Consumers Want Smaller Payments for Smartphones, Then Ownership
NEW YORK, Oct. 02, 2015 (GLOBE NEWSWIRE) -- ITG Telecom Market Research today released its monthly ITG Equipment Installation Plan Report (EIP Report). This report tracks the adoption of each telecom data carrier’s purchase offerings by program for each model sold. The research reveals consumer behavior and preference relative to options provided for buying or upgrading their smartphones.
AT&T provided the first option for alternative financing; offering ‘term’ versus ‘speed to upgrade’. Beginning in December 2013, the AT&T Next Plan provided a choice of upgrading in 12 months and paying off the handset in 18 months with a higher monthly payment, or upgrading in 18 months and paying off the handset in 24 months. In November 2014, a third option was added to upgrade in 24 months and pay off the handset in 30 months with a lower monthly payment. As the chart below illustrates, AT&T subscribers opted for pushing the upgrades out 18-24 months once given the option to do so. The launch of Apple’s new iPhone leasing program this fall will likely drive similar buyer behavior.
In November 2014, Sprint introduced the option to lease the handset on either a 12 or 24 month basis. As with all leases, the carrier retains ownership of the handset, a fact that did not detract from adoption of this option. Sprint later cancelled the 12 month lease option but kept the 24 month leases. Customer acquisition of two year contracts, Sprint leases, and EasyPay financing in August was 53%, 36% and 11% respectively. The following chart illustrates the migration in preferences among Sprint subscribers.
“These carriers’ early upgrade programs morphed quickly from promoting a faster path to the latest smartphone, to a financing tool that shifts the capital burden onto the consumer,” says Gary Cohen, Director, ITG Market Research. “With options like these, US consumers will trade out-of-pocket costs for payments over time. The trend in acquisition behavior demonstrates that consumers are willing to trade ownership of their device for an even lower monthly payment.”
ITG Telecom Market Research leverages proprietary data sources and methods to inform strategic decisions for asset managers and industry participants. Monthly reports include ITG Mobile Handset Report, ITG Returns and Exchanges Report and ITG Early Upgrade & EIPs Report. For more information on ITG Telecom Market Research please contact firstname.lastname@example.org or visit http://www.itg.com/intelligence/itg-market-research/.
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