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Smartphone prices down by 3 percent: NPD Group

Buy-one-get-one offers and other price reductions led to a 3 percent decline in average smartphone prices during the third quarter of 2009, according to the NPD Group.

The average purchase price for mobile phones in the United States fell from $88 in the third quarter of 2008 to $85 in the third quarter of 2009. The report also found that smartphones accounted for 28 percent of all handset sales in the third quarter.

?Smartphones will be an important offering for retailers this holiday season,? said Ross Rubin, director of industry analysis at the NPD Group, Port Washington, New York. ?They create opportunities to drive store traffic and sales of services and accessories.

?One somewhat surprising finding is that, while the prices of smartphones continue to drop, the share of smartphones held steady from the last quarter,? he said. ?We may be approaching a point where service plans are becoming a more serious barrier to adoption than the handsets themselves.?

The NPD Group is a research firm that provides consumer and retail information for a range of industries.

Sales on smartphones drive sales
Smartphones represent six out of the 10 top-selling mobile-phone models in the third quarter of 2009.

The NPD Group?s Mobile Phone Track found that smartphone price reductions by carriers helped push the Blackberry Curve, iPhone 3GS and iPhone 3G to the top of the sales rankings for mobile phones.

For feature phones, LG was tops, with both the LG enV3 and LG enV Touch in the top-five of NPD?s seller ranking.

?We?ll see more competition with advanced feature phones,? Mr. Rubin said ?Carriers like the ability of smartphones to drive data plans and usage so pricing promotions will continue.

?Carriers are still looking at the data plan as the main draw for smartphones,? he said. ?However, they should not ignore all the network features and commerce opportunities that had been the focus for feature phones.

?It?s becoming increasingly common, for example, for carriers to develop account management apps for smartphones they offer. Also, T-Mobile offering a pre-paid BlackBerry via its T-Mobile Complete plan is a step toward expanding the smartphone audience.?

Sales of mobile accessories reached $2.3 billion in the third quarter of 2009, which is an increase of 12 percent over last quarter. 

Sixty-eight percent of new handsets were bought at carrier stores, 8 percent at mass merchants and 9 percent at electronic stores.

Mr. Rubin said that during the holidays consumers often purchase mobile devices from mass merchants because of one-stop shopping desires.

NPD predicts gains in pre-paid handsets during the holidays because they can be given easily as gifts, as there is no contract to sign.

Mr. Rubin said that marketers should pay attention to the increase of smartphone users because it will mean more opportunities for mobile marketing.
?Smartphones tend to have better browsers and larger screens, which can help expand the reach of online campaigns,? Mr. Rubin said. ?Also, nearly all have local mapping capabilities, so it?s important that retailers, for instance, be able to be located easily using these tools.

?As for apps, it?s hard to get noticed in the Apple App Store, and competitors are still in early development,? he said.