media logos

Will prepaid capture the feature phone market?

While we’ve seen a number of smartphones and smartphone plans hit prepaid carriers, their bread and butter remains with feature phones. These are often older models that carriers can provide cheaply without a subsidy. Customers can more easily afford them, which makes for easier access to prepaid services. Feature phone shipments, though, are down. Handset shipments grew just 21.7 percent year-over-year from Q1 2009 to Q1 2010, but the smartphone sector fueled that growth, increasing shipments by 56.7 percent year-over-year. It made me wonder if we’ll see people sign contracts only for high-end smartphones, with feature phones heading mostly to prepaid.

As we saw with the first quarter results from major carriers, people are shifting their cellular habits. Where at one time they might have signed a two-year contract in order to receive a mediocre phone for free, we’re seeing less of this behavior these days. People will still sign a two-year contract for the iPhone, or BlackBerry, or Android devices, but they’re less willing to use a feature phone with postpaid services.

This trend does not come as a surprise, and I expect we’ll see things shift more in this direction in the next few years. There are so many prepaid companies offering good rates on a commitment-free basis that it makes less and less sense to sign a two-year contract for those services.

What I really wonder, and I have no idea about this one, is of how this will change the feature phone market. Will prepaid services continue to offer mostly very low-end and refurbished handsets? Or will there still be a market for more advanced feature phones? I suppose there’s room for a little of everything, but I’m not sure how much room.

5 Responses

  1. Darryl Says

    I feel that prepaid has only caught on because of the economy. There are still many people who will sign a contract to get the latest phones, which are not yet offered on prepaid (unless you’re willing to buy them for full retail price). Feature phones on contracts are usually free to about $50 on a contract. And smartphones can range from $60-$250 on a contract.

    Posted on May 11th, 2010 at 10:25 am
  2. Are family plans the next prepaid frontier? | Prepaid Reviews Says

    [...] I mentioned last week, prepaid could capture the feature phone market. In other words, the data heavy phones could still be in the realm of subsidies and contracts, [...]

    Posted on May 17th, 2010 at 7:32 am
  3. BoostBlackBerry Says

    I love my Blackberry from Boost mobile.
    No contrat phones are be comeing big, and putting Smartphones in there will help sell no contract phones.

    Sent from my BlackBerry by Boost Mobile

    Posted on June 2nd, 2010 at 2:10 pm
  4. Jaclyn Mestayer Says

    Any smarphone purchase advice?

    Posted on February 13th, 2012 at 1:53 pm
  5. KBlanco Says

    While I think people will always favor smartphones over dumbphones (feature or traditional cell phones), I also think that a sizeable segment of the population doesn’t need or want smartphones and all that they have to offer. Some folks will be exposed to pre-paid cellular just because of the economy and they’ve got to cut back, then find out that pre-paid cells really have come a long way and have an underserved bad reputation. I’ve been pre-paid for nearly ten years and love my Motorola by Tracfone. I just cut my landline in fact and can’t imagine being my brother whom’s got a plan with the Iphone and pays $120.00 a month to my $10.00 recurring that I just signed up for…

    Posted on December 10th, 2012 at 1:58 am

Leave a Reply