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US cellphone purchases decline

21 мая 2008

U.S. purchases of new cellphones declined in the first quarter for the first time in several years, signaling that worries about an economic slowdown are hurting the handset market, according to two new studies.

The drop was concentrated among poorer customers using prepaid plans and among households earning $75,000 to $99,000 a year. The upper end of the cellphone market - phones featuring full keyboards for email and text messaging, and extra features for music downloads and video viewing - continued to see growth.

The overall decline in handset sales also comes amid finds that growth in wireless-service subscriptions is slowing as the market reaches saturation, with 83% of the U.S. population owning a cellphone now.

One study, from United Kingdom-based market-research firm Strategy Analytics showed a 5% drop in the quarter compared with a year earlier, while a separate report from NPD Group, showed a 22% drop in purchases of new handsets in the quarter.

The studies are the latest piece of bad news for handset makers, particularly Motorola Inc., the U.S. market leader that is particularly exposed to the lower end of the market. Motorola cellphone sales slid 39% in the first quarter, and the company attributed much of that loss to the U.S., where it sells half of its phones.

The evidence of slowing wireless-service subscriptions came from a report Monday by Bernstein Research estimating that the U.S. wireless industry added 23% fewer subscribers in the first quarter, compared with the year-earlier period. The slowdown in wireless subscription rates started six months ago, said telecom-and-cable analyst Craig Moffett, who added "we expect growth to slow further from here."

The analyst said that growth was slowing most rapidly among new subscriptions for children under 12 and for "deeply subprime users, and it's reasonable to think that in a weak economy, that both of these populations would be strapped," he said.

The research on handset sales reached a similar conclusion."When money is tight or expected to be tight, many consumers tend to delay upgrading to a new phone and hang on to the one they already own for a little while longer," said Neil Mawston, wireless analyst for Strategy Analytics.

NPD analyst Ross Rubin said the growth in family plans, which are post-paid, may be eating away at the sales of prepaid phones for children.

As the market plateaus, carriers and handset makers will both look for growth in phones with full keyboards for the boom in text messaging and extra features for multimedia applications. Handset makers charge more for these phones while carriers can generate extra revenue from customers who use the phone's enhanced features.

Already there is evidence that the market is shifting toward these high-end phones. NPD estimated that such phones comprised 17% of all mobile phone sales in the first quarter, an increase of 10 percentage points since the same period a year ago. Also in the quarter 79% of phones purchased had Bluetooth short-range wireless technology (up from 65% from the year-ago quarter), and 60% of phones purchased in the first quarter were music enabled (versus 41% the year-ago quarter).

This trend benefits makers of feature-rich handsets such as Samsung Electronics Co., LG Electronics Co., BlackBerry-maker Research in Motion Ltd. and iPhone maker Apple Inc. Motorola has struggled to add high-end phones and has lost market share as a result.

At the end of the first quarter, Motorola held 25% of the U.S. cellphone market, compared to 34% at the end of the first quarter of 2006, according to Strategy Analytics. During the same period, Korean competitors Samsung had increased its share of the U.S. market to 22% from 15% and LG rose to 21% from 16%. RIM's BlackBerry devices comprised 8% of the market, enabling the company to take the No. 4 slot from Nokia Corp., the global market leader.

The slowing growth in wireless subscription sales appears to be hurting the No. 3 player, Sprint Nextel Corp., more than its bigger rivals. Verizon Wireless's net subscriber additions in the first quarter were 1.5 million, just 200,000 lower than a year earlier, and a spokesman said the carrier saw "no change in momentum since the first quarter." AT&T Inc. increased its quarterly net additions to 1.3 million, up from 1.2 million in 2007. Analysts say much of the growth for those companies is coming from signing up customers who have defected from Sprint Nextel, which lost nearly 1.1 million customers in the first quarter alone.

Источник: Total Telecom

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