Smartphones make big gains in prepaid

Smartphones long ago lost their hoity-toity status as the toys of the technological elite, but in the last few years they have been moving down to the lower rungs of the mobile market ladder. Smartphones accounted for 29 percent of all prepaid device sales in 2011, compared to just 5 percent three years ago, according new survey data from marketing research group the Stevenson Company.

Stevenson found that smartphones account for 50 percent of all mobile phone purchases in 2011 across prepaid and postpaid contract plans. Furthermore, while 63 percent of new postpaid phone buys are in the smart category, the smartphone gap between prepaid and contract users is closing, Stevenson found.

Contract subscribers usually get big discounts on their smartphones (though some carriers are fighting against the subsidy model), while prepaid users typically pay full price for a new device, so the numbers are a bit surprising. It shows that Android smartphones are not only getting cheaper, but also that it’s not just the most budget-minded of consumers that are attracted to prepaid service.

Source: Stevenson Group

Stevenson drilled deep into the demographic data and found that half of prepaid buyers had a household income of $ 35,000 or more, compared to 76 percent of postpaid buyers, and more than 55 percent of prepaid buyers owned their own home. Income and credit are no longer the sharp dividing lines between prepaid and postpaid.

Stevenson also found that customers weren’t buying their prepaid services directly from operators. Wal-Mart was the biggest prepaid retailer in the country, Stevenson found, and its share of prepaid to postpaid phone sales is growing. Meanwhile Target is shifting from a primarily prepaid retailer to one split between the prepaid and contract sales. More shoppers are also moving online as Amazon saw big gains in prepaid sales in 2011.

Image courtesy Flickr user fourstarcashiernathan.

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