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

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.]