2009: Cell phone sales will be down, but not out

Suzanne Choney • E-mail

If 2008 was the year of the “smartphone,” 2009 may be the year of the smarter consumer looking to save on phone costs by reducing service where they can, including in some cases, losing their land lines, using alternative wired line-options or moving to prepaid cell phones that don’t require a contract.

Smartphones themselves — devices like the iPhone and BlackBerry which can surf the Web and provide e-mail access — had stunning growth this year, with shipments up 75.7 percent in the United States, according to a recent report from IDC.

Next year, the research firm projects smartphone shipments will continue to increase, albeit by only 3.1 percent in the U.S. That’s small but impressive compared to how more traditional mobile phones are faring. Shipments of those were down by 9.8 percent this year in the United States, and will decrease by 11.6 percent next year, IDC says.

“Smartphones will continue to grow as a segment, as consumers have discovered that a phone can do more than voice and text messaging, and that they want to do those things,” said Avi Greengart, Current Analysis’ research director for mobile devices.

“Apple has been influential here far beyond its sales reach,” he said. “Its 30-second tutorials (via TV ads) have educated consumers that so much more is possible when you move away from a 12-button feature phone and buy a smartphone instead.”

Mobile devices will be “the primary connection tool to the Internet for most people in the world” in the year 2020, according to a recent survey of experts by the Pew Internet & American Life Project.

But first we all need to get to 2020, and right now trying to get through 2009 seems challenging enough because of the economy.

Significant price drops on smartphones — many now are less than $200 and even $100 — and some lower monthly service plans, including Sprint’s “Simply Everything” plan for $99 a month, should help continue to fuel smartphones’ success, even with a weakened economy.

Some consumers, who are cutting costs in other areas, may decide it’s okay to splurge on their cell phones, said Rob Enderle, technology consultant and president of The Enderle Group.

“As long as the price delta isn’t too big, they may buy up because they will want some purchases to fall into the ‘feel good’ category and may be willing to pay $50 or so more for something that gives them that benefit,” he said.

Not for everyone
Still, smartphones will not be for everyone. “It’s a very niche audience that has around $100 a month to spend for a cell phone plan,” said William Ho, Current Analysis’ research director for wireless services.

Whether it’s a smartphone or a regular mobile phone, when it comes to cost-cutting, the phone to go may be the landline.

“If you can only afford one phone, it’s going to be a mobile phone,” said Greengart.

“Few consumers are going to drop their cell phone service; they’re much more likely to drop their home phone service,” agrees Ross Rubin, director of industry analysis for The NPD Group market research firm.

That’s the direction it has been heading the last few years, with an estimated 18 percent of households now having only cell phones and no landlines, according to a recent study by the federal Centers for Disease Control and Prevention.

Compare that to 2005, when 7 percent of those surveyed said they had cell phones only.

“Given the current economic environment, I’d not be surprised to see more and more people give up their landline phones for economic reasons,” Stephen Blumberg, CDC senior scientist told The Associated Press.

Going wireless only can be a good option for one- or two-person households, or for those who rent and don’t want to invest in a landline, said Ho of Current Analysis.

Still, there are reasons for hanging onto a landline. Cell towers can and do go down in severe weather, and when there’s an emergency, cell phone networks quickly get busy, making it difficult to place a call. Plus, there’s the battery life issue for anyone who uses their phone heavily or for long conversations.

“Battery life is pretty good these days, but if you keep your phone for two years, you know that the more you use the battery, the faster it drains, and ultimately you have to replace it,” Ho said. “Admittedly, it’s a small price to pay for mobility.”

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