Penetration Up, Retail Share Down In Wireless
By Joseph Palenchar -- TWICE, 10/8/2001
AGOURA HILLS, CALIF.— Household penetration of wireless phones continues to rise in the nation's top 25 markets, but the indirect channel's market share keeps sliding, a J.D. Power and Associates survey found.
Household penetration hit 52 percent in the latest survey, which was based on responses from more than 14,000 respondents interviewed by phone from mid-April through June. The penetration rate is up from 46 percent in 2000 and 43 percent in 1999, when surveys were conducted in the top 22 markets.
Increasingly, purchasers of new phones are buying from carrier-operated channels, the survey also found. Of respondents who purchased a phone within the past 12 months, 91 percent said they bought from a carrier's store, kiosk, sales rep, toll-free source, or Web site. That's up from 54 percent in the 1996 survey, when households only in the top 13 markets were surveyed, and up from 75 percent in 1999.
Kirk Parsons, J.D. Power's wireless service director, admitted that the indirect channel's share could be overstated because some independently operated stores and kiosks carry only a carrier brand name. Even Sprint-branded kiosks in RadioShack stores might have been misidentified by respondents as carrier-owner kiosks, he said. Nonetheless, the trend for carrier-direct sales is up, he pointed out.
From 1996 to 2001, the indirect channel's share plummeted from 46 percent to 9 percent.
The survey also found that the convenience of the purchasing location is growing in importance as a reason for selecting a purchasing venue. Thirty-seven percent of respondents cited convenient location as a main reason in the 2001 survey, compared to 21 percent in 1996.
The survey also underscored one of the reasons that carriers are building their direct channels and the indirect channel's expense: People who buy phones from carrier channels spend an average of $62 for monthly service, while people who buy through indirect channels spend $59 on average, the latest survey found.
| 2001* | 2000** | 1999** | 1998** | 1997*** | 1996**** | |
| Company-Direct Sources (Net) | 91% | 85% | 75% | 80% | 68% | 54% |
| Phone Store | 48% | 44% | 41% | 43% | 41% | 37% |
| Booth/Kiosk | 22% | 22% | 17% | 17% | 6% | 3% |
| In-Person Rep. | 6% | 8% | 8% | 10% | 9% | 9% |
| Phone Rep. | 8% | 9% | 7% | 8% | 7% | 5% |
| 800 Number/Catalog | 5% | 1% | 2% | 2% | 5% | 0% |
| Internet | 2% | 1% | NA | NA | NA | NA |
| Indirect Sources (Net) | 9% | 15% | 25% | 20% | 32% | 46% |
| National Electronic Store | 3% | 5% | 9% | 7% | 10% | 14% |
| Local Electronic Store | 1% | 2% | 4% | 4% | 7% | 10% |
| Other Stores | 2% | 5% | 5% | 6% | 11% | 16% |
| Other | 3% | 3% | 5% | 4% | 3% | 4% |
| * Top 25 markets **Top 22 markets ***Top 18 markets **** Top 13 markets Source: J.D. Power & Associates, Agoura Hills, Calif.©TWICE 2001 |
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