Mobile handset sales dropped in the US during Q2 2008 due to weak economy and as many people were tied in two-year contract with mobile companies, making upgradation an expensive affair.
NPD Research has revealed that the mobile handset sales in the US during Q2 2008 plunged 13% against the same period previous year, as reported by InformationWeek.
The sales of mobile manufacturers in Q2 2008 declined by nearly 2% to 28 Million units as compared to the same quarter last year. This brought around $2.4 Billion in revenue to the industry. Moreover, the median price of a mobile in the US during the period surged 14% to $84 over the same period last year. However, the handset prices fell 4% during the same period.
The US economy is passing through the recession phase and its impact is clearly visible in the people’s decision to buy mobile phones. Amid economic slowdown concerns, many consumers have suspended their plans to buy (upgrade) mobile phones, particularly those who are tied with new prepaid plans. Moreover, the mobile manufacturing companies are finding their profit margins shrinking under tough competition.
Another important reason for downfall in mobile handset sales is the limitation to upgrade existing mobile phones against two-year contract with which many users are bound. As many people are bound with two-year contract of mobile companies, upgrading the existing handset is very expensive, forcing consumers to wait till tue contract expires. This has also stopped people from buying mobile phones.
The mobile manufacturing companies in the US will continue to face tough time ahead as business conditions will not change and sales remain low in coming months. Besides, the sales of mobile phones will be greatly hampered by global economic slowdown and rising competition among manufacturers.
A Senior Research Analyst at RNCOS opined, “The US mobile industry sales have fallen in absence of favorable business conditions in the country. It is not only affecting the handset manufacturers and mobile service providers, but the US economy has also been hit. Manufacturers and service providers are witnessing eroding profits, in fact losses. Therefore, mobile companies should launch low-priced handsets to lure consumers that will help in raising the demand in the country.”
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