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John Tews
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J.D. Power and Associates Reports:
Wireless Customers Are Keeping Their Mobile Phones Longer as
Term Contracts Impact the Replacement Cycle
Motorola and SANYO Tie to Rank Highest among Wireless Mobile Phone Manufacturers
WESTLAKE VILLAGE, Calif.: 30 May 2007 —The average reported length of time a customer owns their cell phone has increased by 5 percent since fall 2006, according to the J.D. Power and Associates 2007 U.S. Wireless Mobile Phone Evaluation StudySM —Volume 1 released today.
The study finds that customers are keeping their mobile handsets for an average of 17.5 months—an increase from 16.6 months since the last reporting period (November 2006). This marks the first increase in the reported ownership cycle since 2002, when the average was 18.4 months. The increase in ownership tenure is roughly equal across major handset brands.
“One possible reason for this significant increase in the length of handset ownership is that more customers are initiating or renewing their service contracts for a longer period—typically for two years, as opposed to just one year, which was customary a few years ago,” said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. “While these longer contracts help wireless carriers recover the costs associated with offering subsidized cell phones, customers tend to hold on to their current cell phones longer to avoid termination fees when switching service, which may ultimately lead to lower renewal rates.”
The study also finds that the price a customer pays for their wireless mobile phone has dropped from an average of $103 in 2002 to $93 in 2007. The decline is primarily due to discounts given by handset providers and wireless service carriers to incentivize sales. Currently, 36 percent of customers report receiving a free mobile phone when subscribing to a wireless service—up considerably from 28 percent in the 2002 study.
“It's clear that wireless service carriers are using mobile phones as bait to increase consumer traffic, applying discounts either through rebates or free limited-time offers,” said Parsons. “The problem with this strategy is that, in most cases, the discounted handsets being offered are older models, which typically lack the latest technological advancements or desired design features.”
The study measures customer satisfaction with wireless handsets by examining five key factors. In order of importance, they are: physical design (24%); operation (22%); features (20%); handset durability (19%); and battery function (15%).
Motorola and SANYO tie to rank highest in overall customer satisfaction with wireless cell phones. Motorola performs particularly well in the physical design, operation and features factors, while SANYO receives high ratings in operation and battery functionality. Following Motorola and SANYO in the rankings and performing above the industry average are Samsung and LG, respectively.
The study also finds several key wireless handset usage patterns:- Sixty-nine percent of all cell phones owned are a clamshell design—an increase of 19 percent from 2006. This compares to 29 percent for the candy-bar style, and 2 percent for the slide-cover design.
- Handset features that are used most frequently include: speakerphone (51%); camera capabilities (35%); services to send/receive short messages (22%); and gaming (16%).
- More than one-half of all current wireless users compared other handset brands before selecting their current wireless phone. Those customers who compare phones during the selection process are more likely to be satisfied overall with their current handset than those who do not.
Volume 1 of the 2007 U.S. Wireless Mobile Phone Evaluation Study is based on experiences reported by 21,520 wireless users who have owned their current mobile phone for less than two years. The results are from the two most recent study reporting waves, which were conducted in October 2006 and February 2007. Visit JDPower.com to view customer satisfaction ratings for wireless service, call quality, customer care, retail sales and mobile phone handsets.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The firm's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2006 were $6.3 billion. Additional information is available at http://www.mcgraw-hill.com/.
Media Relations Contacts:
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John Tews
J.D. Power and Associates
Director, Media Relations
5435 Corporate Drive, Suite 300
Troy
, MI
48098
USA
(248) 312-4119
john.tews@jdpa.com
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Jeff Perlman
Brandware Public Relations
Media Relations
Malibu
, CA
USA
(818) 317-3070
jperlman@brandwaregroup.com
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No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate # # #
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What does J.D. Power and Associates do?J.D. Power and Associates' research, consulting, and performance improvement services are used by a variety of industries to improve product quality and customer satisfaction. The firm's research is based solely on responses from millions of consumers and business customers worldwide. Product and service rankings that result from this research reflect the opinions of consumers and business customers-not the opinion of J.D. Power and Associates. Rankings are derived from nationally syndicated studies that serve as industry benchmarks for measuring and tracking quality and customer satisfaction. J.D. Power and Associates conducts the research, publicly announces the results, and then offers analysis based on consumer feedback to product and service providers to help them improve their businesses.
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