Handset sales slowing in U.S. amid worsening economy

Good and bad news for the U.S. mobile wireless industry when it comes to the worsening economy. The bad news: Consumers' purchases of new mobile devices declined in the first quarter for the first time in many years. The good news: The decline tended to concentrate around customers using prepaid and among the middle class. The higher end market that features higher ARPU customers that heavily use the more sophisticated devices continued to grow.

The Wall Street Journal cites two new studies that indicate falling handset sales in the first quarter. Strategy Analytics reported a 5 percent decline in the quarter compared with the previous year, while NPD Group reported a 22-percent drop in the purchase of new devices in the first quarter. Also, Bernstein Research estimates that U.S. mobile operators added 23 percent fewer subscribers in the first quarter compared with the first quarter in 2007. The firm is anticipating that growth will continue to slow and said that the segment experiencing the most slowdown is new subscriptions for children under 12 and for "deeply sub prime users, and it's reasonable to think that in a weak economy, that both of these populations would be strapped," said analyst Craig Moffett. Prepaid MVNO Virgin Mobile is being squeezed by the economy.

However, NPD estimates that high-end devices made up 17 percent of all mobile-phone sales in the first quarter, in increase of 10 percentage points since the first quarter 2007.

To read more about the economy's impact on the U.S. mobile-phone market:
- check out this article from The Wall Street Journal (sub. req.)

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