Cordless Phone Market Poised For Growth in '01

PORT WASHINGTON, N.Y. — The cordless phone market, including 900 MHz analog, digital and 2.4GHz analog and digital, is on pace to equal last year's unit sales growth of 13 percent, according to the latest numbers from the market research firm NPD Intelect.

Figures from NPD showed that, though sales growth has slowed from 1999 figures, the category is still healthy and has experienced double-digit growth over the last four years.

"I would expect this growth to continue based on a few factors," said Peter Arato, senior account executive, Telecom at NPD Intelect. "In terms of market penetration, cordless is still not at 100% of the home phone market, so there's new people out there to sell to. You also have people who have an older technology to sell replacement units to."

In general, Arato praised the landline telecom industry for "coming up with features that are meaningful to the consumer at price points that represent real value."

Leading the way are phones in the 900MHz analog frequency, thanks to lower pricing and mass market sponsorship. 900MHz analog phones represented 69.2 percent of the cordless market in 2000 and are on pace to beat that in the early months of 2001, garnering 74 percent of the market share.

According to Arato, this market dominance is largely due to pricing. The average price of a 900MHz analog phone was $30.83 in the first months of 2001.

Phones in the 2.4GHz analog and digital frequency still occupy a niche market, at 9 percent of the total market — and this too is largely a matter of pricing. The average price of a 2.4GHz digital spread spectrum phone is $144.82.

Although 2.4GHz lingers behind in market share, one out of every five dollars spent on cordless phones is spent on a 2.4GHz model, for a 20 percent dollar share. This makes it a profitable category for retailers.

Consumer curiosity, or possibly paranoia, seems to be thriving as cordless phones with caller ID have captured 47.8 percent of the market in the first months of 2001 and 40 percent of the market in 2000.

One feature on cordless phones that appears to be a non-factor is multiple lines. A mere 2.9 percent of all cordless phones sold in 2000 feature two or more lines, and those numbers are consistent with figures garnered from early 2001, which showed multiple line cordless phones as roughly 3.3 percent of the total market.

Looking ahead, Arato sees competition from wireless phones raising consumer expectations, especially in areas like form-factor.

"When you can get this high-tech wireless phone with all these advanced features either free or at a nominal cost, people are going to want more from their cordless," said Arato. "Now, some of those wireless features don't make sense, but other changes, like the look and feel of the phone, are already being made by some manufacturers."