Port Washington, N.Y. – Smartphone buyers are becoming older and less affluent, forcing carriers to shift strategies to offer pricing and service plans that meet the needs of the new demographic, The NPD Group said.
For the third consecutive three-month period ending February, smartphone sales to consumers earning less than $30,000 per year grew by more than 50 percent to account for 28 percent of all sales, NPD found. That growth made the income demographic the largest segment of the smartphone market by income, NPD said. In contrast, sales to consumers earning more than $100,000 per year increased by only 24 percent.
Also for the three-month period, buyers aged 55+ accounted for 28 percent of all smartphone purchases, up 24 percent from a year ago, to represent the fastest growing age segment of smartphone buyers.
“As older and less affluent buyers enter the market, the industry is increasingly offering pricing and service plans that match the needs of these demographics,” said Stephen Baker, vice president of industry analysis. With the customer base changing, he said, “we see an important catalyst for the shift in the competitive landscape.” Changes include more installment-payment options, lower upfront pricing, an increase in the availability of prepaid phones, and new data plans “that increase certainty around the costs of the monthly phone bill,” he explained. These changes “are surely a reaction to this flood of new customers entering the smartphone marketplace.”
Handset vendors are also seeing demand shifts.
“We are seeing Apple react with increased distribution, lower priced products, and more device choices in order to appeal to a wider audience,” said Baker. “Samsung continues to provide a wide range of choices for its customer and channel base, which continues to be broader in scope than its main competitor.”
Apple and Samsung accounted for two out of every three smartphones sold during the three-month period, NPD also found, with Apple sales growing 45 percent compared to Samsung’s 10 percent. The new iPhone 6 and iPhone 6 Plus represented 57 percent of Apple sales, down from 63 percent for the then-new 5s and 5c during the year-ago period.
NPD also found that for the three months, overall sales of mobile phones rose 28 percent compared to the year-ago period, with smartphones leading the gains with a 35 percent increase. The share of share of non-smartphone sales declined to 14 percent.
