Camera-Phone Sales Increase, Boosting Handset Price Points
By Peter Arato -- TWICE, 12/22/2003
PORT WASHINGTON, N.Y. — The U.S. camera-phone market is not quite as mature as it is in other countries, but it's rapidly catching up.
During the first three quarters of 2003, the NPD Group found, 12 percent of all cellphones sold to consumers included an integrated camera. An additional 10 percent of cameras were equipped for add-on camera attachments.
In October alone, 15 percent of phones sold to consumers included integrated camera, and another 6 percent were equipped for camera attachments.
For a rebounding industry, this comes as good news because it:
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Gives consumers a tangible reason to upgrade their existing phone;
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Helps buoy price points; and
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Generates carrier revenue from additional services.
For the January-September period, 81 percent of handsets sold were replacement sales, and the rate rose to 84 percent in October. With cameras being a highly visible feature, and with a clearly communicated benefit of sharing images instantly, they provide a good reason for current subscribers to upgrade their handsets.
Bucking the price-erosion trends seen in consumer electronics in general, the net retail price paid by consumers for wireless phones has actually been increasing. Consumers paid $78 for the average handset in October 2003 compared to $67 in October 2002 and $49 in October 2001. Such features as integrated cameras, no doubt, helped this. Through September, in fact, consumers on average paid more than double for a handset with a camera compared with one without camera ($165 vs. $66). In October, that difference spread to $185 vs. $63. Of course, many other attributes frequently bundled with camera phones contributed to the higher price point.
Color screens, a more mature segment, may be a contributing factor to the rapid camera-phone uptake. Color displays were launched in the U.S. market almost three years ago and accounted for 60 percent of all handsets sold in October 2003, according to NPD Techworld's Cell Track service. Not only have color-display phones taken off, but image quality continued to improve: 8 percent of all phones sold in October had 100,000+ colors.
A key question marketers are asking is: Who is buying these camera phones? Camera phone buyers skew younger, male, upscale, with a slightly higher proportion of purchases being an impulse buy. For the January-October 2003 period:
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61 percent of camera phone buyers were male, compared to 52 percent of standard cellphone buyers;
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55 percent of camera-phone buyers were under the age of 35, compared to only 41 percent for standard cell phone buyers;
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The proportion of camera phone buyers earning at least $75,000 per year was 44 percent, compared to 39 percent among conventional camera buyers.
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15 percent of camera phones were purchased on impulse, two percentage points higher than non-camera phones.
During the same time period, NPD found that camera-phone buyers often buy their phone model for different reasons than conventional cellphone buyers. Fourteen percent of camera-phone buyers said they were attracted to their phone to have the latest technology, whereas only 4 percent of traditional phone buyers cited that reason for buying. In addition, 23 percent of camera-phone buyers said they were attracted to their phone for its features, whereas only 18 percent of other cellphone buyers cited features as a reason for buying. Price-related motivators were less of a factor for camera-phone buyers.
As integrated cameras become more sophisticated, with higher resolution, optical zoom, flash, and self–timers, this emerging segment could be further embraced by consumers, not only leading to more camera-phone purchases, but more frequent use.
NPD Group's Cell Track service combines data from a panel of retailers and online consumer surveys (heavily weighted to the latter) to reflect the total U.S. consumer market. Each week, 35,000 surveys are sent to a panel of pre-recruited individuals who have agreed to participate and have completed a comprehensive demographic questionnaire. The responding sample is demographically balanced (to restore sample proportions to U.S. census levels), then projected and calibrated, to represent the population for people ages 13 and up.
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