4/9/2008 11:27:00 AM
Boom in sub-£30 mobile phones
Dramatic price cuts on prepay handsets have resulted in low-end, sub-£30 phones almost doubling their share of the market during the past year.
Meanwhile, according to the latest figures from market research expert GfK, high-end phones are making up an increasingly small part of prepay handset sales.
Despite the fact that operators say they are targeting the high-end market, they have also been paying heavy prepay subsidies.
Two thirds of all prepay phones sold in February cost less than £50; one year ago, it was less than half.
As a result, the value of prepay sales has fallen. In November last year the value of all prepay phones sold was 14% less than in the same month in 2006, despite an increase of 26.6% in the number of phones sold.
One GfK analyst said: ‘With contract sales slowing down, operators are focusing their energies on the prepay market, and the increased competition is manifesting itself in falling prices.’
Orange, for example, has been selling half-price phones for a few months.
The falling prices culminated recently in Carphone Warehouse’s £2.95 Sony Ericsson J110i offer. Unsurprisingly, the low price boosted sales of the J110i, which has featured in the top 20 of Mobile’s prepay handsets chart for the past few weeks.
Non-specialist retailers, such as Argos, Tesco and Asda, have also reduced the price of prepay phones to increase competition in the prepay market.
Meanwhile, the share of higher priced phones has been affected. Handsets costing over £131 made up 13.2% of the market in February last year, but their share has dropped to 2.3% of all prepay handset sales in February this year.
Evidence has shown a lack of consumer interest for high-end handsets; the lower than expected iPhone sales is one example.
Also, Nokia’s share price in high-end phones fell due to its reduced demand for 3G chipsets, prompting speculation of lack of consumer interest.