers are beginning to "trade up" when it comes to dining out.

Other findings include:

• A greater percentage of consumers say they'll be dining at more expensive restaurants going forward (4%; up 3 pts)

• There's been a significant increase in the percentage of consumers who expect to dine out More Frequently over the next 90 days (14%; up 8 pts)

• Still, overall only 10% of respondents say they'll be spending more at restaurants going forward, while 37% say they'll be spending less – both unchanged from May.

Paul Carton co-wrote this article

Stalling Out in July?

2009-07-21T20:19:03Z

By Paul Carton
July 21, 2009

The mixed picture we reported back in June has worsened in ChangeWave’s July consumer spending survey. And for the first time in four months we’re seeing an actual pullback in the 90-day spending outlook going forward.

The ChangeWave survey of 2,681 U.S. consumers, completed July 6th, has also picked up a significant worsening in consumer sentiment and expectations.

But is this new pullback simply a case of summer doldrums and the normal type of bumpiness we also saw coming out of the last recession – or is it the start of a further sustained slowdown?

A Consumer Spending Setback

After three consecutive months of improvements, our July survey has registered a setback in U.S. consumer spending.

Better than two-in-five U.S. respondents (45%) now say they'll spend less over the next 90 days – 2-pts worse than the previous survey in June. Only 22% now say they'll spend more – 3-pts worse than previously.

A Mixed Bag Within Spending Categories. While several spending categories have registered a slight pullback, a couple of them have remained steady.

Travel/Vacation has registered the biggest slowdown of any spending category going forward – although this is partially due to seasonal variation.

Consumer Durable Goods for the Home have also fallen 2-pts since the previous survey. There’s little to cheer about in terms of Consumer Electronics spending as well. While 14% say they’ll spend more on electronics over the next 90 days, 37% say less (down 1-pt).

Restaurant spending, however, remains unchanged from June, as does Automobile spending.

Consumer Sentiment and Expectations

Consumer expectations have turned significantly more negative this month. Well over a third of respondents (36%) think the overall direction of the U.S. economy is going to worsen over the next 90 days – an 8-pt jump since June. Another 22% believe it will improve – a 10-pt decline.

In another example of declining consumer confidence, nearly three-in-ten (29%) say they’re Less Confident in the U.S. stock market than they were 90 days ago – a 10-pt leap since June. Only 28% say they’re More Confident – down a big 16-pts from previously.

Retail Store Trends

The spending picture among the major retailers remains relatively unchanged from the previous survey, with a couple of notable exceptions. In particular, Target (TGT; up 1-pt) has improved slightly compared to our June survey results.

Wal-Mart (WMT) (+4; down 2-pts), on the other hand, has registered a decline in its growth rate for only the second time since September 2008.

The sluggish market is also having an impact on the giant electronics retailers. Only 37% of respondents now say they’ll shop at Best Buy (BBY) for home entertainment and computer networking products over the next 90 days – down 3-pts since June.

Even Amazon (AMZN; 25%) has dropped 4-pts in terms of home entertainment shopping over the past month – but we note that June represented the highest market share level ever recorded for Amazon in this key category.

Bottom Line: The mixed picture we reported last month has continued to worsen among consumers in our July survey. For the first time in four months we’re seeing an actual pullback in the 90-day spending outlook going forward. There has also been a worsening of consumer sentiment and expectations.

It’s still too early to know whether the current pullback is simply a temporary pause or something of far greater concern – the beginning of a sustained slowdown.

We’ll know a lot more after next month’s survey, including whether the Back to School shopping season will help jumpstart consumer spending for August.

But the outlook has toughened for the U.S. consumer in July, and the bumps we've picked up this month need to be watched very closely.

Jean Crumrine co-wrote this article

Business PC Purchases Rising - But Will It Help Windows 7?

2009-07-08T18:28:04Z

By Andy Golub
July 8, 2009

ChangeWave's latest Corporate IT survey shows U.S. tech spending in the process of rapidly stabilizing - with a dramatically improved outlook for the 3rd Quarter.

The findings also point to the first uptick in business PC spending in 18 months, with a 4-pt jump in the percentage of respondents who say their company will buy laptops (71%) and desktops (68%) in the 3rd Quarter.

But what does this mean for the major PC manufacturers - and for the upcoming release of Microsoft's Windows 7?

A Closer Look at Dell, Apple and Hewlett-Packard

Dell: Corporate sales account for nearly 80% of Dell's (DELL) PC business - and almost without exception Dell has been losing market share in our ChangeWave corporate surveys since it peaked back in August 2005. The current survey, however, shows a slight 2-pt uptick for Dell in planned 3rd Quarter Desktop (31%) and Laptop (30%) purchases.

All told, this represents Dell's first rise in the business PC market in nearly 4 years - but we caution that this is coming after Dell hit its all-time low in our previous two surveys.

Apple's (AAPL) corporate PC market share continues to grow, with 9% of respondents saying their company plans on buying Apple Laptops and 7% Desktops next quarter - up 1-pt and 2-pts respectively.

Both numbers represent all-time highs for Apple in the business computer market.

The data comes on the heels of our latest corporate smart phone results, which also show Apple hitting an all-time high in future market share among planned corporate purchasers - although this growth in iPhone sales is occurring primarily in small- to medium-sized companies.

Hewlett-Packard's (HPQ) corporate PC sales appear stable going forward - with planned laptop purchases (16%) up 1-pt and desktops (16%) unchanged since our February survey. Note that about 70% of H-P's sales come from outside the U.S. - while our ChangeWave surveys focus primarily on the U.S. market.

Microsoft's Windows 7 Operating System

Microsoft (MSFT) recently announced that Windows 7 should be available before the end of the calendar year, just in time for the holiday season. With business PC purchases finally rising, this would appear to be an optimal time to launch - but is the new OS ready for primetime?

In our latest survey, 118 Microsoft Windows 7 beta testers were asked a series of questions on the new platform, beginning with their overall satisfaction with the MSFT Operating System:

A total of 34% said they were Very Satisfied and 58% Somewhat Satisfied - a good overall rating, although the Very Satisfied percentage did decline 10-pts since our February survey (note that the Somewhat Satisfied group rose 11-pts during the same time period).

Most importantly, the Windows 7 satisfaction rating is much higher than the initial reaction to Vista in a February 2007 ChangeWave survey - when only 10% of Beta testers said they were Very Satisfied.

Window 7 Likes. One reason for the more enthusiastic reaction to Windows 7 lies in the introduction of a virtualized "XP Mode" - which is essentially a way to run Windows XP within the Windows 7 environment. Importantly, nearly half of beta testers (49%) say this option makes their company more likely to upgrade to Windows 7 in the future.

Other features respondents like about Windows 7 include its speed, lower system requirements and improvements in overall performance.

As Beta tester BRA03904 puts it, "Windows 7 is cleaner, faster, and has a better user interface." RGL19684 adds "It comes with a good selection of hardware drivers, and compatibility does not appear to be a big problem."

At a minimum, most testers agree Windows 7 is a big improvement over Vista. JNR10054 sums it up as "Windows 7 is fast and uses less memory than Vista."

Windows 7 Dislikes. The three biggest dislikes uncovered by Beta testers to date are system instability, incompatibility issues and Windows 7's big learning curve.

SLM00554 finds the new OS is "more complex, less intuitive, and the system crashes in CADD mode."

RKZ37471 says he is having difficulties "forwarding certificates to other applications - requiring additional sign-on software," while INT8286 says using the new virtual XP mode is "very cumbersome."

CUR09136 finds that in terms of training, "changes in the interface are always hard on those who have used Windows for years, and Windows 7 has lots of user interface changes."

Bottom Line. In comparison to Vista, the initial reports on Microsoft Windows 7 appear promising for the software giant. Moreover, the timing of the Windows 7 launch is fortuitous - coming at what looks to be the tail end of the recession and after the first recorded uptick in planned corporate PC purchases in 18 months.

Paul Carton co-wrote this article