NPD: Q4 Smartphone Dollar Volume Up, Growth Rate Slows

By Joseph Palenchar -- TWICE, 3/17/2010

Port Washington, N.Y. - Consumer spending on smartphones grew year over year in the fourth quarter, but because of a proliferation of lower-priced models, smartphone dollar volume didn't grow as rapidly as it did during the year-ago period, an NPD Group consumer survey shows

Although smartphone dollar volume was up 21 percent in the fourth quarter of 2009, the growth rate slowed from the year-ago 37 percent, NPD said. The research company attributed much of the slowing growth rate to a greater selection of lower price smartphones. Almost two-thirds of U.S. smartphones sold to consumers in the fourth quarter, NPD said, were priced at $150 or less, whereas in the year-ago quarter, less than half were priced at $150 or less.

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At the same time, smartphone unit-sales share grew to 31 percent of all phones sold to consumers during the fourth quarter, compared with the year-ago 23 percent. In units, smartphone volume grew 38 percent year over year in 2009's fourth quarter, compared with 77 percent year-over-year growth in 2008's fourth quarter.

As smartphone prices fall, the cost of data plans and ease of use "will emerge as more significant factors to limiting consumer sales growth [of smartphones]," contended Ross Rubin, industry analysis executive director. Compared with smartphone buyers, for example, current feature-phone buyers focus more on ease of use as a key purchase criterion, he said, whereas "smartphone buyers tend to care more about their phone's available capabilities, the fact that it leverages the latest technology, and that it is considered to be a cool phone."

NPD's survey also found that smartphone buyers consider the phone first and the carrier second. "With many carriers now offering exclusivity on specific handset models, smartphone buyers were more likely than the average phone buyer to choose the phone they wanted prior to choosing their wireless carrier," NPD said. "Bolstered by the brands of their hardware and operating systems, smartphones have established strong identities in the marketplace," NPD added. "That means more consumers now have specific models in mind when choosing their handsets."

NPD's statistics are based on more than 150,000 completed online consumer surveys each month. The results, which exclude purchases by enterprises for their employees, are projected to the entire population of U.S. consumers.