Westlake Village, Calif. — The average selling price (ASP) of cellular handsets is increasing because more consumers are stepping up to smartphones and music phones and because carriers are offering fewer free phones, according to a consumer survey by J.D. Power and Associates.
The survey also found that SonyEricsson jumped to the lead in customer satisfaction over other handset brands to displace Motorola and Sanyo, who were tied for the lead in the year-ago survey (see table).
The findings are based on the responses of 18,093 wireless users who owned their current phone for less than two years. The survey was conducted in two waves, in September 2007 and January 2008.
The study found that the average reported purchase price of a wireless handset increased substantially for the first time in two years, jumping to $101 from $93 in the year-ago survey. That marks the highest average price paid for a wireless device since J.D. Power launched its survey in 2003, the company noted.
Smartphones’ share of the market rose from 1.7 percent during the previous survey to 6.3 percent during the latest survey. The current average smartphone was $208, higher than the average $58 price paid for models other than smartphones, the survey also found.
“The increase in the average purchase price can be partially attributed to the recent surge in popularity of smartphone devices, such as the RIM Blackberry, Palm Treo and recently introduced Apple iPhone, as well as music-enabled handsets, both of which typically have higher price points when first offered,” the company said.
“As more customers start to upgrade to mobile phones that offer real-time connectivity and access to Internet content — particularly those offered by smartphone devices — we should continue to see the wireless handset price point rise,” the company added.
Along with rising smartphone sales, J.D. Power found falling free-phone sales. In fact, the percentage of surveyed consumers who said they bought a free phone fell for the first time since the survey’s 2003 inception, the company said. The percentage of purchasers reporting a free-phone purchase dropped to 33 percent, from 36 percent in the year-ago report, but that percentage is still up considerably from 28 percent in 2002.
The drop can be explained by the popularity of smartphones, “which have a much higher price point and tend to be discounted less frequently by wireless carriers,” said Kirk Parsons, wireless services senior director for J.D. Power.
Brand satisfaction: In assessing consumer satisfaction with their handsets, J.D. Power found a major turnaround in the reputation of Sony Ericsson, whose phones were ranked tops in customer satisfaction. That contrasts with the brand’s fifth-place rank in the year-ago survey.
LG’s luster also grew as the brand’s rank rose to second place from a year-ago fourth place, but Motorola and Sanyo sank from a first-place tie last year to a fourth-pace tie in the latest survey. Nokia ranked seventh in the latest survey.
The study measures customer satisfaction by examining five factors in the following order of importance: physical design (24 percent of the score), operation (22 percent), features (20 percent), handset durability (19 percent) and battery function (15 percent).
Handset preferences: The study also found that clamshell-style phones continue to gain ground, with 74 percent of the surveyed consumers saying they own a clamshell, up from 69 percent in the year-ago survey and 50 percent the year before that. Candy-bar-style phones dipped to 21 percent ownership from the year-ago 29 percent, and sliders were owned by 5 percent of respondents, up from a year-ago 2 percent.
The most frequently reported reasons for choosing a specific model were pleasing design style (41percent), received for free (25 percent), easy to use (23 percent), discounted/reduced price (21 percent), digital camera features (18 percent), and variety of features offered and small size (17 percent).