Cell Dollar Sales Soar On Modest Unit Gains: NPD

PORT WASHINGTON, N.Y. — Retail-level unit sales of cellphones rose only 2 percent in 2007 to 146 million, but dollar volume soared 27 percent to $11.5 billion, in large part because people are using cellphones as their main phones and are therefore willing to invest more in their phone, The NPD Group found.

"More consumers are relying on cellphones as their only phones and are willing to invest in their functionality and expression of style," added Ross Rubin, NPD industry analysis director. In the fourth quarter, 19 percent of mobile phone users said their mobile phone was their primary phone, NPD's consumer survey found. That's up from the year-ago quarter's 16 percent.

As consumers step up, more are turning to smartphones, MP3-playing cellphones and phones with memory card slots, NPD found. High-speed cellular-data technology is also encouraging consumers to step up to costlier phones with bigger screens and multimedia features, NPD added.

"Last year's introduction of the iPhone established a new level for matching functionality with fashion," Rubin continued. "In 2008, the handset industry is rising to the opportunity of higher-speed networks with devices that feature enhanced input methods and larger screens. These handsets will set the stage for the best wireless Web and media experiences that consumers have ever had."

In 2007, the step-up trend was well underway, with 12 percent of cellphones sold in the fourth quarter being smartphones, up from the year-ago quarter's 6 percent. Music-enabled cellphones accounted for a 48 percent share of fourth-quarter sales compared to 34 percent in the fourth quarter of 2006. And phones in with removable memory accounted for 33 percent of phones sold in the quarter, up from 22 percent.

Usage habits: Bluetooth-equipped phones accounted for 72 percent of all phones sold in the fourth quarter compared to 53 percent. Although only 19 percent of consumers were using the Bluetooth feature, that's up from 11 percent in the year-ago quarter, NPD said.

Usage of a phone's MP3 player and camera are also rising. In the fourth quarter of 2007, 11 percent of cellphone users were using their phone as an MP3 player, up from 6 percent in the year-ago quarter. A total of 55 percent of subscribers are using their phone's camera feature, up from the year-ago 42 percent.

Brand share: In supplier share, Motorola continued to dominate sales with a 32 percent unit share in 2007, although the brand's share slipped from 33 percent in 2006. Motorola had the two top-selling handsets in the fourth quarter. "The thin clamshell as popularized by Motorola's Razr continues to lead U.S. handset sales. However, sliders and larger screens are driving the trend of putting more access at the consumer's fingertips," said Rubin.

Nokia retained its No. 4 slot in 2007, although its share dropped from 15 percent in 2006 to 10 percent in 2007. Samsung share grew from 14 percent in 2006 to 17 percent in 2007.