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Unlocked Phones Locking Up More Sales

NEW YORK – Unlocked GSM-network cellphones, available for well over a decade, are poised to take a larger share of the U.S. phone market, driven in large part by consumers looking for lower priced alternatives to the unsubsidized – but locked — phones that major carriers have begun promoting heavily.

The unlocked market is also growing because it gives consumers the ability to find features unavailable on locked phones, such as dual SIM capability, marketers said. “If a consumer is willing to give up brand-name handsets, features tend to be higher on second- and third-tier manufacturer-branded handsets,” added Gartner analyst William Lutman.

Unlocked phones work on the TMobile and AT&T GSM networks as well as with services from MVNOs and prepaid brands that use those carriers’ networks, including Metro PCS, Cricket Wireless, Simple Mobile, Net 10, Trac- Fone and others.

Because unlocked phones work with airtime from so many service providers, BlackBerry said unlocked purchasers can shop around and save up to $1,000 in handset and service costs over two years when buying an unlocked Black- Berry, even after factoring in carriers’ handset subsidies.

Other factors contributing to unlocked sales include the ability to switch GSM service providers without buying a new phone if a consumer is dissatisfied with service or pricing, marketers noted. Other advantages include the ability to use a local SIM card to cut cellular service expenditures when traveling abroad.

Sales are also up, said Gartner’s Lutman, because unlocked phones are purchased to replace lost and stolen phones when consumers don’t have replacement insurance. U.S. residents who hail from other countries where unlocked phones are more commonplace also contribute to sales, he said.

Lutman speculated that unlocked phones account for 10 to 15 percent of U.S. unit volume.

Handset vendors also see advantages for themselves in the unlocked market. Some view unlocked phones as a way to supplement sales to carriers that don’t promote their phones as aggressively as the phones of market- share leaders Apple, Samsung and LG.

Sales challenges remain, however. Most consumers aren’t familiar with the unlocked-phone concept, and installment-payment plans are usually not available for unlocked phones even though installment plans are available from carriers and retailers for unsubsidized locked phones.