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U.S. Consumer Demand for 4G Phones Rises Sharply

U.S. Consumer Demand for 4G Phones Rises Sharply
March 13, 2012 2:45PM

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HSPA+ smartphone sales received a tremendous boost in last year's fourth quarter because it was the only 4G technology supported by Apple's highly popular iPhone 4S, said NPD's Ross Rubin. However, the dominant position of HSPA+ as the most popular 4G technology among American consumers is expected to be challenged this year by LTE.

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More than one in three smartphones sold in the fourth quarter of 2011 was capable of some form of 4G high-speed networking, whether LTE or HSPA+, The NPD Group reported Tuesday.

NPD said the 4G smartphone market grew from 6 percent in the fourth quarter of 2010 to 35 percent in the same quarter last year. The firm's analysts said growth was driven in major part by the successful launch of Apple's iPhone 4S.

During last year's fourth quarter, the most popular 4G network technology in the United States was high-speed packet access plus (HSPA+), which accounted for 22 percent of U.S. smartphone sales. And Apple's iPhone 4S was the leading 4G model shipping in this market segment during the fourth quarter of 2011.

"HSPA+, which has combined high throughput with practical power efficiency, has been a compelling evolutionary 4G upgrade option for carriers upgrading GSM networks," said Ross Rubin, the executive director of connected intelligence at The NPD Group.

Committing to LTE

During the fourth quarter of 2011, U.S. consumers exhibited a strong association between LTE and 4G. According to NPD, 26 percent of consumers who purchased LTE phones were specifically seeking 4G technology last year, compared with just 9 percent of all smartphone buyers overall.

Rubin said that HSPA+ smartphone sales received a tremendous boost in last year's fourth quarter because it was the only 4G technology supported by Apple's highly popular iPhone 4S. However, the dominant position of HSPA+ as the most popular 4G technology among American consumers is expected to be challenged this year through the introduction of even faster mobile products running long-term evolution technology.

The LTE smartphone with the most unit sales in last year's fourth quarter was the HTC Thunderbolt, NPD said. Still, LTE-enabled handsets accounted for just 7 percent of the smartphone market overall during the fourth quarter of 2011 -- one year after Verizon's launch of the first commercially deployed LTE network in the U.S.

"With all major U.S. carriers committing to LTE as their 4G future, it is clearly the cellular network technology that will determine the baseline for the next generation of advanced smartphones," Rubin said.

Setting the Stage for iPhone 5

Last January, AT&T rolled out LTE service in 11 U.S. metropolitan markets, including Los Angeles, New York City and San Francisco. The wireless carrier's 4G LTE network is now live in 28 markets, and the company plans to switch on LTE services in Cleveland, New Orleans, St. Louis and other markets next month.

Meanwhile, LTE market leader Verizon is working to enhance its existing LTE network in New Hampshire and Massachusetts and elsewhere. Additionally, Sprint expects to begin offering high-speed LTE services in selected U.S. markets -- such as Atlanta, Baltimore, Dallas, Houston, Kansas City and San Antonio -- in the first half of this year.

Apple's new iPad, which in some models is LTE capable, is widely expected to help Apple "maintain and expand its technology lead in the tablet space," wrote Piper Jaffray analysts Gene Munster and Andrew Murphy in a recent research note. AT&T and Verizon Wireless are already offering the new iPad model to their subscribers.

Apple's new LTE media tablet also sets the stage for the introduction of a new iPhone 5 with LTE capabilities in 2012. Piper Jaffray's analysts expect the buzz around a redesigned iPhone 5 to escalate during the first half of 2012 until Apple launches the device midway through the year.

"We think it's probable that iPhone 5 has LTE," Murphy said in an e-mail Tuesday.

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