More than Half of U.S. Adult Cell Phone Users Have No Preference; Almost two-thirds believe that more choice will lead to product innovation

Today, consumers typically sign up for cellular service and select a phone made by a cell phone manufacturer. But soon, service providers may start offering their own brand of cell phone. Would consumers select these phones, or want to stay with the brands they know?

The latest survey of cell phone users (1) by Harris Interactive(R) shows that a slight majority (54%) of U.S. adult cell phone users say they have no preference for an existing brand or a new one offered by their service provider, while the rest differ in opinion between interest in a new brand (27%) and an existing brand (19%).

These are the results of an online survey of 1,870 U.S. adult cell phone users conducted by Harris Interactive between July 14 and 18, 2006.

Choice is good

About two-thirds (64%) of U.S. adult cell phone users agree that more competition among cell phone manufacturers will lead to product innovation and 40 percent believe it will ensure more choices in the marketplace. Other benefits of having cell phones and service from the same company could be increased compatibility between the handsets and the networks, according to about half (48%) of adult cell phone users, as well as overall lower plan costs (32%).

Not all consumers on board

There is some skepticism about cellular service providers offering their own brand of phones, and approximately one-third (29%) think this actually may result in decreased competition and higher prices in the long run. Similar numbers (30%) agree that smaller wireless service providers who cannot manufacture their own phones will go out of business, and another one in five (21%) feels that wireless service providers lack the design skills to build quality handsets.

Joe Porus, Vice President and Chief Architect for the Harris Interactive Technology Practice said, "Cell phone manufacturing by the large wireless service providers is the next logical step in this market. If they can pull this off, it will give their bottom lines a nice lift, but a failed entry here could start a new phase of consolidations in the industry. This apple is likely too tempting to leave on the tree -- new cell phones could be coming your way soon."

(1) Respondents who indicated they have a cell phone

TABLE 1
BUYING A CELL PHONE FROM HANDSET MANUFACTURER VS. WIRELESS SERVICE PROVIDER

"If you were to consider buying a new cell phone, assuming that the cell phone has the same features, pricing and warranty, how likely would you be to buy a cell phone manufactured by a wireless service provider compared to a handset manufacturer?"

Base: Adults with a cell phone. Total %

Much/Somewhat More Likely to Buy from Handset Manufacturer (Net) 19

Much more likely to buy from a handset manufacturer 11

Somewhat more likely to buy from a handset manufacturer 8

Much/Somewhat More Likely to Buy from Wireless Service Provider (Net) 27

Much more likely to buy from a wireless service provider 16

Somewhat more likely to buy from a wireless service provider 11

Just as likely to buy from a wireless service provider as a handset manufacturer 54

TABLE 2
HANDSET MANUFACTURERS VS. WIRELESS SERVICE PROVIDERS

"How much do you agree or disagree with the following statements?"

Base: Adults with a cell phone

Neither
Strongly/Some- Strongly/Some- Agree
what Agree what Disagree nor
(NET) (NET) Disagree
% % %

Increased competition in the manufacture of cell phones will lead to more product innovation (better features/functionalities). 64 8 28

The wireless service providers will design cell phones that will workbetter with their networks (result in better service). 48 16 36

Having wireless service providers manufacture their own cell phones will ensure more choices in the marketplace. 40 19 41

My overall cell phone plan (including service and handset) would cost less if I got both the service and handset from a single provider. 32 21 47

Smaller wireless service providers who can't make their own cell phones will go out of business. 30 30 40

In the long run, the impact of wireless service providers making cell phones will be less competition and higher prices for cell phone service. 29 27 44

Wireless service providers lack the design skills to build good cell phones. 21 29 50

Current handset manufacturers have built a history of success that would be ruined if wireless service providers start to make them. 20 31 49


About Harris Interactive Technology Research

The Harris Interactive Technology Research group doesn't just monitor and measure the industry. It interacts with the thought leaders who drive technology, telecom and e-business everyday and provides insights from a variety of vertical perspectives. Using the group's unique knowledge, experience, and expertise in both the telecommunications and information technology sectors, Harris Interactive asks the right questions, confirms business issues, and designs and implements studies to provide clients with actionable results.

Methodology

This online survey was conducted within the United States between July 14 and 18, 2006 among 1,870 adult cell phone users (aged 18 and over). Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents' propensity to be online.

All surveys are subject to several sources of error. These include: sampling error (because only a sample of a population is interviewed); measurement error due to question wording and/or question order, deliberately or unintentionally inaccurate responses, nonresponse (including refusals), interviewer effects (when live interviewers are used) and weighting.

With one exception (sampling error) the magnitude of the errors that result cannot be estimated. There is, therefore, no way to calculate a finite "margin of error" for any survey and the use of these words should be avoided.

With pure probability samples, with 100 percent response rates, it is possible to calculate the probability that the sampling error (but not other sources of error) is not greater than some number. With a pure probability sample of 1,870 adults one could say with a 95 percent probability that the overall results have a sampling error of +/-3 percentage points. However that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.

These statements conform to the principles of disclosure of the National Council on Public Polls.

About Harris Interactive
Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods.

The company has built what could conceivably be the world's largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at http://www.harrisinteractive.com/.

Harris Interactive Inc. 08/06
Source: Harris Interactive
ROCHESTER, N.Y., Aug. 9 /PRNewswire/ --

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