Bluetooth Finally Has Some Bite

After many years of hype, it appears Bluetooth has finally cut some teeth. In just a few short years, the technology that allows for short-range wireless connectivity has begun to make significant inroads into the mobile phone arena. Data from The NPD Group shows that nearly one in six devices sold during the third quarter of this year was Bluetooth-enabled. Continued strong growth is expected in the coming quarters.

Reasons for Growth

What are the reasons for the significant uptake in Bluetooth-enabled devices? Based on the latest consumer data from The NPD Group, growth is linked to a variety of factors ranging from the availability of Bluetooth in CDMA handsets to a larger number of Bluetooth-enabled consumer electronics devices, as follows:

  • Bluetooth in CDMAphones – While Bluetooth adoption was once limited to GSM devices and carriers, it has started to become a more common feature in CDMA phones. Over the past year, U.S. wireless operators Verizon Wireless and Sprint have introduced several new Bluetooth devices.
  • More device manufacturers – For a number of years, European handset manufacturers seemed to be the only ones touting Bluetooth, but now U.S. and Asian handset manufacturers (namely Motorola and LG) have finally caught on, and are including Bluetooth in more of their devices.
  • Bluetooth in more consumer electronics – Devices and peripherals such as PDAs, digital cameras, laptops, keyboards, mice and printers are now shipping with Bluetooth connectivity. This growth has helped spread the word about Bluetooth, and proven that its uses are not solely limited to mobile phones and headsets. In fact just about any digital device can incorporate Bluetooth, and many more products that do so are sure to come to market. As consumers begin to use and see the benefit of Bluetooth in other electronic devices, they will likely want and demand it in their next mobile phone, thus driving increased adoption rates.
  • Better marketing – In addition to incorporating Bluetooth into more devices, manufacturers have done a better job of promoting the various applications and benefits of the technology. Better-informed consumers are the key to increased sales.

What to Expect From Bluetooth

While Bluetooth in mobile phones is not yet as common as color screens, NPD data highlights the growth in Bluetooth over the course of the past year, as follows:

  • According to NPD’s Mobile Phone Track information service, the number of devices purchased with Bluetooth connectivity has grown from six percent during fourth quarter of 2004 to nearly 10 percent in the first half of 2005. While sales of Bluetooth devices remained steady during the first half of 2005, there was a dramatic increase in Bluetooth devices during the third quarter of 2005. During this timeframe, the percentage of Bluetooth devices grew from 10 percent to nearly 16 percent and the total units of Bluetooth devices sold jumped from nearly three million to more than five million.
  • Bluetooth devices tend to be the newer models on the market; they also tend to have higher prices. The average retail sales price for a Bluetooth handset is $135, compared to $58 for the average mobile phone.
  • In NPD's recently completed Wireless Retail Survey, nearly eight percent of respondents who purchased a mobile phone accessory at the time of their phone purchase reported buying a Bluetooth headset, compared to 10 percent who purchased a traditional wired headset.

Bluetooth's Next Moves

While the most popular application for Bluetooth will likely remain its use in wireless headsets and in-vehicle usage, companies in and out of the wireless space are exploring new uses for the technology. Some of these technology innovations include the following:

  • Bluetooth in more devices – While Bluetooth is mainly limited to high-end phones today, it will start to make its way into mid-range devices in the near future;
  • Carriers – Carriers (particularly CDMA carriers) will soon fully embrace Bluetooth and stop crippling and limiting its capabilities;
  • Bluetooth for delivering content – Nokia, EMI Music, Finnish record label Free Record Shop and the Robert's Coffee chain recently announced a trial of free music, music videos and wallpaper downloads using Bluetooth. It is likely others will experiment with Bluetooth's connectivity options and continue to explore new ways of using the service.
  • New uses – Along with the increasing number of consumer electronics with integrated Bluetooth technology, companies in the medical field are exploring ways to take advantage of Bluetooth connectivity. Recently announced developments include a Bluetooth hearing aide, heart monitoring equipment, and a new brain scanner.

Given this backdrop, it is clear that Bluetooth is well on its way to becoming a mainstream mobile phone feature. In addition, as more consumer electronics become available with Bluetooth technology, there will be further opportunity for the handset to become the hub or gateway to other connected wireless devices.

And that’s something significant for Bluetooth to chew on.

Charul Vyas, Senior Wireless Specialist

 
© 2005 The NPD Group

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