Mobile Phone Prices Continue to Fall, Even As High-End Features Rise

­According to The NPD Group, buy-one-get-one (BOGO) offers and other price reductions on smartphones led to a 3 percent decline in average prices in the third quarter (Q3) of 2009. The overall average purchase price for mobile phones in the USA fell to US$85, which is down from US$88 in Q3 2008. Smartphone unit share held steady against feature phones; 28 percent of handset sales were smartphones last quarter.

"Carriers have been heavily promoting the latest advanced handsets, which has spurred recent growth in the smartphone market and an increase in the number of smartphone brands available to consumers," said Ross Rubin, director of industry analysis at The NPD Group. "For example, while there was only one Android device available in the fourth quarter of last year, now there are eight available from three major carriers."

According to NPD's Mobile Phone Track, smartphone price reductions by carriers helped push the Blackberry Curve, iPhone 3GS, and iPhone 3G to the top of the sales rankings for mobile phones. LG dominated sales of feature phones (i.e., phones sold without an operating system) with LG enV3 and LG enV Touch rounding out the top five sellers. Mobile phone accessories sales reached $2.3 billion in Q3 2009, which is an increase of 12 percent over the prior quarter.

"Carriers and retailers are increasingly looking to the holiday season for the increase in sales traditionally enjoyed by other consumer-electronics categories," Rubin said. "Growing revenue opportunities offered by accessories and service are just two ways that handsets offer revenue potential beyond someone switching carriers."

When it comes to consumers' preferred shopping venues, in the third quarter of 2009 68 percent of new handsets were purchased at carrier stores, 8 percent were purchased at mass merchants, and 9 percent at electronics stores. "Although carrier stores lead sales throughout the year, around the holidays consumers tend to purchase more handsets from mass merchants, due in part to the allure of one-stop shopping for a variety of holiday gifts," Rubin said.

As NPD noted last year, sales of pre-paid handsets represented 17 percent of the market in the third quarter, increasing to 20 percent the following quarter. "We expect to see even greater gains for pre-paid phones during the holidays, as they are quite easy to give as gifts, since they don't require a signed contract with a particular carrier," Rubin said.

Posted to the site on 23rd November 2009