By Peter Wolchak

When people buy a new washing machine, computer printer or VCR, it is fair to say the primary consideration is price: how many dollars do I have to shell out to get a decent whateveritis?

But when people walk into a store to buy a new cellphone, price is only one deciding factor.

The other, and equally important consideration, is hip-value—how cool the phone looks on your hip, how many ooohs and aaahs you hear when you pull it out of your purse or how much slicker it is than the one owned by your cubicle neighbour.

Sure, people still like deals, according to Diane Scaini, associate director and group manager of hardware marketing at Bell Mobility.

Cellular rate plans that get you a phone for $0 will always be popular.

“But up to 50 per cent of people’s decisions are aesthetically driven: they are looking for something that reflects who they are,” Scaini said. “What size is the display, how bright is it, is it a bar or clamshell (design) phone? And the phones are becoming better and better looking.”

Consider the Samsung a500. At about $499 it’s among the most expensive phones on the market but “if you have to have the coolest phone out there, this is it. And it is selling very well,” Scaini said.

Not everyone can afford that price tag, though, and the current sweet spot in the industry is about $49 for a phone with a two-year rate plan. “Phones fly off the shelves when we get down to that price point. In fact, anything under $100 does very well,” Scaini said.

Even with all this activity, though, only about 39 per cent of Canadians own a cellphone, according to Warren Chaisatien, senior telecom analyst at IDC Canada. By contrast, more than 80 per cent of Scandinavians and Western Europeans own cellphones.

One reason for this, Chaisatien said, is Canadians enjoy an ubiquitous and cheap landline infrastructure, which means we often don’t feel compelled to move to mobile.

And we don’t enjoy paying a lot of money for cellular service, Chaisatien said. Cellular ARPU (average revenue per user) has been dropping by $2 or $3 per year, down from $80 in the mid 1990s to less than $47 in 2002.

Where there is new revenue to be had it will come from two sources, he said. The first is convincing existing users to buy into higher profit extra services, like text messaging or downloads like ring tones and screen savers.

“If you can get people to send an SMS message to vote someone off an island or download a ring tone, then that is revenue on top of the regular monthly plan, and that means your ARPU can increase pretty dramatically.”

The second growth area is simply convincing more people to carry a cellphone, and there is good news there. “I think we can look forward to the day when two thirds of Canadians will own a cellphone,” Chaisatien said.