High-end smartphone such as the iPhone 5 are threatened by budget handsets, since consumers are looking more for bargains than they are for premium blowers. This is according to a report from Bloomberg.
The business news site reports, “France Telecom SA (FTE) Chief Executive Officer Stephane Richard, head of one of Europe’s largest wireless carriers, said the increasing frugality of customers is threatening sales of pricey phones such as Apple Inc. (AAPL)’s iPhone.”
Speaking to Bloomberg, Richard said, “We are in a period of changing consumer behavior.”
He adds, “There are fewer early adopters, and probably with the next release of the iPhone this will be evident. Selling a phone for $600 is getting more and more difficult.”
Bloomberg says, “In February, the one-time French phone monopoly offered a dim outlook for 2013. It said operating cash flow will be about 7 billion euros this year, down from 8 billion euros in 2012.”
The site adds, “In France, the company cut its mobile-service plan prices 10 percent last year and expects an additional decline this year of between 10 percent and 12 percent, Richard said. Most of the price pressure is coming from Iliad SA (ILD), a low-cost carrier that sells service under the Free brand, he said.
“To bring its prices down and keep subscribers from defecting to Iliad, France Telecom started a low-cost brand called Sosh in 2011. With Sosh, customers bring their own phone and get more limited customer support. Sosh’s standard package is more than 40 percent cheaper than the comparable subscription under the Orange brand.”
Richard says, “Customers are more focused on price. Except for a few hundred thousand people who will buy the latest iPhone — except for that category of people — the majority of the market will be difficult.”
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