France Telecom 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’s iPhone, Bloomberg reports. “We are in a period of changing consumer behavior,” Richard said this week during an interview at Bloomberg’s headquarters in New York. There are fewer shoppers in search of the latest and greatest gadget, and more of them are seeking lower prices on wireless service, he said.
The shift has been especially severe in Europe, where more customers are keeping the same phone when they switch carriers. Amid a slumping economy and mounting competition, France Telecom has seen prices drop 25 percent over the past three years, squeezing profit margins and its stock price. Its cheapest plan now provides unlimited calls and texting and 3 gigabytes of data for about 20 euros ($26) a month -- about half the price of T- Mobile USA Inc.’s $50 plan, which is touted as a U.S. bargain.
The persistent belt-tightening in France and elsewhere in Europe has decreased the number of consumers who buy the latest phones at top prices, Richard said. Without a carrier subsidy, the iPhone typically sells for about $600, making it too pricey for many shoppers, he said.
The change may be felt when Apple introduces its latest iPhone this year, Richard said. The product’s annual refresh has traditionally drawn long lines and a frenzy of anticipation since it first debuted in 2007.
“There are fewer early adopters, and probably with the next release of the iPhone this will be evident,” Richard said. “Selling a phone for $600 is getting more and more difficult.”