Unlocked Phone Users Are Less Loyal to Both Carriers and Device Brands Than Those With Locked Phones, Reports NPD Connected Intelligence

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Thirty percent of unlocked phone users switched carriers when purchasing a new device, versus 24 percent of locked phone users.

Retailers, both in-store and online, have taken this opportunity to increase their unlocked phone selection, as more consumers are open to purchasing alternative brands for a lower price, or even for the same price if the functionality is appealing.

The unlocked mobile phone market has reached approximately 30 million consumers in the U.S, which currently accounts for 12.5 percent of the market, according to global information company, The NPD Group. As the unlocked phone market continues to grow, the latest Unlocked Phone Demand Report 2.0 from NPD Connected Intelligence compares consumers who purchased unlocked phones, to the larger base of consumers who purchased standard, locked phones from their carriers. Among the findings, the report revealed that consumers with unlocked phones are less loyal to both carriers and device brands than those with locked phones.

According to the report, 30 percent of unlocked phone users switched carriers when purchasing a new device, versus 24 percent of locked phone users. In fact, the number one motivator for purchasing an unlocked phone was freedom to choose a future network. Unlocked users were also more likely to cite ‘lowering cost’ as a reason for switching carriers than those with locked devices (45 percent versus 34 percent, respectively).

“The market is made up of two distinct consumer bases: price sensitive consumers looking for low-cost devices that deliver value; and high-end, tech focused consumers, looking to differentiate from the standard choices,” said Brad Akyuz, director, industry analyst for NPD’s Connected Intelligence. “Now that smartphone subsidies are nonexistent, for the most part, the unlocked market has become a cost effective option.”

In addition to being more likely to switch carriers, unlocked phone users are also more likely to purchase a different device brand when upgrading. Forty-eight percent of unlocked phone users switched brands when upgrading devices, compared to 37 percent of locked phone users. Among unlocked users brand loyalty increases with price paid.

“Retailers, both in-store and online, have taken this opportunity to increase their unlocked phone selection, as more consumers are open to purchasing alternative brands for a lower price, or even for the same price if the functionality is appealing,” noted Akyuz. “As the unlocked phone market grows, differentiation will be key for original equipment manufacturers. While price is one competitive component, devices will need compelling features/functionality to appeal to consumers and retailers alike.”

Methodology
The results of the NPD Group Connected Intelligence Unlocked Phone Demand Report 2.0 are based on consumer panel research from the Unlocked Smartphone Survey, which reached 1,026 unlocked U.S. smartphone owners. This survey was completed in April 2017. As well as the Broadband Adoption Survey that reached 4,150 U.S. consumers, aged 18+ from diverse regions and demographical backgrounds.

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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