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The cordless phone category will lean on higher-priced multi-handset bundles, niche designs and 5.8GHz technology to shore up margins in the wake of a category-wide softening in unit sales, say vendors and analysts.
According to the NPD Group, cordless phone unit sell-through has declined year-over-year from January through May 2004 vs. the year-ago period, with steep declines in unit volume for 900MHz analog models largely responsible for the sales dip.
The beneficiary of the erosion of 900MHz analog has been 2.4GHz analog models, which occupied a majority share of the retail sell-through market, 33 percent of the unit and over 25 percent of the dollar volume, as of May 2004, according to NPD.
"2.4 GHz is now the dominant category in the industry and will remain so through 2005," said Lisa Castor, VP, ATLINKS, a wholly owned subsidiary of Thomson and makers of GE/RCA-branded phones.
While 900MHz analog occupies a rapidly diminishing share of the market, vendors will continue to offer at least one SKU to hit key entry-level price points, said Al Silverberg, president, Uniden.
"Price always sells, but 2.4GHz analog is closing the gap" in price between the two analog frequencies, Silverberg noted, and that above all is forcing 900MHz into extinction.
"Many retailers have dropped 900MHz entirely," Castor said. "It will most likely remain until 2006, driven by select retailers as well as the need for closeouts and special niche products."
Concurrent with the softening sales over the first two quarters is a tightening of retail shelf space, Silverberg said. "Retailers are shrinking their assortment, and the major brands are a key focus for them."
"I believe that a part of the traditional telephony industry has become a 'sunset' business," said James Palmer, president, VTech Communications. But, he added, the sun is rising on other niches, particularly uniquely styled phones like the company's V Mix line of 2.4GHz analog phones with interchangeable color face plates.
It is those phones, in addition to 5.8GHz models and digital expandable systems, that will be heavily promoted through the holidays, said Frank Lasorsa, VP, communications division, Panasonic.
"5.8GHz is the shining star," Lasorsa said. According to NPD, 5.8GHz phones accounted for almost 10 percent of unit volume through the first quarter of the year and 16 percent of the dollar volume.
"We see large growth for the 2.4GHz and 5.8GHz digital multi-handset category, both dual handsets and single handset expandable options," Castor said.
"We see a strong shift toward caller ID telephones," said VTech's Palmer. "This shift has come at the expense of the products which only offer 'basic dialing' feature sets. The customer is demanding more capabilities in their home communications products."
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.