Cell Phone Market Conundrum

How many of your friends have a land line still? Have they ever told you they are thinking of switching to a cell phone or a service like Vonage? According to the new Harris Interactive survey, the use of cell phones is still going up while the use of landlines is going down. Supply and demand in a free market explains most of this: a great example would be the $99 Sprint Unlimited Plan and the new MetroPCS Unlimited Plan.

But wait… According to the new Bernstien Research estimate the wireless industry added 23% less subscribers in the first quarter compared to a year earlier. Moreover, a Harris Interactive survey found the use of cell phones is increasing. Well, which is it you say? One in five adults do not have a land line, and one in seven adults use only cell phones. Additionally, the same survey found 89% of all adults have a wireless cell phone.

The answer to the question, is a some-what simpler answer than you may think. One study, from the firm Strategy Analytics showed a 5% drop in the quarter compared with a year earlier; NPD Group’s study found a 22% drop in purchases of new handsets in the same quarter (first). Thus, “It’s the economy stupid" (no offense, please). And as far as the difference in usage that can be explained with a generation gap theory: about half of U.S. (adults) who only use a cell phone are 30 or over and the one-third that do are aged 18-29 that use a cell phone or Internet to make calls.

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