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Looking back at Black Friday: Optimism and realism in wireless

By the time you read this, Black Friday will be in the record books.
But it will be weeks, perhaps, until the wireless industry knows whether consumers embraced their inner spender on the hottest shopping day of the year, or held back.
A variety of sources paint a decidedly mixed picture of the holiday season so far.
First, there’s the industry’s presentation: smartphones are de rigueur, data plans come in many sizes and shapes and many still believe that mobile phones have become such personal tools that few will sacrifice them.
But will consumers postpone handset upgrades? Select less costly service plans? Cut back on other consumer electronics? The industry will be crunching carrier and device vendor data next month to discern the answers and what they might mean for 2009.
One handset comparison site, BillShrink, has a page dedicated to comparing Apple Inc.’s iPhone to the HTC G1 and Research In Motion Ltd.’s BlackBerry Storm – the flagship devices at AT&T Mobility, T-Mobile USA Inc. and Verizon Wireless, respectively. (Sprint Nextel Corp. offers the HTC Touch Pro and Diamond Touch, the BlackBerry Curve and another handful of smartphones in the $200 to $300 price range.) By providing apples-to-apples comparisons – something the carriers have balked at doing themselves – BillShrink hopes to save people money.

Units down, ARPU steady
One executive, well-placed to observe the action, is Mike Cost, president and COO at distributor Brightstar Corp.
“We are seeing similar softness in mobile retail as in other spaces – though not quite as bad as in other consumer electronics,” Cost said last week. “The smartphone category, overall, is still growing year-on-year. Right now, the indications are that data-enabled devices are the flagship for the industry.”
According to Cost, data shows that this fourth quarter is down significantly from the year-ago quarter in terms of handset shipment volumes. Yet he has not seen evidence that consumers are cutting back their wireless service plans.
One potential indicator that people are willing to spend money, Cost said: the traffic to Verizon Wireless stores for the BlackBerry Storm, which was “pretty impressive,” and reflected “pent-up demand.”
In fact, competitively, the BlackBerry Storm is a “significant device” for Verizon Wireless, according to NPD Group analyst Ross Rubin. Whereas the first iPhone robbed T-Mobile USA of subscribers, the 3G version stole subscribers from Verizon Wireless, thus the Storm is a “retention play.”
“Apple’s focus on price really initiated growth for Apple and ignited the popularity of smartphones,” Rubin added. “And rivals are following.”

Smartphones to lead growth
“In recent history, I can’t remember another match-up this hot,” said BillShrink CEO Peter Pham. “These devices are big movers for the carriers. Our traffic has spiked significantly since September, almost doubling on a monthly basis. Lots of people are looking at family plans. There’s a lot of uncertainty in the market.”
Meanwhile, surveys pointed to a mixed forecast for Black Friday and, indeed, the entire holiday shopping season.
Smartphone sales will continue to grow as much as 9% year-on-year, according to Oliver Wyman, a management consultancy. But the overall handset market may contract by single-digit negative growth, according to Gartner.
NPD Group has forecast the weakest holiday season for consumer electronics in general in more than a decade, while ABI Research found that 53% of consumers will spend as much or more than they did last holiday season.
Observers mention that the metrics to watch include handset unit volume shipments, average selling priceses, market share of original equipment manufacturers and their profitability.
If volumes are down and average selling prices are up, then people are upgrading their handsets, Rubin said.


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