US Consumers Buying Fewer but Fancier Phones

The NPD Group said in a report Tuesday that 28 million cell phones were sold in the United States in the second quarter, a decline of 13 percent from the same period a year ago.

It was the third quarter in a row with a year-over-year decline, and the lowest number of phones sold since NPD began tracking the category in 2005, said Ross Rubin, the firm's director of industry analysis.

Quality Over Quantity

However, the phones that were sold tended to have more features and be more expensive, and the total value of the market was down only 2 percent from a year ago, at US$2.4 billion, according to NPD.

Motorola's (NYSE: MOT) phones were the most popular, but its share of the units sold dropped to 21 percent, from 32 percent last year.

One important caveat is that NPD figures were based on online surveys of cell phone buyers, and exclude government and corporate buyers. Figures from another research firm, IDC, indicate that institutional buyers are making up for slackening consumer demand.

Ramon Llamas, IDC's senior research analyst for mobile phones, said 42.9 million handsets were shipped to the U.S. market in the second quarter, up 6 percent from a year ago. IDC's figures are based on manufacturer reports.

Going for Smarts

The average cell phone in NPD's surveys cost $84, up 14 percent from a year ago, as sales of feature-rich smartphones nearly doubled. Cell phones with full-alphabet keyboards, like Research In Motion's (Nasdaq: RIMM) BlackBerry models, saw the biggest increase. Meanwhile, sales of simpler phones used mainly for calls are falling off, Rubin said.

"One explanation might be that there's a group of consumers that's holding off, making do with the devices that they have, either because of larger economic concerns or because they don't see any value yet in the new voice and data services that are driving some of these new handsets," he said.