iPhone anomaly: Most cell phone buyers pay under $50

August 16, 2007, 6:00 AM UTC

More than half of the cell phones U.S. consumers bought this spring cost them less than $50, a statistic that shows the masses remain hungry for cheap phones.

According to NPD Group, 28 percent of phones consumers purchased in the second quarter were free after rebates and promotions, and another 28 percent cost less than $50. Just 11 percent of phones cost more than $150, and 4 percent more than $250.

“Carriers and wireless specialty stores accounted for the most sales of higher-priced phones and are key to driving advanced functionality,” said Ross Rubin, director of industry analysis for NPD. “By comparison, mass merchandisers and department stores sold a higher percentage of phones priced at $50 or less, which can help to expand the market via pre-paid options.”

The numbers also show that Apple (AAPL) and its touch-screen, media-rich iPhone are swimming against the tide. The iPhone starts at $500. Apple executives say they expect to sell 1 million of the devices by the end of September.

In general, cell phone retail sales in the U.S. remained strong in a seasonally slow spring. Consumers snapped up 33 million handsets, NPD said, for sales of an estimated $2.4 billion. The number was up 14 percent from a year ago.

Most of the sales – 62 percent – came through the stores of dominant carriers such as Verizon Wireless (VZ), AT&T (T), Sprint (S) and T-Mobile (DT). Big-box retailers and department stores contributed 9 percent, and specialty stores 5 percent.