Hold The Phone: Economy Forestalls Upgrades

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Consumers are holding onto their traditional cell phones longer, thanks to the economy and a wariness of additional charges associated with smartphones, according to J.D. Power and Associates.

According to the company's 2010 U.S. Wireless Traditional Mobile Phone Satisfaction Study, people are keeping their traditional mobile phones (a/k/a feature phones) for an average of 20.5 months, the longest period of time since the study began in 1999 (when the average was 17.3 months).

"If you think about the marketing communication within the wireless community, it's all smartphone-focused," Kirk Parsons, senior director of wireless services for J.D. Power, tells Marketing Daily. "They're hoping the customers that have a traditional feature phone will get an upgrade."

However, two things are keeping many who don't see the immediate need for the bells and whistles of a smartphone from upgrading: the economy and the additional charges (such as data plans) that come with smartphones.

At the same time, monthly wireless bills are steadily increasing. According to the study, the average monthly wireless bill in 2010 was $78 compared with $69 three years ago. Parsons attributes the increase to the addition of data-related services, increases in activities such as text messaging and added fees and taxes. (Meanwhile, feature phone costs are coming down; customers are paying $76 on average for feature phones, down from $81 in 2009.)

However, those who have bought smartphones are using them for more purposes. According to a similar study on smartphone customer satisfaction, more than two-thirds of smartphone users have downloaded gaming applications, while 54% download travel apps (such as weather and maps). Forty-one percent download utility applications and 36% download business apps.

Among smartphone users, Apple remained the leader in customer satisfaction. However, Motorola's Android-phones have given the company a boost, coming in second (and only nine points behind on a 1,000-point scale). HTC also scored above the industry average.

"The [customer] experience has improved with the addition of other operating systems," Parsons says. "I think that has breathed life into some older brands like Motorola, which has done better in the brand rankings over time .... The gap is definitely shrinking.

Among feature phones, LG continued to rank at the top, as the only company to perform above the industry average in the J.D. Power study.

 

Tags: research, telecom
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