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NPD: Prepaid Smartphone Sales Surge In Q1

Port Washington, N.Y. – A total of 32 percent of all smartphones purchased  at retail in the first quarter were prepaid phones, up from 21 percent in the year-ago quarter and 22 percent in the fourth quarter of 2012, The NPD Group found.

And national retailers were the trend’s biggest winners.

Prepaid-smartphone unit sales doubled in the quarter compared to the year-ago period, continuing a string of more than 12 quarters of triple-digit sales increases, NPD also found in its Mobile Phone Track survey.  In contrast, postpaid smartphone unit sales grew just 23 percent in the first quarter.

 NPD surveyed consumers ages 18 and up. The survey excludes exclude purchases by businesses.

“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, NPD’s industry analysis VP. “Prepaid has proven to be a real winner for national retailers. The easy purchase cycle and grab-and-go nature of the product play into the strength of large-format stores.”

 Carriers such as AT&T recognize have recognized the purchasing shift, with AT&T having ramped up its prepaid focus by announcing its Aio prepaid-service brand, Baker also noted.

In the survey, NPD also found that total smartphone unit sales rose 42 percent in the first quarter on a year-over-year basis and that Samsung was tops in prepaid smartphone sales, followed by LG. Samsung’s prepaid-smartphone share was 32 percent, followed by LG’s 22 percent, Huawei’s 11 percent, HTC’s 8 percent, and Apple’s 8 percent.  Sales of the top five prepaid smartphone brands accounted for more than 80 percent of all prepaid smartphone sales, up 5 percentage points compared to the year-ago quarter, NPD said.

 Though Samsung is on top, other vendors are gaining, NPD found. Samsung’s share of prepaid smartphones remained stable between the fourth quarter of 2012 and the first quarter of 2013 but eroded slightly from the year-ago quarter because both LG and Apple made significant inroads into the segment since 2012’s first quarter. LG’s unit share doubled in the first quarter on a year-over-year basis, and Apple’s unit share quadrupled.

The Samsung Galaxy S2 and the iPhone 4S were among the top five prepaid smartphone models in the quarter.

Among retail channels, the prepaid-smartphone trend benefitted national retailers the most. Their first-quarter share rose to 47 percent of prepaid smartphone sales from 44 percent in the fourth quarter and 34 percent in the in the first quarter of 2012.

Carriers’ share shrank to 37 percent in the first quarter from 41 percent in the fourth quarter and 51 percent in the first quarter of 2012. (See table.)