Cellphones Get Cheaper, So People Pay More

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By Saul Hansell

Tags: Cellphones, iphone, motorola

There’s no place that the relentless reduction in prices for technology products is more visible than cellphones. It seems like only months between the time a phone is offered for sale at $300 and it is ready to be given away free in cereal boxes. (O.K. not quite, but that’s not a bad marketing idea.)

What’s odd about all this is that according to new data from the NPD Group, people are actually spending more on cellphones than a year ago. Americans bought 38 million phones in the third quarter up only 4 percent from the third quarter of 2006. But they spent a total of $3.2 billion on those phones, up from $2.2 billion a year earlier.

Doing the math, that means the average phone cost $82.81 this year, up 40 percent from $58.95 a year ago.

NPD doesn’t say whether the extra $1 billion spent on phones in the quarter was simply added to the nation’s credit card bills or whether people cut back spending on food, clothing or something else far less important than cellphones.

But the company does show that more people are buying phones that serve other functions besides making calls. Half the phones sold in the period could play MP3 music files, compared to one quarter a year ago. Bluetooth capability was on 72 percent of phones sold, compared to 50 percent a year ago. And 11 percent were those digital Swiss Army knives called smartphones, up from only 4 percent a year ago.

Speaking of smartphones, Apple’s iPhone hit NPD’s charts in its first full quarter of sales. NPD ranks the iPhone as the sixth most popular phone model in the quarter. The top seller remains Motorola’s Razr line (in all its configurations). Second was LG’s VX8300, a heavily promoted low-price flip phone for Verizon Wireless, with Bluetooth, an MP3 player and a host of other features, I suspect most people never use.

The iPhone isn’t a smartphone, it’s a geniusphone ™ — that it, it was *invented* by geniuses, but designed for idiots like me. I know all of its features, and use them routinely, easily, without fuss or barely even thought. This is in contrast to my last phone, that required I consult the manual, because the people who designed that phone, well, they didn’t.

†Posted by Michael Rogers

“NPD doesn’t say whether the extra $1 billion spent on phones in the quarter was simply added to the nation’s credit card bills or whether people cut back spending on food, clothing or something else far less important than cellphones.”

Far less important than the primary communication device for a large AND rapidly growing segment of the American population? That’s kinda like bitching about families having radios during the WWII era when the valuable wood and wires therein could be directed toward the war effort.

Hey, I have an idea: let’s mix up some metaphors and make a mountain of the molehill that is a $1 billion drop in the bucket of a $12 trillion economy.

†Posted by Jeffrey T. Larson

“The iPhone isn’t a smartphone…”. That’s exactly right. It’s a toy. A very pretty toy, but nonetheless, not something designed as a business tool. For starters, no keyboard. How can you reply to email at 20 wpm without a keyboard?

†Posted by Al Chen

I wonder if the decrease in purchases of PDA when added to the money spent on smart phones would show a decrease in spending.

†Posted by Steve F

Note to Mr Al Chen ” “The iPhone isn’t a smartphone…”. That’s exactly right. It’s a toy. A very pretty toy, but nonetheless, not something designed as a business tool. For starters, no keyboard. How can you reply to email at 20 wpm without a keyboard?”

Actually The iPhone has 3 keyboards. The phone pad, The vertical keypad and the horizontal keypad. See a demo somewhere please!!!!

†Posted by Robert Durnford

how come i cannot post from my phone? yet?

†Posted by Rah

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