Regression Analysis of Cellular Handset Features

For a detailed report, please contact ketuls@gmail.com

The cellular handset market has matured and is controlled by about 4 major players (Nokia, Samsung, Motorola and Sony-Ericsson). With the introduction of iPhone, wireless industry (both wireless carriers and handset manufacturers) seems to have hit the panic button. This regression analysis explains consumer preference of cellular handset features and the real dollar value consumers associate with a particular feature on a handset.

Data: Price of about 50 different handsets was regressed against various features (such as Bluetooth, USB, FM Radio, dual screen, camera, mp3 player, highspeed internet and slim size) and brand value of the handset manufacturer to determine the correlation between price, brand and features. In an effort to maintain data consistency and avoid distribution channel differences, data for all 50 handsets was collected from www.amazon.co.uk; prices of handsets in US are subsidized by wireless carriers. Moreover, Amazon provides a sales rank of all items sold on its website which helps in determining low selling items (sales rank greater than 10,000) and such handsets were eliminated from regression analysis. Amazon web store is a market with full information transparency and owing to the competitive nature of such a matured market the prices on Amazon reflect the actual value to a customer.

Analysis: FM radio is the most highly valued feature with an estimated value of ₤102/handset while brands such as Samsung and Sony-Ericcson command a premium of about ₤26/handset. A brand premium was expected from regression analysis but a premium for FM radio is an interesting outcome. Infact, Motorola doesn’t offer a handset with FM radio in the UK market. The other features that are correlated to price are high speed internet (₤ 58), tri-band (₤ 51) and slim design (₤ 94). All correlated variables have low p-values but only Samsung/Sony-Ericcson brand value variables have slightly higher p-values.

Results of a backward regression with a cut-off p-value of 0.2 are attached in Figure 1.

Figure 1

	Coefficient
Regression Table
Constant	20.73
FM Radio	101.68
High Speed Internet (HSP)	57.96
Tri-band	50.56
Sony Ericcson	25.97
Samsung	26.76
Slim Design	94.28

Conclusion: Few manufacturers offer handsets with FM Radio in the UK market which is the most valuable feature according to this regression analysis. Overall, manufacturers should offer slim design handsets with FM radio in the low-tier segment while offering slim design handsets with FM Radio and Tri-band in the mid-tier segment. High speed internet is valued less and costs more to implement; consequentially manufacturers should wait till more compelling applications are introduced in the market to justify the value of high speed internet on mobile handsets.