Apple’s iPhone looks poised to accelerate its U.S. prepaid market penetration, says GlobalData

At Apple’s ‘Gather Round’ event on Sept. 12, we can expect to see numerous new devices, with rumors indicating the unveiling of multiple new iPhone models. This should be good news not only for postpaid wireless brands but prepaid brands as well, where the iPhone has built a strong following, according to GlobalData, a leading data and analytics company.

GlobalData’s pricing tracker, ‘Handset Pricing and Promotions, Web, U.S.’, shows that the iPhone accounted for almost 60% of all phones available via prepaid carriers in Q2 2018. In other words, three out of five phones on U.S. prepaid shelves were an iPhone.

2018 saw the influx of the premium iPhone X, not only at the mid-size U.S. prepaid operators but also at smaller price-sensitive MVNOs (mobile virtual network operators), drawing a fine line between prepaid devices and phones available on contract.

Avi Greengart, Research Director, Consumer Platforms and Devices for GlobalData, commented, “When Apple launches new iPhones, the assumption is that only wealthy consumers purchase them, either buying them outright or financing through carriers with postpaid service plans. However, over the past year, iPhones have thoroughly penetrated the U.S. prepaid channel as well.

“If Apple launches a new iPhone that looks like the iPhone X at a lower price point, Apple’s momentum in prepaid will only accelerate.”

Anisha Bhatia, Senior Analyst, Consumer Services, Platforms and Devices, for GlobalData, commented: “In the U.S., the prepaid market has become an important growth engine for operators. Device financing plans from third-party companies have driven the adoption of expensive iPhones in prepaid, allowing a wider range of consumers to buy the latest flagship smartphones.”

Apple’s continual inroads into prepaid have also pressured rivals like Samsung and LG to launch their own flagship devices in the prepaid market and promote them aggressively.

Bhatia concludes: “But this does not mean the end of entry-level phones. Budget smartphones will continue to remain popular in prepaid, especially for the credit-strapped customers. However, the demand for high-end phones in prepaid allows Apple and Samsung to capitalise on a previously omitted market segment for volume sales and margin growth.”


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