Lower Prices, Larger Selection Boost Pre-Paid Mobile Phone Carriers

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Accord­ing to The NPD Group, low­er prices and larg­er selec­tions of smart­phones at Boost, Metro, Vir­gin, and oth­er pre-paid mobile phone car­ri­ers are caus­ing a decline in pre-paid smart­phone sales of new phones from AT&T, Ver­i­zon, T‑Mobile, and oth­er tier-one car­ri­ers. In the third quar­ter (Q3) of 2012, 70% of smart­phone buy­ers who pur­chased their phones on a pre­paid car­ri­er had switched from a tier-one car­ri­er.

Based on infor­ma­tion from NPD’s month­ly Mobile Phone Track ser­vice, the over­all pen­e­tra­tion of pre­paid smart­phones rose from 39% in Q2 to 42% in Q3. Pre­paid smart­phone sales at pre­paid car­ri­ers were up 23% over the pri­or quar­ter, while at tier-one car­ri­ers pre­paid smart­phone sales fell 12%. Con­sumers who were replac­ing their mobile phones were more like­ly to have switched from a tier-one car­ri­er (80%) than were first-time smart­phone buy­ers (60%).

Both AT&T and Ver­i­zon have intro­duced less-expensive pre­paid offer­ings and Ver­i­zon has expand­ed its pre­paid smart­phone line-up, but ques­tions remain whether it’s too lit­tle, too late,” said Stephen Bak­er, vice pres­i­dent of indus­try analy­sis at The NPD Group.


Over­all Smart­phone pen­e­tra­tion rose from 66% in Q2 to 70% in Q3. Much of the increase in smart­phone pen­e­tra­tion was dri­ven by Android, which expe­ri­enced a unit vol­ume increase of 25%, as its share increased from 59% to 63% of the smart­phone mar­ket. Apple’s iOS unit vol­ume rose 16%, and the company’s mar­ket share remained steady at 31%.

Accord­ing to NPD, the top-five smart­phones in Q3 were as fol­lows:

Rank Mod­el
1 Apple iPhone 4S
2 Sam­sung Galaxy S III
3 Apple iPhone 4
4 Apple iPhone 5
5 Sam­sung # GALAXY S II

While the iPhone 5 helped Apple main­tain mar­ket share, the iPhone 4S and iPhone 4 also drove a con­sid­er­able amount of sales, among first-time smart­phone buy­ers and also among old­er iPhone gen­er­a­tion own­ers. “With just about a week of sales to record in the third quar­ter, the iPhone 5 had a notable impact on the mar­ket, but by no means did old­er iPhone gen­er­a­tions suf­fer since car­ri­ers pro­vid­ed less expen­sive pric­ing for those mod­els,” Bak­er said.

[Source:  "Mobile Phone Track and Smart­phone Track."  The NPD Group.  15 Nov. 2012.  Web.  26 Nov. 2012.]