NPD: U.S. consumers making under $30K per year buy 28% of all smartphones

Most of the growth in the U.S smartphone market is coming from buyers over the age of 55 and from those making under $30,000 per year, according to new report from the NPD Group.

For the third consecutive three-month period, ending February 2015, smartphone sales among consumers earning less than $30,000 per year grew by more than 50 percent, NPD said. According to NPD, this demographic is now the largest segment of the smartphones market, accounting for 28 percent of all sales. In contrast, sales among consumers earning more than $100,000 a year increased by just 24 percent--in essence, they already have smartphones and aren't buying as many.

This trend likely has been helped by the falling cost of smartphones. Also, the advent of equipment installment plans, which have been enthusiastically embraced by U.S. wireless carriers, is also likely contributing to higher sales to low-income customers. Such plans often allow qualified customers to walk out of stores with smartphones after paying $0 down.

For the three months ending in February, buyers aged 55 and older also represented 28 percent of all sales, up 24 percent from a year ago, and were the fastest growing age segment of the population.

Over the three-month period ending in February, overall sales of mobile phones (smartphones plus feature phones) jumped 28 percent compared to last year, while smartphone sales increased 35 percent. During the same three-month period, only 14 percent of phones sold were not smartphones.

"The smartphone market continues to undergo radical changes, even as it approaches maturity in the U.S. As older and less affluent buyers enter the market, the industry is increasingly offering pricing and service plans that match the needs of these demographics," NPD analyst Stephen Baker said in a statement. "With this changing customer base, we see an important catalyst for the shift in the competitive landscape. More installment payment options, lower upfront pricing, an increase in availability of prepaid phones, and new data plans that increase certainty around the costs of the monthly phone bill, are surely a reaction to this flood of new customers entering the smartphone marketplace."

Unsurprisingly, Apple (NASDAQ: AAPL) and Samsung Electronics continue to dominate the U.S. smartphone market, and accounted for two out of every three smartphones sold over the three-month period ending in February, although Apple sales increased by 45 percent and Samsung just 10 percent. NPD reported that the iPhone 6 and iPhone 6 Plus represented 57 percent of Apple sales, a somewhat weaker performance than the same period last year when the newest iPhones, the 5s and 5c, accounted for 63 percent of sales. 

NPD found that the iPhone 6 and iPhone 6 Plus were most popular among the older demographic, with 69 percent of sales to consumers 55 and older, while only 46 percent of purchases made by customers ages 18-34 were the newest iPhone models. Less affluent consumers accounted for just 35 percent of sales for iPhone 6 and 6 Plus. Buyers earning more than $100,000 a year chose the newest iPhones more than two-thirds of the time.

"Both Apple and Samsung are seeing their customers shift with the overall market," Baker said. "We are seeing Apple react with increased distribution, lower priced products, and more device choices in order to appeal to a wider audience.  Samsung continues to provide a wide range of choices for its customer and channel base, which continues to be broader in scope than its main competitor."

Samsung's Galaxy S6 and S6 Edge flagship phones went on sale in the U.S. earlier this month. Baker noted that "Samsung hopes to deliver increased penetration into the more affluent demographics with its updated and more premium Galaxy S6 line. Apple continues to see success in providing a range of devices, but still has a way to go to match Samsung's strength with entry-level consumers."

For more:
- see this release

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