US 3Q18: A US Carrier Promo Snoozefest—Will Black Friday and Cyber Monday Excite?

According to Counterpoint Market Monitor research, the US market sold in 38.4m smartphones—down 7% year-over-year. Apple and Samsung were in the news with multiple rumors of reductions in production—were they the cause?  No! Premium device sales were up. Apple was up 9% YoY and Samsung registered a flat YoY performance. The weakness in the US market was in the mid and low-tier segments.

Some highlights from the quarter to illustrate:

·         ZTE volumes fell 4.3m as the company reboots from being embargoed. The company missed out on a 2019 carrier launch window and it will take some time to get new devices into the market and regain the confidence of carrier partners. Look for limited activity until 2H19. It has been challenging for US carriers to find the same quality in the company’s low-cost devices.

·         AT&T had a strong wireless performance with smartphone sales up 15% YoY to 7.1m. The company added a whopping 481k phone net adds on the prepaid side yet sold about the same number of devices—2.1m. Used and refurbished market showed its influence. For complete AT&T sales details see, AT&T: Smartphone Sales Up 15%; Fantastic Prepaid Performance.

·         Sprint had a mixed results wireless quarter. Smartphone sales were down 9% to 5.4m. The main culprit was a fall within prepaid. This hurt some entry suppliers. For complete details see, Sprint Device Sales Fall as Company Focus’ on Profitability.

·         Promos remained lethargic as no US carrier was looking to be the first mover. New lines, Internet, or TV were required for virtually all large hardware promos during the quarter. For more on the quarter’s monthly sales performances and promos, see  August and September.

·         Upgrade rates were down YoY averaging just over 5.3%. Sprint saw the high at 6.3% and AT&T had the low at 4.2%.

Limited upgrade promos (without required additional lines) were the main item keeping the percentage low. 85% of the smartphone base is now on an equipment installment plan meaning the vast majority are now feeling the pain of paying full retail. As such, holding periods creep higher. T-Mobile moving to 3-year payoff periods for select flagships means it could move higher.  For complete quarterly details see the US Market 3Q18 Analysis.

·         Will things pick up for Black Friday, Cyber Monday, and December? Early indications appear ‘not likely’. Promos are weighted towards flagships, but most require at least one line. Verizon appears to have the most aggressive offer at $400 off of select flagships with a two-year contract. Stay tuned for full coverage of Black Friday and Cyber Monday insights.