NPD: Nearly one-third of all U.S. smartphone sales are prepaid

According to The NPD Group in the first quarter of 2013, year-over-year total smartphone sales increased 42 percent, with one-third (36 percent) of the actual unit volume increase represented by prepaid smartphone sales.

Year-over-year prepaid smartphone unit sales doubled in Q1 and accounted for 32 percent of total smartphone unit sales, which is an 11 point increase year-over-year and a 10 point sequential increase from the record-high share of 22 percent reached in Q4 2012. Postpaid smartphone unit sales grew just 23 percent, between Q1 2012 and Q1 2013.

NPOD: Unit Share of Smartphone Sales by Plan Type

“In a quarter without a major product launch from either of the two market leaders, consumers refocused their attention away from the postpaid wars and toward finding the best value for their dollar,” said Stephen Baker, vice president of industry analysis at NPD. “Sales of prepaid smartphones doubled from the previous year, continuing a string of more than 12 quarters of triple-digit sales increases.”

Unit share for Prepaid Smartphone Sales
NPD: Unit share for Prepaid Smartphone Sales
Source: The NPD Group, Inc., Mobile Phone Track, 2013

Based on the latest information from NPD’s Mobile Phone Track, while Samsung’s share of prepaid smartphones remained stable between Q4 2012 and Q1 2013, the company has noted some market erosion compared to the prior year. Both LG and Apple made significant inroads into the segment since Q1 2012, with LG’s unit share doubling and Apple’s unit share increasing fourfold.

“For consumers looking at prepaid phones today, value does not equate with finding phones that are cheap or obsolete,” Baker said. “In fact, the Galaxy S2 and the iPhone 4S, two of the top five prepaid smartphone models in 2013, were among the top-selling phones overall just one year earlier.”

Sales of the top five prepaid smartphone brands comprised more than 80 percent of all prepaid smartphone sales, which is an increase of 5 percentage points over Q1 2012. National retailers were the dominant retail channel for prepaid smartphone purchases, and their sales-volume share has risen almost 40 percent in the past year.

Channel Share for Prepaid Sales
NPD: Channel Share for Prepaid Sales
Source: The NPD Group, Inc., Mobile Phone Track, 2013.

“Prepaid has proven to be a real winner for national retailers,” said Baker. “The easy purchase cycle and grab-and-go nature of the product play into the strength of large-format stores. Certainly, companies like AT&T recognize this shift in purchasing as they ramp up their focus on prepaid phones with their recently announced ‘Aio’ product branding initiative.”

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

Source: The NPD Group, Inc.


    1. What exactly are the “Obama” phones?

      There shouldn’t be anything surprising in this trend. Any consumer who accidentally sees an advertising for a $50 unlimited all plan will quickly pay attention, having been paying $80 per month for metered plans (with contract and subsidy). Vast majority of consumers don’t know that there is a subsidy for their $200 flagship phone. They believe the phone costs $200, and they are simply overpaying for their plan. The confusion is amplified when they realise there are prepaid phones that also cost $200 (and even less), and there is no two-year ball-and-chain, and plan is so much cheaper.

      One would think that this type of scenario would strongly benefit those carriers who offer ultra-cheap $200 smartphones, when even three-year-old model, iPhone 4 costs over $400. Who in their right mind would buy a phone that has been around for over three years, when they can get a new one, right? (as crappy as that new LG one is…)

      Yet, people keep forking out $450, $550, even $650 (and more!) for a new iPhone 4, 4S, or 5. Apparently, some folks are capable of doing basic math and have figured out what a colossal robbery the two-year contract plan is.

    2. Your MDN handle is funny, not only because it describes your flawed psyche, but also because you did not spell it correctly.

      Cognitive Dissonance: anxiety that results from simultaneously holding contradictory or otherwise incompatible attitudes, beliefs, or the like, as when one likes a person but disapproves strongly of one of his or her habits.

    3. Not only did you not spell your MDN name correctly. You need to get your facts right. BUSH started the cell phone program not OBAMA do your research. Don’t put something out there you know nothing about. This is why we are in the mess we are in. Always running your mouth and never saying anything goes to show how stupid you are.

    4. Point of order:
      The Obamaphone of Right Wingers is actually the latest incarnation of a program started by Saint Reagan- Peace Be Upon Him- back in the day.

      Turn off the AM radio trolls and rejoin the fact based world.

  1. And I believe T-Mobile’s new $50 all-you-can-eat plans also fall into the “pre-paid” category, even though technically they aren’t, since there is no two-year term requirement, and no subsidy (just an interest-free loan for those who don’t want to pay up-front).

  2. The problem many people have with the government subsidized phones is that it has exploded under Obama and been heavily advertised. Studies have shown that over 40% of the recipients have not demonstrated that they meet the low income qualification. The providers are letting them self qualify hoping that they will buy more minutes, etc. The FCC is starting to crack down, finally. But it upsets many people because we are helping to pay for phones for people who don’t qualify for them. The Democrats love it. The more freebies they can hand out, the more the lock in their voters. It cannot continue forever.

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