WHEATON, Md.-Replacement sales of cellular phones has emerged as a key market segment, yielding profit opportunities, according to market research analyst Herschel Shosteck Associates Ltd., in the company’s latest issue of “The Retail Market of Cellular Telephones.”
The quarterly study reported that from 1990 through 1992, replacement sales averaged 9.3 to 9.9 percent. During 1993, sales increased to 10.8 percent, and during 1994, they increased to 11.7 percent.
Shosteck said replacement sales are especially important for carriers. Whenever cellular subscribers replace their phones, they risk churning to a competing carrier. Shosteck pointed out that the likelihood of this happening will substantially increase as MCI Communications Corp. ramps up its resale operations to, in effect, change cellular from a two-competitor to a three-competitor market.
“In order for carriers to minimize churn, they must ensure that subscribers are satisfied with their present equipment,” Shosteck said. “This becomes increasingly more important as portable phones-those five years or older-become obsolete.”
Shosteck also analyzed the sales of portable phones weighing 5.9 ounces or less. The “ultra-light” phones averaged 7.8 percent of sales in September, 1994; in December 1994, 5.9 percent. For both measurement periods, Shosteck said the average portable sold weighed 9.5 ounces.
“Ultra phones may be appealing. However, low price is more so,” stated Shosteck.
