Cheap touchscreen phones drive down ARPUs, claims report

While much is said about high-end smartphones boosting ARPUs, a new study claims that the emergence of cheaper touchscreen handsets is doing the opposite, driving down ARPUs by 23 per cent.

According to TNS Comtech, which carried out a consumer survey of 240,000 interviews over the course of one year, consumer misunderstanding is to blame. The study claims that consumers are not aware of the difference between a phone with an advanced OS and a touchscreen phone with a basic OS. While this may mean operators are able to grow their customer base, by offering cheap touchscreen handsets, they will be doing so at the expense of their margins.

Paul Moore, director at TNS ComTech, said that, although it was all too easy to attract value driven customers with non-smart touchscreen phones, "operators and manufacturers alike need to think long and hard about their handset portfolio and the effect that handset types are having on customer value. They should take care to educate consumers about the differences between operating systems and not simply push phones that drive volume sales but contribute negatively to value."

To worry operators further, the growth in the global smartphone market slowed to four per cent in the July-to-September quarter as sales of more advanced handsets fell in Europe and Latin America, said the research firm Canalys this week. The firm said much of the recent growth in the smartphone market has come from the most expensive models--iPhone, Nokia's N97 and the BlackBerry Bold--but vendors are increasingly focusing on offering cheaper models.

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