Smartphone Sales Driven By Lower Prices

March 19, 2010

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Smartphone Sales Driven By Lower Prices

Promotions and lower prices, helped smartphones gain market share against feature phones in the fourth quarter of 2009, according to a new report by The NPD Group.

Smartphone share grew from 23 percent of the total handset market in the fourth quarter (Q4) of 2008 to 31 percent in Q4 2009. Nearly two-thirds of smartphones were purchased for $150 or less in Q4 2009, versus less than half purchased at the price level in Q4 of 2008. Due to lower prices, smartphone sales were strong in Q4 2009, but overall smartphone year-over-year revenue growth reached just 21 percent, which was less than the 37 percent posted the previous year.

"Although we are seeing more expensive models among the best-selling handsets, carriers are now offering some popular smartphones for less than $100," said Ross Rubin, executive director of industry analysis for NPD.

"As the average price of these highly capable devices continues to fall, the price of data plans and ease of use will emerge as more significant factors to limiting consumer sales growth."

When it comes to purchase motivators for smartphones, consumers relied mainly on recommendations from family and friends (29%) or chose handsets owned by people they know (18%). This finding was especially true among iPhone and BlackBerry Curve buyers. Consumers also mentioned high consumer-service ratings as more important in the decision making process for smartphones (17 percent) than for feature phones (6 percent).

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