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Report: Tier 1s losing smartphone sales to smaller carriers

Thu, 11/15/2012 - 2:19pm
Andrew Berg, Wireless Week

Smaller prepaid carriers offering a broader range of devices, as well as lower prices, are grabbing smartphone sales from larger carriers like AT&T and Verizon, according to a report released today from NPD Group.

Lower prices and a larger selection of smartphones at Boost, MetroPCS, Virgin Mobile and other prepaid carriers are causing a decline in prepaid smartphone sales of new phones from AT&T, Verizon, T-Mobile and other Tier 1 carriers.

The research firm found that in the third quarter of 2012, 70 percent of smartphone buyers who purchased their phones on a prepaid carrier had switched from a Tier 1 carrier.

The report is backed up by trends seen at the larger carriers. Prepaid smartphone sales at prepaid carriers were up 23 percent over the prior quarter, while at Tier 1 carriers, prepaid smartphone sales fell 12 percent.

Stephen Baker, vice president of industry analysis at NPD Group, said the larger carriers are reacting to the trend.

“Both AT&T and Verizon have introduced less-expensive prepaid offerings, and Verizon has expanded its prepaid smartphone lineup, but questions remain whether it’s too little, too late,” Baker said.

To be sure, the selection of smartphones, while unsubsidized, is improving at smaller prepaid carriers. Just today, Cricket Communications announced that it will carry the LTE-capable LG Optimus Regard ($249), as well as the Samsung Galaxy S III ($549), and many other prepaid carriers are now offering off-contract pricing for Apple’s iPhone.

According to NPD, the top five smartphones in the third quarter were led by the iPhone 4S in the top spot, followed by the Samsung Galaxy S III, Apple iPhone 4, Apple iPhone 5 and the Samsung Galaxy S II.

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