Handset Prices at Their Highest in Over a Decade

Sony Ericsson ranks highest in satisfying customers who have owned their current mobile phone for less than two years, according to a J.D. Power and Associates report. The study measures customers' satisfaction with their wireless handsets based on five key performance factors. In order of importance, these are: physical design (24%); operation (22%); features (20%); handset durability (19%); and battery function (15%).

The study also found that the average reported purchase price for a wireless handset has increased for the first time in two years. The average purchase price cited by users for a mobile phone is US$94 - up US$8 from the first volume of the study in 2006, which was released in May-and marks the highest average price paid for a phone since 1994, when phones averaged US$99.

Sony Ericsson receives the highest ratings from customers in handset durability, and also performs particularly well in features and battery functionality. LG, Sanyo and Motorola, respectively, follow Sony Ericsson in the overall rankings.

"Sony Ericsson has come a long way in enhancing overall customer satisfaction, as efforts to improve their product lineup have really paid off," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "New model offerings and a general improvement in overall reliability have enhanced the user's experiences and elevated the brand to the top of the rankings. In fact, Sony Ericsson has recorded the most improvement of any brand included in the past three study reporting periods starting in 2005."

The increase in the average purchase price can be partially attributed to the recent surge in popularity of thin phones, such as the Motorola RAZR, and music-enabled handsets, both of which typically have higher price points when first offered. The average reported purchase price for wireless handsets owned for less than six months is US$102, much higher than the average price paid (US$89) for the same ownership period last year.

"As more services are added to mobile phones-particularly MP3 downloading or streaming video-we should continue to see the wireless handset price point rise," said Parsons. "For example, the incidence of sending or messaging video and picture content has increased 50 percent between 2005 and 2006. However, as mobile phones become more complicated, satisfaction can increase if it becomes easier for customers to learn how to operate specific product and service offerings. This can also promote future purchases of value-added products and accessories."

The study also finds several key wireless handset usage patterns:

The average replacement cycle for a typical handset is 16.6 months-a notable decrease from 18 months in 2005.
Handset features that are used most frequently include: the speakerphone (32%); camera capabilities (27%); services to send/receive short messages (25%); and gaming (16%).
More than one-half of all current wireless users compared other handset brands before selecting their current wireless phone. Those customers who compare phones during the selection process are more likely to be satisfied overall with their current handset than those who do not.

Volume 2 of the 2006 U.S. Wireless Mobile Phone Evaluation Study is based on experiences reported by 21,679 wireless users who have owned their current mobile phone for less than two years. The results are from the two most recent study reporting waves, which were conducted in April and July 2006.

Overall Wireless Mobile Phone Rankings
(Based on a 1,000-point scale)