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But a USA Today story by Roger Yu paints a picture of a dynamic market growing much faster than the traditional post-paid market, where users buy into two-year contracts in exchange for the mobile carrier's subsidized phone pricing.

The contract market is "saturated," and big carriers now are aggressively targeting users who either need or prefer prepaid. Yu quotes IDC analyst John Weber who says carriers are "are focusing on prepaid as a growth engine. It's not just for those [customers] who fail [a credit check]. It's also for customers who want flexibility."

"The number of 'post-paid' customers fell in the first quarter of this year vs. the previous quarter, the first quarter-over-quarter decline in industry history, according to research firm Recon Analytics," Yu reports. At the time, IDC estimates that the retail prepaid market will grow 7.4% yearly on average until 2016, outpacing the post-paid market's growth of 1.3% yearly on average.

"Apple isn't satisfied with 23% of the smartphone market," argues Matthew Panzarino, writing at The Next Web. "In fact, the evidence is mounting that it wants to dominate it much in the way that it did the market for MP3 players with the iPod." And prepaid customers are the pathway to dominance in an otherwise saturated market.

Perhaps the "flexibility" that prepaid users are said to want is actually better understood as a greater sense of control over what they spend for mobile services, allowing them to judge and even change the value of these services in a more immediate way than postpaid users do.

It's a high-stakes market, Panzarino argues.

"If Apple can leverage its economies of scale to offer affordable iPhones to the prepaid market, even two-year-old models, it has the potential to shift the balance of market-share-power away from Android, just as it [already] owns the lion's share of [smartphone] profits," Panzarino writes.

John Cox covers wireless networking and mobile computing for Network World. : @johnwcoxnww


Email: john_cox@nww.com

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Copyright © 2012 IDG Communications, Inc.

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