Analysts: Consumers, businesses want phones with more 'features'

Customers are now buying more costly cell phones with features such as GPS, Bluetooth, and music enablement, not just in the US but worldwide, according to recent research by two industry analyst firms.

According to a new study from analyst firm NPD, mobile handsets sold in the US during the second quarter of this year were, "by and large, more feature-rich than those sold the year prior." Meanwhile, demand is increasing throughout the world for handsets with features such as GPS, touchscreen, and multimedia, concurs a study by IDC released at the end of July.

Tracking retail sales only, the NPD Group reported this week that 28 million mobile handsets were sold in the US during the second quarter of 2008, a 13 percent drop since the same quarter the year before. Beyond that, the 28 million figure represented the third consecutive quarter of sales declines.

But US consumers paid an average price of $84 for new cell phones during the quarter, an increase of 14% over last year, says NPD.

Smartphone sales comprised 19% of total mobile phone sales, as opposed to 10% the year before. About 28% of handsets sold during the quarter had QWERTY keyboards, in comparison to 12% in 2007. A total of 81% of these phones were Bluetooth-enabled, in contrast to 69% last year; and 65% were music-enabled, rather than 45% in 2007.

Meanwhile, IDC -- which bases its numbers on manufacturers' shipment figures -- has reported shipment of 42.9 million phones to the US market for the second quarter of 2008, an increase of 6% over the same quarter in 2007. On a worldwide basis, manufacturers' shipments rose at almost the same margin, stepping up 5.6% to a total of 306 million phones for the second quarter of this year, according to IDC statistics.

Worldwide demand for features in phones is rising, IDC says. "This also goes for hotly contested emerging markets, where vendors are introducing phones that offer features in addition to voice telephony. Reception towards these devices has been warm, and as we head into the holiday quarter, demand for these and other devices will no doubt increase," according to Ramon T. Llamas, an IDC senior research analyst.

At the time of another IDC report issued just last April, Llamas had predicted that demand for low-cost phones without advanced features would continue through the end of 2008 in some emerging markets.

The new figures from IDC also suggest that, as unit sales to US retail outlets decline, sales of mobile phones to US businesses and government agencies could be on the uptick, helping to bridge the gap for vendors.