Economy affects Columbia cell phone vendors

Cell phone companies are finding it difficult to attract new customers.

By Andrea Kszystyniak

Published Feb. 9, 2009

Because of the economic turndown, cell phone companies across the nation are having difficulty generating revenue.

According to a report from Strategy Analytics, a digital technologies research group, subscriptions to cellular networks will continue at consistent rates.

Revenue growth will slow slightly from 2008, decreasing from 7.5 percent at the end of 2008 to 3.9 percent this year, the report stated.

This is leaving companies, such as Sprint and Motorola, scrambling to find a way to influence new buyers.

Manufacturers are announcing layoffs and companies are struggling to influence customers who are facing monetary crises to buy a product that isn't essential.

Local Columbia cell phone dealers, such as AT&T store manager John Ede, are not facing the implications of this crisis yet.

"Where things are now, there isn't much growth potential," Ede said. "Pretty much everyone has a cell phone. It's kind of hard to grow when everyone has what you have."

Ede said sales have not changed much at his store during the last few years.

"Here in Columbia, we probably don't see it as much," he said. "Some of our other stores, they see the big difference. In the smaller towns, all they want is simple phones. I think that's why you start to see a lot of those stores go down. The only way that you get to grow potential is doing data."

Data, or visual aspects available on cell phones such as text messaging, Internet access and GPS systems are where the market is heading, Ede said.

"In order to make more money in any economy like this when everybody has a cell phone, you have to have more features like data," Ede said. "That's where a lot of the money is. Those are $20 to $50 packages"

Senior Mike Ford, who has been a customer with Verizon Wireless for the past four years, said he has not seen any change in his phone bill. But he said if it were to increase, he would opt for texting in lieu of actually being able to talk on the phone.

Strategy Analytics forecasts 2009 will be the worst year for cell phone manufacturers since 1983, when cell phones were first beginning to be released and the modern cell phone industry first began to expand.

Columbia Sprint store manager Ray Fisher said he remains optimistic the cell phone market will right itself.

"I think it's like many of the other industries that are out there right now," Fisher said. "It's hurting. Once the economy is rolling again and people have jobs, they'll be able to purchase more plans."

Sprint is one of the companies hit the hardest by the slump in customers. Last month the company announced plans to lay off nearly 8,000 employees.

Motorola reported nearly a $3.6 billion fourth-quarter loss at the end of 2008.

In a Feb. 3 news release, Sanjay Jha, Motorola co-chief executive officer and Mobile Devices chief executive, said the company would work to develop new technologies to keep revenue steady.

"We continue to take appropriate action to address the downturn in the global economy as well as the challenges related to our current Mobile Devices portfolio," Jha said. "We are aggressively developing innovative new products, and we are encouraged by the positive customer feedback on our smartphone roadmap"

Despite all this, Ede said he is confident in the power of new data technology to boost cell phone sales.

"I think the cell phone industry has reached its peak," Ede said. "In order to grow, they have to become more than a cell phone industry."