Unlocked Mobile Phones Account for 12 Percent of the U.S. Market with Growth Expected to Continue, According to a New Report from NPD Connected Intelligence

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Unlocked phone sales are more likely to occur online, when compared to locked phone purchases

According to the new Unlocked Phone Demand Report from NPD Connected Intelligence, the unlocked mobile phone market is growing rapidly with an estimated 28 million consumers owning an unlocked device in the U.S., accounting for 12 percent of the market. Additionally, due to limited options available in-store, half of all unlocked phones (51 percent) are being purchased online – a notable deviation from locked phone purchases which traditionally take place in-store. By comparison, 74 percent of locked phones are purchased in stores/kiosks.

“Since consumers now have to pay full price for their mobile phone, the unlocked market is a cost-effective alternative and helps to address the mid-tier pricing market for consumers that are looking for a relatively high-end smartphone, but at a lower price point than the typical $600 plus price tag,” said Eddie Hold, President, NPD Connected Intelligence.

The unlocked market also provides opportunity for new entrant original equipment manufacturers (OEMs) to penetrate the market without a carrier commitment. While this poses a threat to established OEMs already challenged with protecting market share, awareness levels of emerging OEMs are currently below 10 percentage points.

The market is currently made up of two distinct consumer bases: frugal consumers looking for lower-priced devices that deliver; and high-end, tech focused consumers, looking to differentiate from the standard choices. With more devices available, the unlocked mobile phone market is dominated by Android devices (62 percent), as compared to iOS devices (35 percent). The report reveals that unlocked phone users are more likely to prefer prepaid plans when compared to the overall smartphone market, as well as indicate that they remain within their plans boundaries, indicating price sensitivities.

“While costs are a major factor driving consumers to make the switch to an unlocked device, these consumers still expect their devices to deliver dependable service,” said Hold. “That’s why it’s becoming increasingly important for carriers to educate consumers on possible band/frequency issues when using unlocked devices; otherwise, consumers are likely to blame carrier networks for signal losses that are in reality device driven.”

For more information, or to speak with Eddie Hold, please contact Megan Scott, 516-625-7516 or megan.scott(at)npd(dot)com.

Methodology
The results of the NPD Group Connected Intelligence Unlocked Phone Demand Report are based on consumer panel research from the Broadband Adoption Survey that reached 4,100 U.S. consumers, aged 18+ from diverse regions and demographical backgrounds. This survey was fielded in July, 2016.

About Connected Intelligence
Connected Intelligence provides competitive intelligence and insight on the rapidly evolving consumer’s connected environment. The service focuses on the three core components of the connected market: the device, the broadband access that provides the connectivity and the content that drives consumer behavior. These three pillars of the connected ecosystem are analyzed through a comprehensive review of what is available, adopted, and consumed by the customer, as well as reviewing how the market will evolve over time and what the various vendors can do to best position themselves in this evolving market. For more information: http://www.connected-intelligence.com.

About The NPD Group, Inc.
The NPD Group provides market information and business solutions that drive better decision-making and better results. The world’s leading brands rely on us to help them get the right products in the right places for the right people. Practice areas include apparel, appliances, automotive, beauty, consumer electronics, diamonds, e-commerce, entertainment, fashion accessories, food consumption, foodservice, footwear, home, mobile, office supplies, retail, sports, technology, toys, video games, and watches / jewelry. For more information, visit npd.com and npdgroupblog.com. Follow us on Twitter: @npdgroup and @npdtech.

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Megan Scott
The NPD Group
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