Cellular Purchases Heading Down In 2008: NPD

By Joseph Palenchar -- TWICE, 9/15/2008

PORT WASHINGTON, N.Y. — Mobile phone handset sales to U.S. consumers continued to head down in 2008, with second-quarter sales declining 13 percent to 28 million units, The NPD Group said. Dollar sales, however, declined only 2 percent to almost $2.4 billion because of step-up purchasing.

The sales estimates, which do not include purchases by enterprises for their employees, are based on online consumer surveys completed every month by 150,000 consumers. Results are projected to the entire population of U.S. consumers.

"Quarterly unit-sales of handsets fell to their lowest level since NPD begin tracking the category in 2005," said Ross Rubin, NPD's industry analysis director.

The second-quarter drop followed a first-quarter decline, which was preceded by a 2007 gain of 2 percent in unit sales to 146 million and a 27 percent gain in dollar sales to $11.5 billion, in large part because people were using cellphones as their main phones and were therefore willing to invest more in their phone, NPD said.

In a survey released earlier this year, NPD found retail-level cellphone sales dropped 22 percent in units during the first four months of 2008 to 39.3 million, with dollar volume slipping by only 8.7 percent to $3.41 billion.

As in the past, phones sold in the second quarter were more feature-rich than those sold during the year-ago period, NPD said. Sales of phones with QWERTY keyboards gained the most in the quarter, accounting for 28 percent of handsets sold vs. only 12 percent during the year-ago quarter. Smartphones accounted for 19 percent of all units sold in the quarter compared with 9 percent during the year-ago period.

NPD also found that 81 percent of phones sold in the second quarter featured Bluetooth, up from 69 percent, and that 65 percent of phones purchased in the quarter were music phones compared with 45 percent during the year-ago quarter.

Average selling prices rose 14 percent to $84 during the second quarter compared to the year-ago period, but average prices were off 4 percent from the first quarter's $87 because of declining prices from brands such as LG, Motorola, Nokia and RIM, NPD said.

NPD also found that carrier-owned stores accounted for 63 percent of unit sales, with mass merchandisers accounting for 8 percent and electronics specialty stores for 6 percent. Among carriers, AT&T expanded its unit-sales lead to 29 percent, followed by Verizon with 26 percent and 11 percent each for T-Mobile and Sprint.