Conventional wisdom has American shoppers descending like locusts on brick-and-mortar retail stores on the Friday after Thanksgiving-presumably working off the turkey-and-gravy by lightening their wallets-then returning to work on Monday, where they resume spending online.
AT&T Mobility appeared to make the most of “Cyber Monday,” the warm, fuzzy term for the first Monday following Thanksgiving, by cutting prices about in half on nearly its entire online portfolio. Only Apple Inc.’s iPhone appeared to have retained its pre-holiday prices.
The online approach may well have contributed to AT&T Mobility’s apparent popularity that day: according to Nielsen Online, “AT&T” was the fourth-most visited site on Cyber Monday, after eBay, Amazon.com and Wal-Mart. Cyber Monday favored consumer electronics, followed by toys and video games.
“The Web is one of our lowest cost channels and . with the quality of subscribers (we gain), this gives us the ability to be more aggressive,” said Glenn Lurie, president of national distribution for AT&T Mobility, in an e-mailed response to questions. “The pricing strategy for Cyber Monday is no different than we’ve used all year long.”
Online stores drew 32.5 million visitors on Cyber Monday, up 10% over the prior year and shoppers shelled out $733 million, up 21% over the prior year, according to Nielsen Online.
Signs for December
Consumer behavior on Cyber Monday apparently is merely a harbinger of the acquisitiveness that reigns in December. According to M:Metrics, December sees the most mobile handset sales of any month in both the United States and Europe. In the U.S., 12% of all subscribers pop for new and likely discounted handsets, a rate 40% greater than the average monthly rate.
This retail pattern is the result of the symbiotic relationship between consumer behavior in the gift-giving holiday season and the flow of handset launches and discounted products offered by the carriers as the latter push for year-end subscriber numbers, according to Mike Gartenberg, analyst at Jupiter Research.
“Price cuts before Christmas is about subscriber acquisition,” Gartenberg said. “That’s the gift that keeps on giving.”
Smarter consumers
Despite the year-long frenzy over the iPhone and the apparent stream of smartphone and advanced feature phones to hit the market early in the fourth quarter, Current Analysis found that overall average selling prices in the U.S. market did not change between the first week of November 2007 and its year-ago counterpart. Instead there was an overall decline in ASPs for the cited period, in part due to the consumer electronics axiom that, over time, products deliver more for less. But in particular, the ASP decline was led by a decline in smartphone ASPs, as carriers become more aggressive with smartphone subsidies in order to push data plans that recoup those subsidies and drive ARPU.
Current Analysis did find some intriguing details when it crunched handset data by carrier, according to analyst Brad Akyuz.
“AT&T is the only carrier whose smartphone ASPs went up significantly thanks to the iPhone,” Akyuz said.
T-Mobile USA Inc.’s smartphone ASPs declined markedly due to its emphasis on getting the devices into the prosumer segment, rather than the traditional focus on business users, the analyst said.
Verizon Wireless and Sprint Nextel Corp.’s feature phone ASPs both rose, for different reasons, according to Current Analysis data. Verizon Wireless’ ASPs rose by 10% due to its emphasis on its network rather than handset prices. Sprint Nextel’s ASPs rose, presumably because the carrier stopped aggressive subsidies to shore up its cost per gross add, Akyuz said.
