Wireless & Mobile Landscape

U.S. Mobile Device Distribution Channels: The Move to Installment Plans

U.S. mobile consumers have a wide range of options when deciding where to purchase a mobile phone or smartphone. They can purchase it directly from their mobile service provider or the phone manufacturer, but many other options are also available, including electronics stores, such as Best Buy or Radio Shack, discount stores, such as Target, Walmart or even Costco, and online-only retailers, such as Amazon, eBay, or Newegg. And within each of these types of retailers, consumers usually have the choice to either purchase online or go to a physical store.

In addition to the many choices in where to purchase, consumers also have a choice in how they purchase their mobile phone: buy the phone at full price and pay for it up front, or purchase with an installment plan that allows for frequent upgrades. However, buying a subsidized phone with a two-year contract is no longer an option at the major U.S. mobile operators.

This market study discusses where and how U.S. mobile consumers purchase their mobile phones. The study also looks at the rising popularity of device installment plans from both mobile operators and device manufacturers (specifically, Apple) and consumers’ awareness of and interest in the plans. When appropriate, results are compared to those from iGR’s market study of January 2016. The data in the study is based on two web-based surveys of more than 1,000 U.S. mobile consumers that iGR fielded in November 2015 and March 2017.


Key Questions Answered

  • How often do U.S. mobile consumers visit their mobile service providers’ retail stores and why?
  • From what type of retailer did U.S. mobile consumers purchase their latest mobile phone?
  • Did U.S. mobile consumers purchase their latest phone online or in a physical store?
  • Where do U.S. mobile consumers plan to purchase their next mobile phone and why?
  • What type of purchase method did U.S. mobile consumers use when they purchased their last phone – a subsidized phone plan with a contract, an installment plan, or did they pay the full price of the device up front?
  • What type of purchase method do U.S. mobile consumers plan to use when they purchase their next phone and why?
  • What are U.S. mobile consumers’ awareness of and interest in their mobile service providers’ installment plans? How has this awareness and interest changed over the last three years?
  • What percentage of U.S. mobile consumers have purchased their devices with mobile service provider installment plans? How does this number compare to one or two years ago?
  • What are U.S. mobile consumers’ awareness of and interest in Apple’s iPhone Upgrade Program?
  • What percentage of U.S. mobile consumers have purchased their devices with Apple’s iPhone Upgrade Program?
  • Would more U.S. mobile consumers prefer to purchase their next iPhone with Apple’s iPhone Upgrade Program or with their provider’s installment plan?
  • How do the location and method of U.S. mobile consumers’ mobile device purchases vary according to their mobile service provider?
  • How do the location and method of U.S. mobile consumers’ mobile device purchases vary according to demographic variables?

Who Should Read

  • Mobile network operators
  • Mobile service retailers and distributors
  • Mobile device OEMs
  • Financial and investment analysts.

Table of Contents

  • Abstract
  • Executive Summary
    • Purchase Locations
    • Purchase Methods and Installment Plans
    • Interest in Service Provider Installment Plans
    • Impact of Apple iPhone Upgrade Program
  • Methodology
  • Mobile Operator Retail Stores
  • Locations of Mobile Device Purchase
    • Past Purchases
    • Planned Purchases
  • Available Phone Purchase Methods
    • Subsidized Phones with Two-Year Contracts
    • Transition to Installment and Upgrade Plans
    • Other Purchase Options
  • Purchase Method for Past Purchases
    • Significant Trend by Time of Purchase
    • Other Trends
  • Purchase Method for Planned Purchases
    • Purchase Method for Planned Purchase
    • Reasons for Purchase Method
    • Reasons According to Purchase Method
  • Service Provider Installment Plans
    • Awareness
    • Interest
    • Take Rate
  • Apple iPhone Installment Plans
    • Awareness
    • Interest
    • Preference – Apple or Service Provider
    • Summary – Apple Installment Plans
  • Consumer Demographics
    • Demographic Profile of U.S. Consumer Respondents
  • Definitions
    • General
    • Device Types
    • Services
    • Network Technology
  • About iGR
    • Disclaimer

List of Tables

  • Table 1: When Last Visited Provider’s Store
  • Table 2: Reasons for Provider Store Visit
  • Table 3: Where Current Mobile Phone Was Acquired
  • Table 4: Where Current Mobile Phone Was Acquired – Physical Store or Online
  • Table 5: Where Next Mobile Phone is Likely to be Acquired
  • Table 6: Where Next Mobile Phone Is Likely to Be Acquired – Physical Store or Online
  • Table 7: Reasons Next Mobile Phone is Likely to be Purchased from Chosen Source
  • Table 8: Method of Purchase of Latest Mobile Phone
  • Table 9: Method of Purchase for Next Mobile Phone
  • Table 10: Reasons for Next Mobile Phone Purchase Plan
  • Table 11: Full Price Phone Reasons
  • Table 12: Installment Plan Reasons
  • Table 13: Combined - Reasons by Purchase Methods
  • Table 14: Awareness of Installment Plans
  • Table 15: Interest by Service Provider
  • Table 16: Very Interested and Interested in Installment Plans
  • Table 17: Very Interested or Interested in Installment Plans – Historical Comparison
  • Table 18: Take Rate for Service Provider Installment Plan – Historical Comparison of iGR Surveys
  • Table 19: Take Rate for Installment Plans – Historical Comparison of Operator Results
  • Table 20: Awareness of Apple’s iPhone Upgrade Program
  • Table 21: Interest in Apple’s iPhone Upgrade Program
  • Table 22: Reasons for Interest in Apple’s iPhone Upgrade Program
  • Table 23: Reasons for Disinterest in Apple’s iPhone Upgrade Program
  • Table 24: Preference between AT&T Installment Plan and Apple Installment Plans
  • Table 25: Preference between Verizon Wireless Installment Plan and Apple Installment Plans
  • Table 26: Preference between Service Provider Installment Plans and Apple Installment Plans
  • Table 27: Respondent Age
  • Table 28: Respondent Gender
  • Table 29: Respondent Ethnic Background
  • Table 30: Respondent Annual Household Income
  • Table 31: Respondent Level of Education
  • Table 32: Age of Children in Household
  • Table 33: Respondent Region
  • Table 34: Respondent Marital Status

List of Charts and Figures

  • Figure A: Where Current Mobile Phone Was Acquired
  • Figure B: Method of Purchase of Latest Mobile Phone
  • Figure C: Very Interested or Interested in Installment Plans – Historical Comparison
  • Figure D: Interest in Apple’s iPhone Upgrade Program
  • Figure E: Preference between Service Provider Installment Plans and Apple Installment Plans
  • Figure 1: When Last Visited Provider’s Store
  • Figure 2: Reasons for Provider Store Visit
  • Figure 3: Where Current Mobile Phone Was Acquired
  • Figure 4: Where Current Mobile Phone Was Acquired – Physical Store or Online
  • Figure 5: Where Next Mobile Phone is Likely to be Acquired
  • Figure 6: Where Next Mobile Phone Is Likely to Be Acquired – Physical Store or Online
  • Figure 7: Reasons Next Mobile Phone is Likely to be Purchased from Chosen Source
  • Figure 8: Method of Purchase of Latest Mobile Phone
  • Figure 9: Method of Purchase for Next Mobile Phone
  • Figure 10: Reasons for Next Mobile Phone Purchase Plan
  • Figure 11: Full Price Phone Reasons
  • Figure 12: Installment Plan Reasons
  • Figure 13: Combined - Reasons by Purchase Methods
  • Figure 14: Awareness of Installment Plans
  • Figure 15: Interest by Service Provider
  • Figure 16: Very Interested and Interested in Installment Plans
  • Figure 17: Very Interested or Interested in Installment Plans – Historical Comparison
  • Figure 18: Take Rate for Service Provider Installment Plan – Historical Comparison of iGR Surveys
  • Figure 19: Take Rate for Installment Plans – Historical Comparison of Operator Results
  • Figure 20: Awareness of Apple’s iPhone Upgrade Program
  • Figure 21: Interest in Apple’s iPhone Upgrade Program
  • Figure 22: Reasons for Interest in Apple’s iPhone Upgrade Program
  • Figure 23: Reasons for Disinterest in Apple’s iPhone Upgrade Program
  • Figure 24: Preference between AT&T Installment Plan and Apple Installment Plans
  • Figure 25: Preference between Verizon Wireless Installment Plan and Apple Installment Plans
  • Figure 26: Preference between Service Provider Installment Plans and Apple Installment Plans
  • Figure 27: Respondent Age
  • Figure 28: Respondent Gender
  • Figure 29: Respondent Ethnic Background
  • Figure 30: Respondent Annual Household Income
  • Figure 31: Respondent Level of Education
  • Figure 32: Age of Children in Household
  • Figure 33: Respondent Region
  • Figure 34: Respondent Marital Status

For additional information on the U.S. Mobile Device Distribution Channels: The Move to Installment Plans market study, please contact Iain Gillott, at (512) 263-5682 or by email.