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The decline in cordless phone sales looks to continue unabated into the next two quarters, according to phone manufacturers, though some hold out hope that higher-priced technologies will prop up the dollar volume.
“We're projecting the category to be flat, unit-wise, and down three percent in dollars,” said Brad Pittmon, product manager, VTech.
Wayne Borg, national product manager, Panasonic, concurred. “Units will be down slightly and dollars down even more.”
“There is a 'sky is falling' mentality in this business — and we do sell fewer units — but we have been able to trade consumers up with new technology,” said Tom Bratton, Atlinks. “I think we will rebound, dollar-wise.”
“We have been impressed with the amount of business we've done on the higher-end products,” said Rex Holloway, product management director, Uniden.
Chris Taddei product management director, Motorola, pointed to cellular phones as one culprit for the decline. “It's been a disruptive technology,” he said. Borg agreed. “When a kid graduates college, he looks at his cellphone as good enough and doesn't go out and buy a new cordless,” Borg said.
The industry has also, paradoxically, been a victim of its own success. The increasing popularity of multihandset bundles have lowered the total number of units sold because a single system can satisfy an entire home's needs, Holloway said. “It's counted as one phone even if someone purchased a three-handset system.” Indeed, the success of multihandset bundles has not edged up after market handset sales; the attach-rate of accessory handsets remains between 1 and 1.2 per expandable system, manufacturers say.
Most of the bundles are not expandable past what's in the box, Pittmon said. “A bundle customer is not the same as an expandable customer,” he added.
The shift to 5.8GHz and 2.4GHz phones at the expense of 900MHz continues, Holloway noted.
“5.8GHz products have slowed the price erosion — they haven't reversed it,” Pittmon said. That said, retailers are devoting increasingly more shelf space — often as much as a third of their planograms, to the higher frequency, Pittmon added.
For all of 5.8GHz's success, 2.4GHz products will continue to constitute “the bulk of the market's sales for the next two years because of its cost differential,” Holloway said.
Despite the significant gains made by the newer 5.8GHz products, vendors were unanimous on one assessment — the next big leap in cordless technology will not involve a new frequency.
“There's no 11.6GHz. Most of our research is in moving toward VoIP products,” Holloway said.
“We're not concerned with frequency, we're concerned with functionality,” Borg said.
Atlink's Bratton described the move as the “great convergence” as several communications technologies make their way into the cordless phone including VoIP, cellular, and audio/video home monitoring. The first fruits of this convergence have just begun to ship and should be well-represented on store shelves this holiday, but the solutions are incomplete, vendors acknowledge.
The rollout of VoIP-based cordless systems has been slow and uneven due to the proprietary nature of each service provider's network and the added complexity of forging agreements between the service provider and prospective retail partner. Due to the vast number of cellular phones on the market it has been impossible for vendors to offer anything approaching universality in a cellular-cordless dock.
“You can't make a universal dock, especially not a mechanical one,” Holloway said. “You can use Bluetooth, which a growing number of handsets feature.”
“Ultimately mechanical is difficult because of how many cellphones are constantly introduced, but we feel we have a solution that gets the majority of them,” Bratton said.
“Longer term we have to do something to recoup cordless sales. It has to be more than just about making a phone call,” Taddei said. “The cordless phone can be a 'wireless node' in the home.”
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