J.D. Power and Associates Reports: Operation and Physical Design Have Become More Critical Areas in Driving Overall Customer Satisfaction with Wireless Mobile Phones; LG and SANYO Rank Highest in a Tie in Wireless Mobile Phone Customer Satisfaction

Business Wire, Oct 26, 2005

WESTLAKE VILLAGE, Calif. -- As cell phones increasingly offer enhanced features such as Web-based text messaging and e-mail, as well as the ability to take still and video pictures, the operation and physical design of phones has become more important to wireless customers, according to the J.D. Power and Associates 2005 U.S. Wireless Mobile Phone Evaluation Study(SM) released today.

The study measures satisfaction among customers who have owned their mobile phones for less than two years. Overall satisfaction with wireless handsets is measured based on performance in five key factors. In order of importance, they are: physical design (24%); operation (22%); features (20%); handset durability (19%); and battery function (15%). Since 2003, there has been a major shift in importance from the customer's perspective in the areas related to operation of the phone (up from 15% in 2003) and physical design of the handset (up from 19% in 2003).

"As more services are added to the phone, the ability to navigate around the handset in an easy and straight-forward manner becomes paramount," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "For example, the incidence of the camera phone feature among new owners has increased more than five-fold, from 4 percent in 2003 to 23 percent in 2005. Making it easier for customers to learn how to operate these kinds of product and service offerings can increase satisfaction performance and enhance the overall wireless experience. In fact, the handset can enhance the consumer's view of the wireless carrier by making the service experience much more enjoyable, which will promote future purchases of value-added products."

Another trend the study tracks is the shift in the physical design of wireless handsets. Manufacturers are moving away from the candy bar-shape design and more toward the clamshell design. In 2002, 70 percent of wireless users owned a candy bar-type handset, compared to 45 percent in 2005. Over the same time period, clamshell-design phone ownership has risen from 7 percent to 52 percent.

"The physical size and look of the handsets are evolving to a smaller, more compact design that's more pleasing to the eye," said Parsons. "In the mind of the consumer, these changes are for the better, as satisfaction among those who own a clamshell design is significantly higher than those who own a candy bar-shaped cell phone."

LG and SANYO rank highest in a tie in overall customer satisfaction with wireless cell phones, each performing significantly above the industry average across all five factors. LG performs particularly well in areas related to physical design and battery functionality. SANYO, which ranked highest in the study in 2004, receives the highest ratings in the areas of operation, durability and features.

Following LG and SANYO in the rankings above the industry average are Samsung and UTStarcom (Audiovox), respectively.

The study also finds several key wireless handset usage patterns:

--The average reported handset purchase price in 2005 is $89 -- a decrease from $99 in 2004.

--The average replacement cycle for a typical handset is 18 months.

--The features on the handset used the most include the speakerphone (22%), send/receive SMS (short messaging services) messages (19%), gaming (15%) and camera capabilities (14%).

--One-half of all current wireless users compared other handset brands before selecting their current wireless phone. Those who do compare phones during the selection process are significantly more likely to be satisfied overall with their current handset than those who do not (56% vs. 45%).

The 2005 U.S. Wireless Mobile Phone Evaluation Study measures customer satisfaction among the eight largest wireless handset manufacturers and is based on responses from 17,701 households.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firm's quality and satisfaction measurements are based on responses from millions of consumers annually. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, McGraw-Hill Education and BusinessWeek. The Corporation has more than 300 offices in 40 countries. Sales in 2004 were $5.3 billion. Additional information is available at http://www.mcgraw-hill.com.

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