News flash: mobile phone sales slump

Vodaphone logo
Big surprise: people aren’t buying mobile phones the way they used to. Vodaphone saw an 18% drop in handset sales. According to Vittorio Colao, Vodaphone head honcho, “people, instead of staying on the same package and getting a better phone, are deciding to go for a cheaper package and not changing their phone.” The horror!

Cell phones are approaching commodity status, and cellular networks are already there. Average users don’t care about the difference between GSM and EVDO, so “cellular is cellular” to them. The average consumer, if they don’t already have a cell phone, is going to select a carrier based on perceived value, which includes the plan price but also the number of their friends using that network. I’d wager that most folks are happy to take the “free phone” supplied to them when they sign up for an account. Most average users don’t seem to care too much about phone features, since the phones are largely interchangeable: it’s the service about which users care.

Why should folks buy new phones? Do new models of low- and mid-range phones really offer anything new that’s worth the price of an upgrade? If you’re not already a smartphone user, reading email and “being productive” wherever you go, what’s the real difference between mobile phones? I have a friend who’s had a LG LX350 for almost three years now, and has no plans to upgrade any time soon. The phone works, and does all he needs of it. What’s his incentive to upgrade?

Handset manufacturers and cellular carriers are going to need to figure out how to deal with the new reality of customers making the most of their purchases. Gone are the days of the obligatory upgrade just because you’re renewing your contract. We need to see real innovate in the products and services offered, rather than blindly performing perfunctory upgrades.

Via The Guardian.