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. Last Updated: 07/27/2016

Mobile Upgrade Trend Boosting Handset Sales

MTCellphone sales are soaring thanks to Muscovites' penchant for handset upgrades.
Fashion-conscious Muscovites have overtaken other European cellphone owners in upgrading their handsets.

According to British magazine Cellular News, Europeans change their mobile phones on average once every 1 1/2 years. In Moscow, dealers say residents of the capital buy new or extra phones at least once a year -- and marketing experts are not surprised.

"Our people follow mobile phone fashions closely," said Yelena Vlasenko, senior consultant with the GfK market research agency. "Many watch for the latest models and buy them the moment they appear."

Handset sales have been growing faster than contract sales for some time. Anton Pogrebinsky, an analyst with J'son & Partners, said that last year on average 220,000 contracts were concluded each month, but now the figure is closer to 350,000. Dealers say handset sales have doubled over this time. Vladimir Bogdanov, marketing director with Tekhmarket, said more than half a million mobile phones are sold in the capital each month, while Dixis reported selling as many handsets in the first half of 2002 as over the whole of last year.

Alexei Chebotok, director for marketing with Maxus, which owns the Svyaznoi chain of stores, said that on average handset sales exceed contract sales by 20 percent to 30 percent.

"We have carefully researched this phenomenon and come to the conclusion that Muscovites regard the phone as a fashion accessory to a much greater extent than Europeans or Americans," he said.

Bogdanov of Tekhmarket agreed.

"Often people buy phones simply for their gadget value, not for vital communication requirements," he said. "I have lots of friends who buy telephones to match the color of their clothes or their car."

About 70 percent of people upgrading their cellphone choose to stick with the brand they had before, said Marina Dreling of Dixis.

"As a rule, people select a phone from the new model range of the same producer and want their new phone to be as similar to their old one as possible but with more advanced features," she said, adding that already having accessories for that brand is a major reason.

"They swap brands only if the phone has broken down badly or they have had some other serious disappointment with it."

With cellphone producers rapidly updating their product lines and introducing from two to eight new models every year, older models lose value rapidly, especially if they are used. A $400 mobile phone may fetch just $30 after three years of usage, while a year-old phone may sell for 50 percent of its original price. Even a two-month-old handset would only retain about 70 percent of its initial value.

The most profitable deals can be struck on cellphones from six months to one year old. Dreling said it is almost impossible to profit from selling a two- or three-year-old phone. "There is very little chance of even selling a mobile phone in two years," she said.

Old phones sell better if they come in a box, with instructions, charger and the complete set of components that normally sell with the model. The price jumps up for a phone with a guarantee. About 10 percent can be knocked off the price if the phone is scratched or shabby-looking.