France Telecom CEO Stephane Richard says that budget smartphone buyers are threatening sales of Apple’s pricey iPhone. Consumers are becoming more frugal due to the state of the economy, particularly in Europe, Richard told Bloomberg Businessweek, and so they’re turning to cheaper options when it’s time to get a new cellphone.
“We are in a period of changing consumer behavior,” Richard said during an interview with Businessweek, adding that fewer people are in search of the latest and greatest devices. Instead, they’re favoring lower prices, and many are happy to keep their old phones and switch to cheaper plans when it’s time to upgrade.
The slumping economy in Europe means the situation is more evident there; France Telecom has seen priced drop 25% over the past three years, slimming its profit margins and reducing its stock price. The carrier’s cheapest plan is now just €20 (approx. $26) a month, and offers unlimited calls and texts and 3GB of data.
That’s almost half the price of T-Mobile USA’s “bargain” plan in the U.S., Businessweek notes.
Richard believes the consumer shift will be most noticeable when Apple introduces its new iPhone, believed to be called the iPhone 5S, later this year.
“There are fewer early adopters, and probably with the next release of the iPhone this will be evident,” he said. “Selling a phone for $600 is getting more and more difficult.”
Apple could alleviate this the change with a cheaper iPhone, of course, and according to recent rumors, we’ll see one this year. Both Bloomberg and The Wall Street Journal have reported that Apple will launch a “low-cost” iPhone for emerging markets and budget-conscious smartphone buyers in a bid to compete with Samsung’s wide range of Android smartphones.
Source: Bloomberg Businessweek