Pre-Paid Phones Drive Increase In Smartphone Sales Says The NPD Group

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News Posted: Thu, Aug 9 2012 12:25 PM

A new report from The NPD Group shows smartphone sales are on the rise. Interestingly enough, the increase in sales has been driven by pre-paid smartphones. In fact, post-paid smartphone sales were flat year-over-year while prepaid smartphone volume increased 91 percent year over year. Overall, total smartphone sales rose 9 percent in the second quarter of 2012 in comparison to the same quarter of 2011.

NPD’s data also shows the average smartphone buyer's annual income is lower than in previous years. In the second quarter of 2012, 33 percent of smartphone buyers had average household incomes of less than $35,000 per year. In the same quarter of 2011, that same number was only 24 percent. Here again, we see a relationship to pre-paid smartphones: 71 percent of pre-paid smartphone buyers had an average income less than $35,000.

NPD's research also shows two key manufacturers who currently hold a combined 55 percent of the market share: Apple (31 percent) and Samsung (24 percent). HTC, Motorola, and LG rounded out the top five smartphone brands with market shares of 15 percent, 12 percent, and 6 percent, respectively.

The NPD Group: Rise in Smartphone Purchases Driven Entirely by Pre-Paid Phones

Total smartphone unit sales rose 9 percent in the second quarter of 2012 compared to the prior year; however, all growth was driven by increases in pre-paid smartphone sales.

PORT WASHINGTON, NEW YORK, August 8, 2012 – According to The NPD Group, a leading market research company, driven by sales of pre-paid smartphones, total smartphone unit-volume sales rose 9 percent in the second quarter (Q2) of 2012, compared to Q2 2011. While year-over-year post-paid smartphone unit sales were flat, pre-paid smartphone unit volume almost doubled, rising 91 percent year over year.

“Prepaid smartphones are no longer just cheap, also-ran options, focused on older and less capable phones,” said Stephen Baker, vice president of industry analysis at The NPD Group. “As the smartphone market matures, and as growth slows, carriers have been smart to aggressively market some of their best current smartphones on a pre-paid basis to a new set of customers, in order to keep sales humming along.”

Based on NPD’s monthly Mobile Phone Track service, the income level of the average smartphone buyer is shifting downward, from middle- and upper-income families, to those with lower annual household incomes. In Q2 2011 24 percent of smartphone buyers had average household incomes of less than $35,000 per year; however, in Q2 2012 that number jumped to 33 percent. This year 71 percent of pre-paid smartphone buyers had an average income less than $35,000, which is a 12 percentage-point rise over the prior year.

Apple and Samsung Top Smartphone Brands

NPD’s research also revealed that the lion’s share of smartphone-market growth is concentrated in the top two brands. In fact Samsung’s and Apple's combined smartphone unit sales rose 43 percent between Q2 2011 and Q2 2012, as unit sales for other brands fell 16 percent.

According to NPD, the top five smartphone brands, and their market shares, in Q2 were as follows:

  1. Apple: 31 percent
  2. Samsung: 24 percent
  3. HTC: 15 percent
  4. Motorola: 12 percent
  5. LG: 6 percent

"By concentrating on their best, flagship devices, while at the same time supplementing their volumes with lower priced alternatives, both Apple and Samsung are extending their lead over the other smartphone makers,” said Baker. “To be a share leader means participating in all segments of the market, in order to take advantage of pre-paid and other growth opportunities, while also providing the hero devices that drive customers to your brand.”

Information this press release is from Mobile Phone Track and Smartphone Track, both of which report on the activities of U.S. consumers, age 18 and older, who reported purchasing a mobile phone or smartphone. NPD does not track corporate/enterprise mobile phone purchases.

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rapid1 replied on Thu, Aug 9 2012 2:41 PM

That makes sense though really especially with the economy being up and down.

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The great success of samsung and apple is really not surprising, they both put out superior products for a relatively small fee, think about it, the Apple Ipad costs today what it did the day it came out even though this is the 3rd version, naturally we would expect the price to rise 4-6% yearly for no other reason then to combat inflation. The iPad by all measure should cost about 580$ per ipad.

The ability to keep the price down on its products while simultaneously increasing their functionality and value is testament to their strength as a company. Samsung hasn't missed a step with them either, both companies keep churning out wonderful products at solid prices, apple holds to a community of near fanatic integration and samsung offers a powerful self contained system. Its hard to beat.

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InsideSin replied on Thu, Aug 9 2012 11:43 PM

Now if only carriers lowered the ridiculous price (at least in Canada) on the mandatory data plans you need to own a smartphone.

"You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new."

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dpthanki replied on Sat, Aug 11 2012 10:41 AM

Apple enjoying the sales of smart Phones and Samsung is also eating the chocolate. :)

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JOMA replied on Sat, Aug 11 2012 10:55 AM

With the cost of some of these unlimited prepaid plans I can totally see the reason for the sales increase. We got on a $50/month unlimited plan with Verizon and so far it's working well.

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