Popularity Of Smartphones Boosts Average Cell Phone Price

blackberry, palm treo, iphoneConsumers are paying more for smartphones these days, and when they subscribe to services at AT&T Mobility, Verizon and T-Mobile, fewer are getting cell phones for free. That's according to the J.D. Power and Associates "2008 U.S. Wireless Mobile Phone Evaluation Study-Volume 1" released Thursday. 

The average price jumped $9, to $101, during the past six months. The increase marks the highest average price paid for a wireless device since the study's inception in 2003. Consumers who participated in the study attribute the price hike to the recent surge in popularity of smartphone devices, such as the Reach In Motion (RIM) Blackberry, Palm Treo and Apple iPhone, as well as music-enabled handsets that typically cost more when first released.

Kirk Parsons, senior director of wireless services at J.D. Power and Associates, says consumers like the ease of use in smartphones, especially those that have a full keyboard and touch screens. "Discounts on pricing in advertisements get consumers in the store, but sales are mainly driven by design and functions on the phone," he says.



Sales of smartphone devices rose 6.3% during the past year, up from 1.7% in overall market share at the beginning of 2007.

The current average reported purchase price for smartphone devices is $208, much higher than the average price paid price of $58 for phones with fewer features. Parsons says smartphones will continue to rise in price as more consumers move from standard cellular phones to those that connect to the Internet, and have music and video capabilities.

The study also reveals that fewer customers--36% to 33% during the past six months--say they received a free handset when signing up for service.

The study measures customer satisfaction with wireless handsets by examining five factors. Physical design ranked 24%; operation; 22%; features, 20%; handset durability (19%); and battery function, 15%.

Sony Ericsson tops the list in overall wireless customer satisfaction for a second consecutive time with a score of 740 points on a 1,000-point scale. LG ranks No. 2 with 721 points, also above the industry average. "We're hearing a lot about the next version of the iPhone coming out in the next month or so and that should impact the industry," Parsons says.

The study also suggests several key wireless handset trends.

Seventy-four percent of all cell phones have a clamshell design, up 24% from 2006. This compares with 21% for the candy-bar style and 5% for the slide-cover design.

The average length of cell phone ownership is 17.7 months, up from 16.6 months in 2006. Style ranks highest, 41%, as the reason consumers chose their cell phone. Free follows with 25%; ease of use, 23%; discounts/reduced price; 21%; digital camera features, 18%; and a variety of features and small size, 17%.

Volume 1 of the 2008 U.S. Wireless Mobile Phone Evaluation Study is based on experiences reported by 18,093 wireless users who have owned their current mobile phone for less than two years. The results are from the two most recent studies conducted in September 2007 and January 2008.

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