Prepaid smartphone sales for smaller wireless carriers grew 23 percent

17 Nov

According to market research firm NPD, big mobile service carriers in the United States such as AT&T, Verizon Wireless and T-Mobile are losing sales of prepaid smartphones to smaller companies such as Boost Mobile, Virgin Mobile and MetroPCS. And the trend is in fact intensifying.

Third-quarter prepaid smartphone sales for those smaller carriers actually rose 23 percent over the previous quarter. But sales among the tier-one wireless carriers dropped by 12 percent over the same period.

And the reasons are fairly easy to explain, says NPD. Smaller market players won over customers by offering lower prices and a larger selection of prepaid phones, NPD added.

In the third quarter, 70 percent of smartphone buyers who bought their phones through a prepaid carrier had switched from a tier-one carrier.

Consumers replacing their mobile phones were more likely to switch from a tier-one carrier than were first-time smartphone buyers.

“Both AT&T and Verizon have introduced less-expensive prepaid offerings, and Verizon has expanded its prepaid smartphone lineup, but questions still remain whether it’s too little, too late,” NPD Analyst Stephen Baker said.

Of all the smartphones sold in the third quarter, about 42 percent were prepaid phones, NPD said. That’s an increase from the second quarter, when 39 percent of all smartphones sold were prepaid ones.

Overall, about 71 percent of all mobile phones sold in the last quarter were smartphones, according to the report, up from 66 percent in the prior quarter.

And most of that growth came from Android, which saw its share of the smartphone market grow to 63 percent from 59 percent in the second quarter. Apple’s share stayed about the same, at 31.4 percent.

In leading order, the top five smartphones sold last quarter were the iPhone 4S, the Samsung Galaxy S3, the iPhone 4, the iPhone 5, and the Galaxy S2, according to NPD.

“And while the iPhone 5 certainly helped Apple maintain or slightly increase its market share, the iPhone 4S and iPhone 4 also drove a considerable amount of sales for Apple, among first-time smartphone buyers and also among older iPhone generation owners,” Baker said.

“With just about a week of sales to record in the third quarter, the iPhone 5 still had a notable impact on the market, but by no means did older iPhone generations suffer, since wireless carriers provided less-expensive pricing for those models,” added Baker.

In other mobile news

Cisco confirmed yesterday that it will start making miniature-size cellular base stations, which aim to integrate the cellular technology into several WiFi access points.

The news came out during a conference call with Wall Street analysts following the company’s latest quarterly earnings, which revealed higher profits and revenue, but a drop in sales of networking and switching gear and internet routers. That drop was caused by European wireless operators not spending enough on their networks, so small cell antennas are a natural extension for the network equipment maker.

Cellular network infrastructure used to be a ‘clean-cut’ specialist operation a few years ago, left to a handful of large equipment suppliers, but just as phone hardware has become commoditised to the point where the most popular phone manufacturers have no history in radio, so base station suppliers don’t need to be so versed in radio technology as was necessary in the recent past.

To be sure, macro networks– the big base stations mounted on top of heavily braced towers are still something of a specialist subject, but smaller cell antennas, which now outnumber their macro sisters, are much more versatile pieces of equipment which can be fitted with the minimum of headaches and managed from a central office.

And that’s exactly the kind of networking gear that Cisco has always excelled at producing, and at a cost that still leaves the company a healthy profit margin, while still being competitive for the product.

Cisco’s smaller cell antennas will be the kind of thing you can see on top a hydro pole, or bolted to the side of a shopping centre or small office building.

Cisco will only sell its miniature cell antennas to network and wireless operators who own the frequencies in which they operate. Mobile companies will still be able to use the small cells in densely populated areas to increase their capacity to push phone calls and data to their mobile subscribers.

However, Cisco isn’t completely new to this market, having worked with AT&T and Verizon Wireless on their femtocell offering, but that was with the aid of IP.Access and didn’t lead to the small cells entering the product catalog.

But Cisco still wants to buy in some technology for its smaller cells, particularly for 4G and LTE support. There’s a handful of other suppliers making headway into the small cell market these days.

Mindspeed and Ubiquisys come to mind, and you can bet your bottom dollar that more will discover the opportunity and act upon it, if they haven’t already.

In other mobile industry news

Research In Motion’s market share of the business smartphone segment continues to drop. New numbers place BlackBerrys into a distant third spot behind iOS and Android as employees are increasingly allowed to use their preferred handsets in the workplace.

Overall, less than 31 percent of the 1,600 companies surveyed globally provide smartphones for their staff, down from 59 percent in December 2011. Workers are choosing their own platforms to use and not many of them are selecting RIM. Most are picking iPhones, but a significant minority are choosing Android which places BlackBerry into a distant third place.

In 2011, RIM’s phones were listed as second behind Apple devices. The figures are 53 percent for utilization of the iPhone, 34 percent use Android and 26 percent use the BlackBerry. Windows Phone barely trails at less than five percent.

Smart readers will have noted that this totals 118 percent which matches the UK’s mobile penetration– some of those enterprise users are packing multiple mobile handsets and we’d venture that not all of them are exclusively for business utilization.

An executive with his own iPhone might use that to check email in the morning, but still have a BlackBerry for use in the office, putting both devices into the enterprise camp though their commitment to it is far from equal. Overall, about 15.9 percent of business respondents are apparently packing at least two smartphones in that manner.

Which is good news for RIM, whose BlackBerry 10 operating system can slip easily between work and personal life, but the software is a few months off from completion during which more even more market share will be lost.

RIM is slated to launch new hardware to go with the OS at the end of January, and will produce a finalized build on December 11 in the hope of attracting more app developers to the cause.

Various surveys by enterprise networking firm iPass, which conducted the poll, are generally accurate as the numbers are drawn from customers using its connection-aggregation platform rather than self-selecting web users.

On average, Apple is still expected to win big time. With users bringing in their own hardware under Bring Your Own Device schemes, claiming back the cost of connectivity on expenses, iPass says that companies are in for a shock as they’re not counting the true costs across the business.

Individual users aren’t counting the pennies, but business should be, and there are a lot of pennies at stake. Such scaremongering is in iPass’s interest – the company sells aggregated Wi-Fi access – but getting staff to use their own connectivity is becoming an unmeasured expense in many businesses.

In other mobile news

The European Commission said earlier today that it has approved the creation of a new secure-element company backed by ARM, Gemalto and Giesecke & Devrient, on the specific condition that ARM promises to keep its hardware open to the industry.

The new company will be named later, and it will design, develop and sell products running software from G&D and Gemalto on the TrustZone element embedded in today’s ARM chips.

The product will come complete with management software, and the EU required promises from ARM that it wouldn’t unfairly lock out competitive offerings. ARM has agreed to the terms.

“ARM will provide the necessary hardware information to industry rivals at the same conditions as to the joint venture to enable them to develop alternative TEE (Trusted Execution Environment) solutions,” said an EU spokesperson.

Additionally, ARM won’t design its intellectual property in a manner that would degrade the performance of alternative TEE solutions.

That restriction will be in place until December 1st, 2020, after which it will be void. ARM will own 40 percent of the new joint venture, which builds on the growing need for better security on smartphones and other mobile devices, with Gemalto and G&D splitting the remaining 60 percent between them.

But as the two software companies currently have different business models for their code (Gemalto licenses software while G&D gives it away, making money on the servers) the model to be adopted by the new venture is a still work in progress.

Overall, TrustZone is built into ARM’s chip designs, which are licensed to processor manufacturers which have put the technology into around 90 percent of today’s mobile phones and smartphones, though very few have the software to take advantage of it.

Neither can that software easily be downloaded, as downloaded software can’t be trusted, but the facility can easily be utilized in new mobile handsets where the software can be securely preloaded, the EU said.

Such mobile apps run with the TrustZone, isolating them from the operating system and malware which could be lurking there. To be sure, the process isn’t as secure as putting the secure element in the SIM, according to the SIM manufacturers at least, but it’s a good deal more secure than the phone’s architecture.

But despite the ubiquity of TrustZone, and its ability to secure the operating system, verify downloads, authenticate users and prevent ‘man-in-the-middle attacks’ almost no one is using it today, which is what’s promoting this new project.

The three companies will promote a single trusted execution environment making it much easier for banks, and other people interested in secure tokens, to create new mobile applications, and competing with the operator-owned secure element in the SIM.

NFC Times has more details, and points out that GlobalPlatform has been busy creating a standard API for communicating with an embedded secure element which could be important as phones with Intel chips inside use that company’s Secure Element instead.

Soon, it is hoped that we won’t have to trust our mobile phone operating system at all, we’ll just have to trust the Secure Element supplier instead, which is probably good news for all mobile users.


Posted by on November 17, 2012 in Mobile


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