Prepay smartphone share nearly doubled between October 2010 and April 2011, according to figures from analyst GfK.
Share of prepay smartphones jumped from 12.4% in October 2010 to 21.1% by April 2011, GfK’s figures showed.
This growth was driven by retailers offering ‘key handsets at more affordable price points’, rather than an increase in demand.
The report said: ‘As new smartphones have recently been launched at more expensive prices in contract, the older smartphones are now offered at more affordable prices in prepay. Focusing only on the price band share within the smartphone sector, in prepay, the middle range smartphone price point of £120 to £129.99 started to grow significantly and in April represented 13% of smartphones sales.’
The analyst said the £50 to £99.99 band now represents 32% of the sales. Meanwhile, most important volumes are sold above £130 and accounted for 45.2% of the sales in April.
In October 2010, the £100-plus price point represented 11% of the prepay market in volume. In April 2011, the same price point comprises 15% of the prepay market.
GfK said: ‘It seems the smartphone market penetration pushes people to buy higher value phones. Selling more phones at more expensive prices points usually means an increase of the profit margin for operators and manufacturers.’
The analyst added that this is also an ‘opportunity to attract customers likely to spend more on data in prepay as smartphones make web surfing easier’.
But it warned: ‘The overall prepay market has declined by 16% in volume terms versus last year, which shows that this segment is suffering from the decline of general consumer confidence. It seems the prepay segment arrives in a new cycle with less people buying at higher value.’
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